8 Signs You Have a Bad Real Estate Agent
There are quite a few investors out there who believe you should either become a real estate agent yourself or shun them—at least for the most part. Such investors believe the best deals will always be direct-to-seller, and there’s not much point in dealing with real estate agents (other than once in a blue moon or perhaps to sell your flips).
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I understand these perspectives, but there are certainly good real estate agents out there. We’ve had the opportunity to work with two really good ones. And especially when the market was softer (and whenever it becomes softer again), good agents can be very helpful in sorting through REOs and motivated sellers on the MLS. (In a hot market like this, any such deals usually get snatched up immediately.)
If you're just looking for an agent to sell your property, all you need is a quality agent. However, if you want an agent to help you with acquisitions, then you need more than that. You need an "investor-focused" real estate agent, which some very good homeowner-focused agents simply aren't a good fit for. It's a "round peg, square hole" sort of deal.
(Quick side note: I heavily recommend against ever signing an exclusive agency agreement. You want to be able to walk if the relationship isn't working or work with another agent on a one-off if they bring you a particular deal.)
5 Signs of a Bad Real Estate Agent
Below are five key signs you have a bad real estate agent on your hands, followed by three key signs that the agent might not be investor-focused and is thereby a bad fit for youâeven if he or she is a good agent overall.
1. Unethical or Dishonest
This one sort of goes without saying, but you absolutely don't want to be dealing with an unethical or dishonest real estate agent. If you catch them lying to you or see the agent lying to someone else, you need to walk away before signing a listing. (Or if you already have, get out of it if possible or never use them again.)
If the agent recommends lying about disclosures you should make or advertises false claims or exhibits any other kind of dishonest or unethical behavior, this is not someone you want to be doing business with.
An unprofessional agent can cost you deals by turning off potential sellers (or buyers, vendors, etc.) or by costing you time and energy. Unprofessional behavior could include rude emails, vulgar jokes or profanity, showing up late, etc.
No one will be perfect, of course, but you should demand that an agent who is representing you acts in a professional manner.
3. Unwilling to Cooperate
It is important to take your agent's counsel, but at the same time, you are a real estate professional, too. If an agent is too stubborn or believes that he or she knows best about everything, there's no reason to bother. You will be constantly butting heads, and the trouble will be far more than it's worth.
4. Lazy, Unorganized or Unresponsive
I expect a prompt response to any of my emails, texts, and calls. I'll accept 24 hours at the most and right away in the rare times when it's urgent. In many ways, it doesn't matter if the agent is lazy or unorganized or whatever. If they don't get back to you quickly and don't get done what needs to be done, there's no reason to work with them.
Furthermore, you want an agent who does more than just going through the motions. You want an agent who hustles. If they have my listing and it isn't selling, I want to hear more than, "We should lower the price."
What kind of niche marketing ideas could we employ? What minor upgrades could we do to make the property more sellable? Should we consider staging the home? I want to hear ideas like these.
I listed this flaw at the end because unlike the others, this one isn’t 100 percent. Some young, inexperienced agents are really hungry and will make up for their lack of experience with enthusiasm and hard work.
That being said, the less experience they have, the more likely they are to make a mistake or not know what to do. Perhaps they'll wait too long to drop off the earnest money check or give you the wrong information about a contingencyânot out of malice but simply because they don't know any better. While there are exceptions, it's usually best to work with an experienced real estate agent.
3 Signs an Agent Isn’t Investor-Friendly
Now, let’s move on to separating good agents from good investor agents.
1. Lacks an Investor Mindset
It's important for an agent to think of the end-user. For example, early on in my investment career, an agent mentioned to me that a house I was in had no place to put a sofa and TV. I was so busy counting bedrooms and bathrooms (as if real estate were nothing more than an equation) that I forgot to think about what tenants and homeowners actually wanted.
That being said, a good agent for investors will need to think past what a homeowner wants and understand what an investor needs. For example, a skylight (or ceiling window) may make a great selling point for a homeowner. But they are notorious for leaking and something a buy-and-hold investor will usually want to avoid. Swimming pools are also often great for homeowners but far more trouble than they are worth for investors.
Just seeing a house that's in terrible shape (which would turn off most homeowners) and visualizing what it can become after a rehab is beyond some homeowner-focused agents. But as an investor, you need an agent who knows what the end-user (tenant or homeowner) wants and also what is cost-effective for rehab and maintenance, as well as what is most beneficial to the bottom line.
In sum, you need an agent who thinks in terms of cost/benefit and profit/loss.
2. Doesn’t Understand Construction
While it isn't essential for an agent to have an understanding of construction costs, it is a huge benefit. The real estate agent we work with in Kansas City is a former contractor. It has been a big plus.
We've worked with him for nine years. At this point, I can ask him to check out properties on his own and write up rehab estimates. Then, I make offers based on those and simply double-check if we get it under contract. That being said, this is something I would only recommend doing if you have a lot of experience and trust with an agent.
Regardless, an agent should have a decent understanding of what is necessary to rehab a property. Real estate investors are almost always dealing with properties that need some work, while homeowner-focused agents are often looking predominantly at properties that are either near perfect or just need a little TLC.
It’s a huge benefit to have someone on your side who knows what they’re talking about with fixers. And agents who don’t know may often feel overwhelmed by such properties and try to talk you out of them—even if they make good sense to buy.
3. Tries to Talk You Into Buying Deals
This is an important red flag for all real estate agents, but especially for agents working with investors. Someone looking for a home to buy may not know a good deal when they see one, so there are times when an agent should try to convince them to at least strongly consider a property.
With investment, though, you want an agent who understands that no one deal is going to make or break their bank account. They simply give advice without attempting to persuade.
Indeed, you want an agent who will not only not try to talk you into deals if you don't think they make sense, but preferably, you also want an agent who is actively willing to talk you out of a deal if he or she doesn't believe it makes sense. That last point is probably the biggest green (?) flag that an agent is both a quality agent and a quality investor-minded agent.
Real estate investing can be done without using a buyer's agent or getting your own license. But there are still times when a good real estate agent on your team can be a major help. Don't simply write them off because it's the trendy thing to do.
That being said, if you decide to go the agent route, make sure you seek out a quality agent with an investor-minded focus.
Do you have other red (or green!) flags to add to the above list?
Share in the comment section below!