Most Realtors have a “type-A” personality. They are go-getters, and no challenge is too big. That’s exactly what you want, right?
If you plan to be a successful investor—or you simply want your first home purchase to go smoothly and quickly—it’s important to hire a good real estate agent. In the Denver market, 15% of real estate agents do 85% of the transactions, so it is important to know that you are working with an agent who considers it their job and not their hobby.
If you are considering using a family, friend, or neighbor new to the business, ask yourself if supporting them is worth at least $1,000 to you—and that’s probably a conservative number. Screw-ups during the home purchase process can put a significant dent in your bank account.
Seasoned agents know their market—what the value of the house is, how to negotiate an inspection, and which professionals you may need post-close. New agents don’t have that confidence or those resources.
The Right Questions to Ask Potential Realtors
To help prevent you from working with the wrong agent (and potentially losing money), ask any potential agent these questions.
1. How do you communicate?
Buying a home is intimidating, especially if it’s your first purchase. You’ll make lot of decisions very quickly—with a lot of money on the line. It’s really important that your agent is in constant communication. You should always know what the next steps are. And if you have questions about real estate terms, they should be able to thoroughly explain.
When you’re ready to put in an offer, will they run a comparative market analysis (CMA) to make sure you’re offering the best price?
Additionally, a savvy agent will have insight into the other party’s thought process, because they’ve been on both sides of the deals so many times. When you’re dealing with inspections, closings, and offers, it’s vital to choose an agent that can walk you through the process.
If you have to hunt down your agent, that’s not a good sign. Remember: You are paying them, and your relationship should reflect that.
2. How many deals have you done in the past year? Where? And what type of property?
Okay, so that’s three questions, but they’re all getting at the same general info: how experienced your agent is and what that experience looks like. Obviously, more experience is better, but someone with 10 or more deals should at least have a good understanding of the process and patterns. You don’t necessarily need a full time agent, but make sure a part-time agent has enough time and experience to dedicate to you.
You also want to make sure the agent understands the neighborhood in which you’re buying or selling. Markets can vary dramatically, even in the same city. Look for a seller’s or buyer’s agent who has expertise in your desired area.
This is particularly important if you’re looking for a listing agent. You need to know how often your seller’s agent has actually sold their own listings.
Anybody can throw a listing on the internet and wait for another agent to swoop in with a buyer, but this is a very limited marketing strategy. When a realtor creates a good listing AND finds the buyer on their own accord (and they’ve done it on multiple occasions), this is a strong indication that they’re probably doing something right.
Of course, there are many variables at work here, and the answer to this question isn’t entirely conclusive, but an agent’s ability to drum up new business and make things happen is something that can help you decide whether you’re talking to the right realtor for your situation.
3. How did your last three home inspection negotiations go?
This is the most important question you can ask an agent. It will tell you two things:
- What they consider their job to be
- How hard they’ll advocate for you.
An agent’s job is to help you make a responsible financial decision—which includes how much you pay for the property and how much you get back in negotiations. A realtor who is hesitant to push back during inspections isn’t the best choice.
4. How long is your contract?
In manny cities, real estate agents and their clients formalize the relationship with an “Exclusive Right to Buy” contract. This states you are working together, and not with any other agents. Most agents want them signed. In fact, an agent who doesn’t want one signed is probably not very experienced.
It can be difficult to want to commit to someone when you are just getting acquainted. Many agents sign contracts in three-month intervals. That’s enough time for both sides to establish if they like working together and if they should continue to work together.
5. Do you require any fees?
Some real estate brokers charge home buyers and sellers a fee—usually a couple hundred bucks, paid with the other closing costs. This may or may not be a deal-breaker for you, but you should never go into the buying or selling process without knowing.
6. Why do you want to be my Realtor?
It’s a pretty simple question, but you might be surprised at the answer. Some agents respond with the completely unhelpful and overly generic canned response, “Because I want you to help you find the home of your dreams!”
And others are honest. “Because I’m looking for new business, I understand what you need and I think we can help each other.”
Pro tip: If someone claims to know what you need, they should also be able to spell it out for you with some clarity.
The answer will tell you very quickly whether you’re talking to someone who knows how to be honest—even when the truth hurts—or a people-pleaser who won’t contribute anything new to your search.
Beware of anyone who feeds you a sugar-coated answer. If someone can’t be real with you in this simple conversation, will they be able to challenge your thinking and help you grow as an investor?
If your desired listing price is too high, you need to know! And if you’re trying to buy a property in a terrible location, you need to know, too. Are your price ranges reasonable? It does you absolutely no good to build a team of yes men.
The Unique Advantages of an Investor-Realtor
An investor realtor can help you find better deals and succeed because of their connections and how they think. The more connections they have in the investing community, the more they know and the more likely they are to hear about good investments that haven’t hit the market yet. Good deals go fast; you want someone always on the lookout.
So how do you find someone who’s always on the lookout? Find a Realtor who invests. Call a few offices or go online and look for agents who advertise that they work with investors.
Here are a few extra questions real estate investors should ask.
1. Do you invest in real estate? What do you invest in and why?
If they’re excelling at a certain type of investment, they can easily teach you to do the same. If they don’t invest in real estate, there are a lot of things they won’t be able to help you with.
2. How many real estate deals do you do in a year?
You want to find someone who closes 10 to 20 deals a year, on average. Too low and they might not be that invested in their business; too high and they won’t have time for you.
Too many people go with the Realtor who does the most deals. But the more deals they do, the less time they have for each client. Quantity usually doesn’t mean quality.
3. Do you work with other investors?
Get someone who makes a living in part by working with investors. You want someone who lives and breathes investing. They can help you more.
4. What kind of training do you do to better yourself?
Do they just work, or do they take classes and read about real estate constantly? Do they have certifications? Education is priceless. Find someone who invests in themselves.
5. How do you help investors?
See what they say. You want someone with a system already in place.
- Do they go to weekly office meetings looking for properties that haven’t hit the market that you might be interested in?
- Do they have a trusted network of contractors that can help estimate repairs and give quotes?
- Do they send out mailers to owners of properties that meet your criteria if there isn’t anything on the market?
- Do they pay for software that will help you keep up on market trends and make better decisions?
- Do they pull all comparable sales in the area and even sales history of the selling agent to see what you should expect when bidding?
6. What can you do for me that I won’t find anywhere else?
Generally speaking, agents are all in business to do the same basic thing, right?
But is there any unique value proposition that one Realtor can offer over the other? Are there any “special skills” you should be looking for, or does it ultimately boil down to which realtors you like the most?
To answer this, you need to know what’s missing in your investment business. Think about it: Why are you looking for a Realtor’s help in the first place? What’s holding you back from just doing this whole thing yourself?
For example, some investors might struggle with one (or more) of the following things…
- Selling properties.
- Facilitating the closing process.
- Marketing and advertising.
- Finding motivated sellers.
- Communicating with various parties.
- Making connections with a title company, attorney, lender, and contractor.
Weall have certain things we’re just not good at, but have you taken the time to figure out what you really need? Is there a specific solution you need? Once you know what’s missing, you’ll know exactly when you’ve heard the right answer to this question.
Any realtor will be able to help you find and buy houses. If you can find someone who is passionate, well connected and invests in themselves, you will have no problem succeeding.