How to vet an agent

Question

I am a first time investor looking to house hack a small multifamily in the utah area. I've had lots of recommendations for realtors as there are many of them.

How do you decide what realtor's are good to work with an investor?

Should I sign an exclusivity contract with a realtor?

(I could likely buy off the mls but am also open to off market deals or using a wholesaler. I'm just looking for the best deal as small multi-families are pretty expensive in my area.)

Justin Hammerle · Answer

Ask the realtor if they invest; and if so what experience do they have?

Douglas Mallett · Answer

A good broker with experience can and will represent you assertively, and will have no problem telling you what the deal is, either with the seller and their property or with your own offer price and deal structure.

It is good to recall that every competent broker will be evaluating *you* as you interview them, looking carefully at your knowledge, skill and experience.

Like attracts like, and a lot of great brokers will not represent beginning investors, as it is too much of a learning curve for them to teach. It's very easy to determine experience levels, and Realist/county records are just a click away for vetting any new clients.

That being said, it is possible to find a great broker, even if you are new in the space.

How?

By knowing your facts, markets and numbers - and by being a good business partner with your realtor.

Bring complete data to the table, know exactly what you want, be reasonable and practical, etc, etc. Make them happy to talk with you, instead of looking at the caller ID and... groaning.

Re vetting -

Highly Recommended Suggestion #1 - see if they answer their phone on the first call, or return your call immediately. This is absolutely the most accurate Turing test for realtor competence. Make some calls and see the truth of this for yourself - it's easy, and you can learn a lot quickly.

Some other suggestions...

Ask the brokers very direct questions when you call, and listen to how they respond. This is how they will respond to your seller's very direct questions.

The same goes for negotiating - ask them to reduce their commission, and see what they say. Again, this is how they will respond to the seller asking for concessions, a higher price, etc.

Ask them some hypotheticals - 'how would you respond to x or y counter offer' or 'what  is an alternative to (some sticky situation), etc... This will give you a good idea of how they think on their feet, how creative and persuasive they are, and so on.

Ask for a followup email, and see how long it takes to arrive, if it has info gaps, typos, etc.

That's the gist of it... There's more but it's basically all the same - just paying attention to what's in front of us.

Someone once said something wise - "You don't need to ask people who they are. Just observe, and they will tell you everything."

With all my best!

Caleb Bailey · Answer

You want to find a Realtor that that has investment experience in the area and actually invests. A lot will say they work with investors, but do not own or know what an investor needs. The Realtor should be able to run numbers and have an idea on what the rents are going to be especially in the case of house hacking.

I would not sign a buyer broker exclusively or be pressured into one unless you want to work exclusively with that agent. You do want to keep in mind if the agent is showing you homes, running numbers, and investing time you want to make sure they are getting compensated.

You will want to keep your eyes out for anything that fits your needs, multi family is still undersupplied along the Wasatch front if you are looking in that area

Hunter Gibson · Answer

Hi Mason,

I am a local Realtor,

Personally, I would not sign a BBA unless there is a cancelation contract in place or you know you are the right fit. Most agents do not know about the investing side of real estate. A great way to see if an agent is knowledgeable by asking them a ton of questions. Also see if they have first hand experiance and have done what you are looking to do.

Some example questions to ask an agent if they know. The average days on market, what is the Absorbtion rate for the area, ask them about seller finance questions to see if they are somebody that can help you out.

You can also look to see if they are a top 500 agent or how many deals they have done in the past too.

Rogelio M. · Answer

Would it be reasonable to seek out an Agent who is knowledgeable on prospecting direct to seller or off market?

Jared Hottle · Answer

In iowa we do not do exlusivity for buyers so I cannot help out with the industry standard there but I will say as an agent we vet buyers just as buyers vet agents. As a first time investor you will have many questions which is understandable. I think once you find an agent you like working with, (interview a couple from your recommendations) do they invest, do they seem organized, do they have good "flow" and know what they are talking about from a community and investing perspective, then go with them for the purchase if it is an MLS purchase.

Eliott Elias · Answer

Date before you marry, hire one that has time to walk property with you and teach you. The top agents come with their flaws, they are too busy for the type of catering you need. Get someone who is newer that will find the answer to your questions even if they don't know it now.

Carl Davis · Answer

Hey Mason, I think it all depends on what YOU are looking for. Since all investors are different as well.

I like to go over what’s important to my clients and try to help them understand how I’ll be meeting those expectations, as long as they’re reasonable.

Benjamin Aaker · Answer

I echo @Justin Hammerle's comment and would add:

Working with investors is very different from retail buyers. As an agent, investors bring the promise of multiple commissions, but require more work in terms of offers that are rejected. Investors don't require as much hand holding and explaining of inspection details, but typically need to pay less for the property, so commissions are lower. You need to find an agent who understands and accepts this. Explain your proposed strategy up front when vetting the agent.

Are you going to be finding the deals yourself and using the agent for the purchase, or are you looking for full-service representation? If the former, you can come to them with your desired property and contract with them for that property only. Otherwise, once you found someone who is good, sign a 6 month contract with them. It's not too long.

How to vet an agent

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