Finding a good agent

[Nikki Nguyen]

Hey guys! I’m just getting started with real estate investing and I’m in the process of finding a real estate agent. Are there certain questions to ask them to make sure we’re a good fit for each other? Also what are some red flags to look out for? 

Thanks in advance! 

[Darius Parsia]

Hi Nikki,

Here are some questions to ask potential agents to help you determine if you're a good fit and some red flags to watch out for:

Questions to Ask a Potential Real Estate Agent:

1. Experience and Expertise:
   • How long have you been working in real estate?
   • What types of properties do you specialize in (e.g., residential, commercial, multifamily)?
   • Have you worked with real estate investors before? - You may find that most RE agents DON'T want to work with investors, typically because it means less commission for them. Try to find an agent that works with a lot of investors.
2. Local Market Knowledge:
   • How well do you know the local real estate market?
   • Can you provide recent examples of successful transactions in the area?
3. Availability and Communication:
   • What is your availability like? Are you a full-time agent?
   • How do you prefer to communicate (phone, email, text), and how responsive are you?
4. Pricing and Negotiation:
   • How do you determine the value of a property?
   • Can you provide examples of successful negotiations you've been involved in?
5. References and Testimonials:
   • Can you provide references from past clients or share any testimonials?
   • Do you have any online reviews or ratings I can check?
6. Team and Support:
   • Do you work independently or as part of a team?
   • Will I be working directly with you, or will I interact with other team members?
7. Fees and Costs:
   • What is your commission structure?
   • Are there any additional fees I should be aware of?

Red Flags to Watch Out For:

1. Lack of Local Knowledge: An agent who is not familiar with the local market or doesn't stay up-to-date with market trends can be a red flag.
2. Poor Communication: If an agent is unresponsive, doesn't return your calls or emails promptly, or doesn't communicate clearly, it can lead to misunderstandings and issues during the buying process.
3. Limited Experience: While every agent has to start somewhere, if you're dealing with a very inexperienced agent who lacks a track record, you may want to consider whether they can effectively guide you in real estate investing.
4. Conflict of Interest: Make sure the agent doesn't have any conflicts of interest that could compromise your best interests. For example, if they represent both buyers and sellers in the same transaction, it may raise concerns.
5. Pressure Sales Tactics: If an agent is pushing you to make decisions quickly or seems more interested in closing a deal than finding the right investment for you, be cautious.
6. Lack of References: If an agent can't provide references or has negative reviews from past clients, it's a sign that you should proceed with caution.

Take the time to interview multiple agents, ask these questions, and trust your instincts when making your decision. 

[Darius Parsia]

Hi Nikki,

Here are some questions to ask potential agents to help you determine if you're a good fit and some red flags to watch out for:

Questions to Ask a Potential Real Estate Agent:

1. Experience and Expertise:
   • How long have you been working in real estate?
   • What types of properties do you specialize in (e.g., residential, commercial, multifamily)?
   • Have you worked with real estate investors before? - You may find that most RE agents DON'T want to work with investors, typically because it means less commission for them. Try to find an agent that works with a lot of investors.
2. Local Market Knowledge:
   • How well do you know the local real estate market?
   • Can you provide recent examples of successful transactions in the area?
3. Availability and Communication:
   • What is your availability like? Are you a full-time agent?
   • How do you prefer to communicate (phone, email, text), and how responsive are you?
4. Pricing and Negotiation:
   • How do you determine the value of a property?
   • Can you provide examples of successful negotiations you've been involved in?
5. References and Testimonials:
   • Can you provide references from past clients or share any testimonials?
   • Do you have any online reviews or ratings I can check?
6. Team and Support:
   • Do you work independently or as part of a team?
   • Will I be working directly with you, or will I interact with other team members?
7. Fees and Costs:
   • What is your commission structure?
   • Are there any additional fees I should be aware of?

Red Flags to Watch Out For:

1. Lack of Local Knowledge: An agent who is not familiar with the local market or doesn't stay up-to-date with market trends can be a red flag.
2. Poor Communication: If an agent is unresponsive, doesn't return your calls or emails promptly, or doesn't communicate clearly, it can lead to misunderstandings and issues during the buying process.
3. Limited Experience: While every agent has to start somewhere, if you're dealing with a very inexperienced agent who lacks a track record, you may want to consider whether they can effectively guide you in real estate investing.
4. Conflict of Interest: Make sure the agent doesn't have any conflicts of interest that could compromise your best interests. For example, if they represent both buyers and sellers in the same transaction, it may raise concerns.
5. Pressure Sales Tactics: If an agent is pushing you to make decisions quickly or seems more interested in closing a deal than finding the right investment for you, be cautious.
6. Lack of References: If an agent can't provide references or has negative reviews from past clients, it's a sign that you should proceed with caution.

Take the time to interview multiple agents, ask these questions, and trust your instincts when making your decision. 

[Nikki Nguyen]

This is amazing. Thank you so much for these great questions and red flags, I really appreciate it! 

[Richard F.]

Aloha,

I would say first of all to get an understanding of Real Estate "Agency" laws for your state. You need to know exactly who the "Agent" is working for, and what their legal constraints are in that regard.

[Ray Hage]

I agree with @Darius Parsia but another important thing to me: is the agent an investor also? If not, that alone is enough for me to not to really believe in the agent's ability. I always found it odd that these agents would have a few years in the game and own zero properties. One of my biggest selling points is that I have the years of real world experience in the south Florida market. Find an agent in your market that has a similar mindset and a decent RE portfolio. They should be able to help you a lot!

[Noel Muscutt]

In response to Darius and Ray, I appreciate everything that has been written. One more question, in order to find such an agent are there any tricks as to which RE agents to check out? For example, we have a thousand agents in the community. I don't have time to call every agent. Any other pointers?

[Max Reynolds]

@Ray Hage is spot on. This would rank as one of the most important attributes for me. There is so much more that you learn through the process of property ownership that will have you analyze and underwrite properties much differently than agents who do not own property will. It wasn't until I purchased my first rental property did I realize this. 

[Nikki Nguyen]

Quote from @Richard F.:

Aloha,

I would say first of all to get an understanding of Real Estate "Agency" laws for your state. You need to know exactly who the "Agent" is working for, and what their legal constraints are in that regard.

 That's a great point. I'll start looking into the laws for my state. Thank you!

[Nikki Nguyen]

Quote from @Ray Hage:

I agree with @Darius Parsia but another important thing to me: is the agent an investor also? If not, that alone is enough for me to not to really believe in the agent's ability. I always found it odd that these agents would have a few years in the game and own zero properties. One of my biggest selling points is that I have the years of real world experience in the south Florida market. Find an agent in your market that has a similar mindset and a decent RE portfolio. They should be able to help you a lot!

 That makes a lot of sense. I will definitely include that in my questions, thank you!

[Alecia Loveless]

@Nikki Nguyen While the others have great points not all agents WANT to be investors. I’ve worked with my agent for 26 years and he retired to my area from downtown Boston after a successful banking career where he was a senior vice president of a large commercial bank. He loves people and networking and the art of the deal and playing the business game but just can’t be bothered with owning real estate. He absolutely loves getting his clients the best deals possible whether that’s as a sellers agent or as a buyers agent.

I’m not a huge investor but I’ve done 9 deals with him in the past 3.5 years and he knows what I’m looking for and is always willing to show me what I’m interested in or something he thinks I’d be interested in.

Sometimes great agents aren’t the #1 agents in their market or even their brokerage, they may be sleepers that you find through word of mouth or other forms of networking.

[Nikki Nguyen]

Quote from @Alecia Loveless:

@Nikki Nguyen While the others have great points not all agents WANT to be investors. I’ve worked with my agent for 26 years and he retired to my area from downtown Boston after a successful banking career where he was a senior vice president of a large commercial bank. He loves people and networking and the art of the deal and playing the business game but just can’t be bothered with owning real estate. He absolutely loves getting his clients the best deals possible whether that’s as a sellers agent or as a buyers agent.

I’m not a huge investor but I’ve done 9 deals with him in the past 3.5 years and he knows what I’m looking for and is always willing to show me what I’m interested in or something he thinks I’d be interested in.

Sometimes great agents aren’t the #1 agents in their market or even their brokerage, they may be sleepers that you find through word of mouth or other forms of networking.

That’s a really good point to make. Thanks for the input! 

[Nikki Nguyen]

Quote from @Alecia Loveless:

@Nikki Nguyen While the others have great points not all agents WANT to be investors. I’ve worked with my agent for 26 years and he retired to my area from downtown Boston after a successful banking career where he was a senior vice president of a large commercial bank. He loves people and networking and the art of the deal and playing the business game but just can’t be bothered with owning real estate. He absolutely loves getting his clients the best deals possible whether that’s as a sellers agent or as a buyers agent.

I’m not a huge investor but I’ve done 9 deals with him in the past 3.5 years and he knows what I’m looking for and is always willing to show me what I’m interested in or something he thinks I’d be interested in.

Sometimes great agents aren’t the #1 agents in their market or even their brokerage, they may be sleepers that you find through word of mouth or other forms of networking.

That’s a really good point to make. Thanks for the input! 

[Jake Andronico]

@Nikki Nguyen

I think @Darius Parsia's questions are phenomenal. There are a lot of agents in our market who aren't fans of investors, but there are also some that are sharp and work very well with them. 

I joined the brokerage I'm with because it was specifically for RE investors (Address Income). 

Single family and small multifamily (2-20 units) is all we do. Comps, mass analysis, and looking for outliers. 

Right now we're focused in Northern Nevada but hope to branch out relatively soon. 

Taking the time to interview agents, get comfortable, and have a clear idea of what you want from an agent is certainly key IMO. 

Good for you for taking the next step on your journey, and I wish you the best of luck!!

[Nikki Nguyen]

@Jake Andronico

Thank you, I appreciate it! I’ll make sure to reach out if I decide to invest in your area. 

[Richard Loniewski]

I'm an agent as well, my suggestion is to find an agent who is investor friendly, BP is a good place to start. Don't bother with big agents that have multiple listings as they will be too busy for you. I prefer a younger agent who is hungry and willing to learn and be a part of your team. I always promise the agent who finds me a deal the opportunity to list it when reno is done.

[Marc Rice]

Quote from @Nikki Nguyen:

Hey guys! I’m just getting started with real estate investing and I’m in the process of finding a real estate agent. Are there certain questions to ask them to make sure we’re a good fit for each other? Also what are some red flags to look out for? 

Thanks in advance! 

I would list out the top 5 things you're looking for in an agent and then interview a few. Most of the good ones may be a bit busier and have a team behind them but you'll get a better experience due to the amount of deals under their belt and their deal sourcing abilities.

[Eric Fernwood]

Hello @Nikki Nguyen,

I believe what you need is an experienced local investment team, not just an investment realtor.

Everything you learn from podcasts, books, seminars, and websites is general knowledge. However, you will purchase a specific property in a specific city, subject to local rules and regulations. The only source for the local information you need is a local investment team.

Before I explain how to find an investment realtor, it is important to understand the difference between a residential (or "investor friendly") realtor and an investment realtor.

Residential or “Investor Friendly” Realtors

Residential realtors enable people to buy or sell homes. The process is simple. Homebuyers select properties, and the residential realtor provides access. Once a home is selected, the residential realtor facilitates the offer and closing process.

Some residential realtors occasionally sell real estate that will become rental properties. However, residential realtors provide limited value beyond supplying MLS data sheets. To an investor, MLS data sheets hold little value. The following compares the contents of an MLS data sheet with the information you, as an investor, need to make informed decisions.

Investment Realtor

Where residential realtors sell homes, investment realtors sell passive income. Almost all experienced investment teams will provide the following services and more:

• Develop a financial profile of properties that will meet your specific situation and goals.
• Working with their team, select and validate conforming properties.
• Present only fully-vetted properties with the necessary information to make an informed decision, including estimated renovation costs - not MLS data sheets.
• Handle the offer and closing process.
• Provide overwatch and keep you informed during the renovation process.
• Provide on-site renovation oversight and keep you informed throughout the renovation process.
• Arrange for professional photos.
• Work with the property manager to transition the property to them and get a performing tenant in place.

Below is a diagram of the process we follow. All investment teams will follow a similar process.

Also, working with an investment team usually does not cost more. For example, we have delivered over 480 properties and only charged our clients a fee for four or five of them, which were exceptional circumstances. In all other cases, our fees were paid by the listing agent, not by our client.

How Do You Find an Investment Realtor?

There are typically thousands of residential realtors in a metro area, but only one or two will be investment realtors. To begin the search, create a list of potential candidates. You can gather names from the following sources and others:

• Real estate investing websites (such as Biggerpockets.com)
• Property managers
• Local investors
• Talk to real estate brokers
• Google searches
• Local meetups

Once you have a list of candidates, review their websites to determine their business focus.

Once you narrow the list, the next step is interviews. The purpose of the interviews is to:

• Determine the individual's character.
• Determining their capabilities in identifying, validating, and bringing properties to market.
• Evaluate their team.

Sample Interview Questions

Ask each candidate the same questions and record their responses. Below are some sample questions. It is unlikely to find a candidate with the "perfect" response to every question, but they should provide reasonable answers.

• Tell me about your investment team. - You're looking for a response like, "I've worked with X property manager for years. We've completed X properties." "I work with several renovation companies...”
• Do you or have you owned investment properties? - If the candidate has not personally owned investment properties, I would reject them.
• How many investment properties did you close in the last 12 months? - Some realtors only sell two or three properties per year. However, this level of sales does not provide enough repetition to develop the necessary processes, experience, and resources. In my opinion, being proficient in this field requires selling a minimum of 12 investment properties per year.
• Did you or your client select the properties? This is an important question. Residential and investment-friendly realtors do not choose properties. Instead, they send MLS data sheets for the properties requested by the client. The client evaluates the properties and selects one or more to make an offer. If you do all the work, the realtor adds very little value. Reject any candidate if the client chooses the property.
• What were your primary selection criteria? - It could be the initial return, appreciation, tenant pool, or something else. You're looking for a plausible answer based on analytics, not opinion or “feelings.”
• How did you estimate rent and time to rent? - They should be able to describe a process like, "I look at recently rented comparable rentals." Another good answer is that they work with a property manager who supplies this information. If they answer Zillow, Redfin, Rentometer, etc., they do not know how to evaluate investment properties. Next candidate.
• Tell me about your renovation process. - You are looking for an answer similar to, “I work with the property manager to determine a list of renovation items. Next, I work with XXX renovation company.”

Nikki, if you would like more information on investment teams or finding an investment realtor, please reach out.

[Michael Smythe]

Start with finding a solid PMC and ask them for a referral to an agent.