REALTORS should stop the "FAKE IT TILL YOU MAKE IT" mentality
Most Popular Reply
Real Estate Broker · Hyde Park Tampa, FL · Member since 2019 · 2k+ posts · 3k+ votes
3yThis is a trigger for me; the incompetency is overwhelming. Housingwire ran an article on the epidemic of stupidity (my words, not theirs) for both realtors and loan originators - and how the incompetency has negatively impacted markets. I simply cannot escape these people. So, rather than to go off the deep end here, I would like to share the following with my fellow BP investors:
If you have made a lot of offers and not had one accepted, it could be due to your realtor.
If you requested a showing and couldn't get in, it could be due to your realtor.
If the seller/seller's realtor is hostile from the start, it could be due to your realtor.
The realtor reflects the competency and judgement of the buyer. If your realtor is an idiot, it pretty much is a warning to the rest of us that you will be clueless as well. Want to get more deals? Hire a realtor who knows more about real estate markets/valuation/zoning than you do and who specializes in that type of real estate.
And, just saying: if your realtor was selling sunglasses out of the back of his trunk last month before getting his real estate license, what comes your way is all on you. I don't do stupid...I hope you won't either.
13 Replies
- 3yMatt McCurdyBusiness MemberReal Estate Broker · Cedar Rapids, IA · Member since 2019 · 143 posts · 56 votes
I'm in total agreement Logan! Realtors have no training on how to comp. and/or run a financial analysis of investment property. These skills are learned on the job or maybe the broker helps with this training. It's certainly a big issue when it comes to how much it could cost their clients due to mis pricing the property (either too low or too high).
I've been on the positive end of a realtor "faking it" and pricing a property too low and we have certainly seen property priced too high over the past 6-12 months.
What would you do if you were president of NAR (National Association of Realtors) to implement positive change?
- 3yLogan M.Investor · Provo, UT · Member since 2016 · 759 posts · 626 votesOPI would advocate for laws to be put in place requiring a minimum number of transactions. You could piggyback on another agent's transactions but you wouldn't have a huge number of agents doing no production. Then I would change dues to $20k/year and include health insurance for all members.
Quote from @Matt McCurdy:
I'm in total agreement Logan! Realtors have no training on how to comp. and/or run a financial analysis of investment property. These skills are learned on the job or maybe the broker helps with this training. It's certainly a big issue when it comes to how much it could cost their clients due to mis pricing the property (either too low or too high).
I've been on the positive end of a realtor "faking it" and pricing a property too low and we have certainly seen property priced too high over the past 6-12 months.
What would you do if you were president of NAR (National Association of Realtors) to implement positive change?
Less agents in total but much better agents. - Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes3y
Yes 99% of agents have no idea valuation. Even the top agents in Chicago small commercial send out OM with absurd numbers like 5% vacancy in war zone areas and rehab budgets that are 1/3 of actual costs. It just makes it more essential for investors to do their own math and helps bring me clients who want a realtor that actually invests and knows how to run realistic numbers.
- Real Estate Broker · Hyde Park Tampa, FL · Member since 2019 · 2k+ posts · 3k+ votes3y
This is a trigger for me; the incompetency is overwhelming. Housingwire ran an article on the epidemic of stupidity (my words, not theirs) for both realtors and loan originators - and how the incompetency has negatively impacted markets. I simply cannot escape these people. So, rather than to go off the deep end here, I would like to share the following with my fellow BP investors:
If you have made a lot of offers and not had one accepted, it could be due to your realtor.
If you requested a showing and couldn't get in, it could be due to your realtor.
If the seller/seller's realtor is hostile from the start, it could be due to your realtor.
The realtor reflects the competency and judgement of the buyer. If your realtor is an idiot, it pretty much is a warning to the rest of us that you will be clueless as well. Want to get more deals? Hire a realtor who knows more about real estate markets/valuation/zoning than you do and who specializes in that type of real estate.
And, just saying: if your realtor was selling sunglasses out of the back of his trunk last month before getting his real estate license, what comes your way is all on you. I don't do stupid...I hope you won't either.
- 3yMatt McCurdyBusiness MemberReal Estate Broker · Cedar Rapids, IA · Member since 2019 · 143 posts · 56 votes
This is good therapy! LOL! Logan, I like your ideas. However, I question how you would govern whose listing is whose and the nightmare of ensuring people aren’t abusing the system. The $20k fee is interesting. It certainly would weed out the low income producing agents, but may deter some competent agents in the Midwest where prices are lower. What are your thoughts on requiring realtors to register in a niche? For example, a realtor only works in the investment property industry, first time home buyer/sellers, luxury market, etc? I question if some of this incompetence is a level of a realtor trying to know every market and master of none.
- 3yLogan M.Investor · Provo, UT · Member since 2016 · 759 posts · 626 votesOP
Quote from @Matt McCurdy:
This is good therapy! LOL! Logan, I like your ideas. However, I question how you would govern whose listing is whose and the nightmare of ensuring people aren’t abusing the system. The $20k fee is interesting. It certainly would weed out the low income producing agents, but may deter some competent agents in the Midwest where prices are lower. What are your thoughts on requiring realtors to register in a niche? For example, a realtor only works in the investment property industry, first time home buyer/sellers, luxury market, etc? I question if some of this incompetence is a level of a realtor trying to know every market and master of none.
The niche is an interesting idea but I wonder how it would be enforced, how many niches agents can have, and who governs the competency of the niche. I think you would have the same problems as the Midwest having agents struggle with 20k.
I don't think it would be difficult to track the transaction totals that I was talking about. In Utah, they already have a point system required to get your broker's license based on closed transactions. - 3yLogan M.Investor · Provo, UT · Member since 2016 · 759 posts · 626 votesOP
Quote from @Patricia Steiner:
This is a trigger for me; the incompetency is overwhelming. Housingwire ran an article on the epidemic of stupidity (my words, not theirs) for both realtors and loan originators - and how the incompetency has negatively impacted markets. I simply cannot escape these people. So, rather than to go off the deep end here, I would like to share the following with my fellow BP investors:
If you have made a lot of offers and not had one accepted, it could be due to your realtor.
If you requested a showing and couldn't get in, it could be due to your realtor.
If the seller/seller's realtor is hostile from the start, it could be due to your realtor.
The realtor reflects the competency and judgement of the buyer. If your realtor is an idiot, it pretty much is a warning to the rest of us that you will be clueless as well. Want to get more deals? Hire a realtor who knows more about real estate markets/valuation/zoning than you do and who specializes in that type of real estate.
And, just saying: if your realtor was selling sunglasses out of the back of his trunk last month before getting his real estate license, what comes your way is all on you. I don't do stupid...I hope you won't either.
My biggest issue that I find is that we can't easily tell others that their agent has no idea what they are doing without "disparaging" them.
We need to have some type of degrees of some sort that allows buyers and sellers to know that we know xy and z about real estate.
- Real Estate Broker · Coppell, TX · Member since 2011 · 5k+ posts · 4k+ votes3y
I tend to agree with you, but what I read into it, is that the property/pricing does not meet your particular metrics, but they might work for someone.
Every buyer and every investor and probably even ever seller has different metrics they're working with. Some people want appreciation, some want cash flow, some just want to park their money safely, some may see a development deal, some people may be looking for a place to live. Good example was the foreclosure sale I was at yesterday. Once parcel was about 50 acres, super low initial bid and quickly sold for I think 100 times the initial bid. Person who bought it actually has no interest in the land, but the minerals are probably worth 100x what he paid for it. He's an oil and gas guy. Makes no sense maybe to regular foreclosure investors, or farmers, or hunters, or someone who just wants a piece of land. For someone who wants to drill for gas, makes 1000% sense. I see this frequently. One day I saw a very young girl pay about double for a lot of what I thought it was worth to me. I asked her why, what were her plans? Ends up she owned the lots on either side, so buying the middle one gave her a nice piece of property to develop a multifamily on it. So her pricing parameters totally different than mine.
I have many investor clients from other countries who often don't care about returns. They're just trying to get their money out of their country where it is at significant risk of inflation or government issues. ROI is a bonus, but not the driving factor. Think about places like Argentina, Cambodia, China, India, and plenty of other countries....maybe even this country.
Some investors like buying D class in the hood, some investors wouldn't touch that. Some like flips, some like value add, some want class A, some want a place where they can employ all their kids. Some want to be near family, and on and on.
You are certainly correct that plenty of agents don't know what they're doing, but the longer I am in the business and the longer I invest, the more I think who I am to judge if it is a good or bad deal....maybe it is good or bad for me, but someone else may have very different motivations or metrics that work for them. I think it is pretty common for many investors to analyze 100 deals, maybe make offers on 5-10, in hopes to get 1 deal. That doesn't mean the other 99 don't sell. They just sell to someone who perhaps has those different metrics or vision.
We did just pass some rules in Texas for realtors that you must have mentorship on first 3 deals of any type. So even if you you've done 100 single family, and now want to sell a RV park, you have to have mentorship of someone else who has sold I guess more than 3. Will be interesting to see how this evolves, but I think the intention is good.
- Real Estate Broker · Coppell, TX · Member since 2011 · 5k+ posts · 4k+ votes3y
I also feel like many if not most experiences are growth experiences. You learn a little more with each listing you take, each deal you do, each investment you make. Also maybe your criteria you use changes over time. I probably wouldn't repeat my first deal again today, but at the time it was a good deal for me. Today I want less works and less headaches and bigger deals.
Also I would encourage you to make offers on deals you consider bad, if it is just the numbers you think are wrong. Saw a multi on Sunday this week that we thought was about 2x the price where it should be at for most investors. I call and ends up they had taken a contract pretty close to my number and that it had just fallen out. 50% deals are not normal, but I think in this case they're just throwing a number out to see what sticks....know well they might get a much lower number, but not in distress and thinking another sucker will buy at the higher price. I'm sure that's what the current owner did....he got hosed. OOS, price looked super low to him, very tough neighborhood that really needs hands on local and probably local owner PM, not 3rd party. I'm pretty sure he got his shins kicked and now ready to unload this beast. I can see that very well could happen with RV parks, but I don't know anything about that business.
- 3yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Quote from @Bruce Lynn:
I tend to agree with you, but what I read into it, is that the property/pricing does not meet your particular metrics, but they might work for someone.
Every buyer and every investor and probably even ever seller has different metrics they're working with. Some people want appreciation, some want cash flow, some just want to park their money safely, some may see a development deal, some people may be looking for a place to live. Good example was the foreclosure sale I was at yesterday. Once parcel was about 50 acres, super low initial bid and quickly sold for I think 100 times the initial bid. Person who bought it actually has no interest in the land, but the minerals are probably worth 100x what he paid for it. He's an oil and gas guy. Makes no sense maybe to regular foreclosure investors, or farmers, or hunters, or someone who just wants a piece of land. For someone who wants to drill for gas, makes 1000% sense. I see this frequently. One day I saw a very young girl pay about double for a lot of what I thought it was worth to me. I asked her why, what were her plans? Ends up she owned the lots on either side, so buying the middle one gave her a nice piece of property to develop a multifamily on it. So her pricing parameters totally different than mine.
I have many investor clients from other countries who often don't care about returns. They're just trying to get their money out of their country where it is at significant risk of inflation or government issues. ROI is a bonus, but not the driving factor. Think about places like Argentina, Cambodia, China, India, and plenty of other countries....maybe even this country.
Some investors like buying D class in the hood, some investors wouldn't touch that. Some like flips, some like value add, some want class A, some want a place where they can employ all their kids. Some want to be near family, and on and on.
You are certainly correct that plenty of agents don't know what they're doing, but the longer I am in the business and the longer I invest, the more I think who I am to judge if it is a good or bad deal....maybe it is good or bad for me, but someone else may have very different motivations or metrics that work for them. I think it is pretty common for many investors to analyze 100 deals, maybe make offers on 5-10, in hopes to get 1 deal. That doesn't mean the other 99 don't sell. They just sell to someone who perhaps has those different metrics or vision.
We did just pass some rules in Texas for realtors that you must have mentorship on first 3 deals of any type. So even if you you've done 100 single family, and now want to sell a RV park, you have to have mentorship of someone else who has sold I guess more than 3. Will be interesting to see how this evolves, but I think the intention is good.
VERY good and accurate counter points Bruce!!.. having grown up in the real estate brokerage business ( my dad had a RE company I owned 3 brokerages.. The fact is RE agents learn as they go bottom line. Just like many other professions.. Pilots Co pilot with 500 hours flying with Captain with 10k hours. Apprentice in the trades you just don't start day one being a Master carpenter or Journeyman Plumber..
Its just how the industry works. And its up to the public to choose the best agents they can but many beginners also work their warm market. You know list there relatives properties to get started.
As a Seller if you have a commercial assets one should look for a broker that specializes in commercial Assets not someone who is brand new selling sfr's. But if a Seller chooses someone who you think is not up to the job that's on the seller not you.. Its your job as a buyer to represent yourself and or your agent to represent you.. Its just how the industry works.. So unless the laws change that there are no licenses required to earn commissions putting buyers and sellers together this is the industry we have.. And just like the legion of folks that wholesale they are all beginners only far less knowledgeable than most beginner agents as agents at least had to pass a knowledge test and understand the laws.
Last point on the Mineral rights buyer.. this is what I did for years in the timber business. Folks would list a ranch in Oregon Washington with a residential realtor who knew nothing about timber and just comped the house and land with no timber value.. Was not my job to educate either the seller or the agent that this property they listed for 600k as land and house has 500k worth of standing timber and once I close the deal within 90 days that 500k will be in my pocket. And the house and land will be re listed for 600k and sold within a year to a new buyer. - 3yMike ReynoldsPro Memberconstruction · Nacogdoches, TX · Member since 2011 · 2k+ posts · 1k+ votes
I like going with the person. If I can see they are willing to do what it takes, I'm willing to throw the dice. I deal with labor and production on a daily basis. I can usually spot a good one. Or a bad one.
I've had realtors who had 25 or more years let me down. I've had newbies that hit that grand slam.
My first mhp I had a commercial newbie. He told me he was. He was very upfront about it. It was his first commercial deal. We had some hiccups along the way and he got knocked around some. Then he hit that grand slam. It's true, you don't know what you don't know. But are you willing to learn it? That's what I look for.
I use that OOS realtor to this day and when I'm in town we have dinner sometimes. I've used him on other deals. He's not a newbie anymore. He's hall of Fame.
Now, if we could just get bankers to see the numbers like we do, that would be something.
- Realtor · Sebastian, FL · Member since 2018 · 53 posts · 30 votes3y
Some valid points on both sides here, but I agree more with what Mike and Jay said last. At my previous Brokerage, the President once said in a meeting, you know there's a good chance that the next President of our company, hasn't even received their real estate license yet, and isn't even working in the business yet. Point being, everyone has to start somewhere and the same could be said for REI...who is to say one of the next big names, or future investing gurus is just starting out on the forums making "silly" comments without using the search button and getting bashed for it, as an example...that's why places like BP exist to embrace the newbies and help show them the way. Maybe if you see a newer Agent pricing wrong, use it as an opportunity to reach out, ask how they valued the property and explain what they're missing. Who knows, just by you doing that you might make a connection with them that has them join your team, or partner on future projects together, just because you're the one offering sound advice that they're clearly not getting from their current brokerage...
Now of course you could argue the point to entry is low and how licenses should be earned could change, but like the others said, it is on the sellers to do their due diligence and make an educated decision. Any reasonable person with some common sense should be able to see through the "fakeness" and vet that person for their experience, knowledge, skills, etc. As for the inexperienced Agent that doesn't know how to properly value a property for sale...well that happens all the time whether the Agent is experienced or not, and there's a case to be made that sometimes the old timers with more experience are actually the worst at pricing properly. And like Mike said, he's had bad experiences with the tenured agents, and great experiences with the newbies, it's all case by case on that individual.
If a new agent prices the property too low, well it just means there should be more activity and more than likely a multiple offer situation anyways. If it ends up selling below market value, it's not any different than all of the wholesale deals and off-market deals that get scooped up below market value too. The seller was comfortable with that list price, that's on them...
If the new agent prices the property too high, well unfortunately that has been the norm across the entire industry as of late, not just with new agents. But either way, the sellers don't dictate the market, the buyer's do. So the property will just sit until then...and again that was the sellers decision after hearing and seeing their listing presentation, marketing plan, pricing strategies, etc to hire that agent...that's purely on the seller, not the agent...
- 3yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Quote from @Eric Jubeck:
Some valid points on both sides here, but I agree more with what Mike and Jay said last. At my previous Brokerage, the President once said in a meeting, you know there's a good chance that the next President of our company, hasn't even received their real estate license yet, and isn't even working in the business yet. Point being, everyone has to start somewhere and the same could be said for REI...who is to say one of the next big names, or future investing gurus is just starting out on the forums making "silly" comments without using the search button and getting bashed for it, as an example...that's why places like BP exist to embrace the newbies and help show them the way. Maybe if you see a newer Agent pricing wrong, use it as an opportunity to reach out, ask how they valued the property and explain what they're missing. Who knows, just by you doing that you might make a connection with them that has them join your team, or partner on future projects together, just because you're the one offering sound advice that they're clearly not getting from their current brokerage...
Now of course you could argue the point to entry is low and how licenses should be earned could change, but like the others said, it is on the sellers to do their due diligence and make an educated decision. Any reasonable person with some common sense should be able to see through the "fakeness" and vet that person for their experience, knowledge, skills, etc. As for the inexperienced Agent that doesn't know how to properly value a property for sale...well that happens all the time whether the Agent is experienced or not, and there's a case to be made that sometimes the old timers with more experience are actually the worst at pricing properly. And like Mike said, he's had bad experiences with the tenured agents, and great experiences with the newbies, it's all case by case on that individual.
If a new agent prices the property too low, well it just means there should be more activity and more than likely a multiple offer situation anyways. If it ends up selling below market value, it's not any different than all of the wholesale deals and off-market deals that get scooped up below market value too. The seller was comfortable with that list price, that's on them...
If the new agent prices the property too high, well unfortunately that has been the norm across the entire industry as of late, not just with new agents. But either way, the sellers don't dictate the market, the buyer's do. So the property will just sit until then...and again that was the sellers decision after hearing and seeing their listing presentation, marketing plan, pricing strategies, etc to hire that agent...that's purely on the seller, not the agent...
taking listings at a price above what most thinks its worth has been with us since the start of time.. The seller generally tells the agent what they will take and the agent takes the listings Agents dont dictate the listing [price most of the time) My wife deals with it like this.. I will take the listing but I think we are 50k over if we dont have any activity in 2 weeks we are lowering it to the value I comped it at .. and if the seller is totally unreasonable, she will do one of two things either retire from the listing or keep it listed with the proviso with the seller that she is not going to spend any marketing money on it..
Then you have the agent that is trying to buy the listing .. what i mean by that seller interviews 3 agents and one agent gives an inflated number seller of course goes for it.. Agent then when nothing happens goes for price reductions until it gets to a salable number.. those agents are slimy.
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