I am a new agent (first full year) so I am learning my markets but I have a contractor who has apporched me about finding homes for him to fix and flip. What advice would you give me to help me make this a success for both of us?
Find good deals. Set him up for MLS updates with rehab criteria and low list prices. He can ask you to set-up showings on the ones that look interesting.
I work with investors, but ONLY after I have a signed Buyer's Broker agreement. (I do the same for retail buyers as well).
My Investor's Buyer's Broker agreement states that should they - or their associate, partner, family member, assigns - buy any property I introduce them to by email, phone, personal visit, etc that they'll buy it through me. I do have a minimum commission too.
It also states that should they sell it within X years, they will list it with me exclusively at Y%.
No investor has had a problem with it and I suspect one that would was probably planning to cut me out of the deal anyway. That's not someone I want to deal with.
In short, before you invest your limited time, protect yourself. Then work hard to serve the investors' needs.
Thanks for the advice so far guys. One of my concerns is that this is his first time as an investor so trying to make sure he's realistic in what he thinks his profit per sale should be. How can I help him to see his margins realitically?
@Vince Reina As an investor, the things I've needed most from my agents are data (so I can research the market), real estate value information based on the agent's personal experience (houses they've sold), and daily searches for good investments. The more information the better.
Regarding your concern about helping your investor to see things realistically.... you will need to give him enough solds data to show him what the realistic value is. Nailing down a properties "value" is a lot easier said than done though because there are many parameters that will define it. If you expect it to sell within a week of being listed, you'll have to price it at a certain level (below market value). If you're ok with letting it sit for a few weeks or months, you can price it higher. It's a subjective thing that's not easily defined. Your best option is to become a values expert and inundate your client with data. Make it clear to him where you stand and then let him make his own decisions.
As an investor, I would provide you with specific criteria. What area, price point, style and size of house, etc. I would nail down what your client is qualified to do in what time period and answer the above questions. Is he closing quickly with cash? Will he be a standard financing and inspection contingency buyer?
A general "I need a good deal" will probably leave you both with missed expectations and frustrated @Vince Reina .
I reverse it. I have a set criteria I go by when evaluating investors for commercial that contact me.
I screen THEM just as much as they would screen me. I know the markets inside and out so when they say they want XX and it is 1 in 1,000 shot for prices that existed 4 years ago then they are not being realistic. DEFINE what you want your business to look like and build your funnel.
I agree with @Steve Vaughan and @Joel Owens . Please screen your clients as well. I know it is tempting when you are new, but there are all sorts of great clients out there, including retail clients. I initially spent way too much time with new investors that ultimately never purchased, or worse yet, purchased without me. Wishing you the best!
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