Locking in with a single realtor - An investors dilemma

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Locking in with a single realtor - An investors dilemma

Dhanush Kondoth
Investor · Dublin, OH · Member since 2015 · 75 posts · 24 votes

Hello Fellow BP-ians,

I am not an experienced investor. I am searching out for my first deal and have got some leads going good. My question to all the Pros and also agents is that, to maximize my leads, I would like to work with two or more realtors. One of the realtor wants me to sign an exclusivity documentation which locks me up with that realtor for a period of 90 days and basically 2 months after that for any property that was shown to me or sent to me or driven past or even probably thought about. 

What would be the advice you guys have for me? I know when I work with multiple agents, there will be conflicting properties in each others lists. Should I look for an agent who will be willing to work with a client who wants to work with multiple agent (just like how agents work with multiple clients). or should I keep trying out one agent after the other for 90+ valuable days.

Thanks

Dhanush

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Dell Schlabach
Investor · Canton-Akron, OH · Member since 2012 · 917 posts · 477 votes
10y

You actually maximize your leads by having a really good realtor who is interested in making sure you get a deal.

Your local realtors all have access to the same inventory, having three realtors showing you the same stuff is not very efficient use of anyone's time in my opinion. 

The challenge is to find a good realtor willing to figure out what you want and showing you a lot of properties that meet your criteria. 

I personally would not lock myself in with a realtor for 90 days without knowing if they perform. On the other hand If i was the realtor, I probably wouldn't take clients, at least I would not work very hard for them,  who are shopping with three or four realtors.  

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  • Dell Schlabach
    Investor · Canton-Akron, OH · Member since 2012 · 917 posts · 477 votes
    10y

    You actually maximize your leads by having a really good realtor who is interested in making sure you get a deal.

    Your local realtors all have access to the same inventory, having three realtors showing you the same stuff is not very efficient use of anyone's time in my opinion. 

    The challenge is to find a good realtor willing to figure out what you want and showing you a lot of properties that meet your criteria. 

    I personally would not lock myself in with a realtor for 90 days without knowing if they perform. On the other hand If i was the realtor, I probably wouldn't take clients, at least I would not work very hard for them,  who are shopping with three or four realtors.  

    4Reply
  • Matthew Olszak
    Real Estate Broker · Chicago, IL · Member since 2015 · 1k+ posts · 2k+ votes
    10y

    My recommendation is that you find an agent who understands your needs, education, situation, and goals and stick with them. Here's a good out-doorsy metaphor for you: We all fish from the same lake, and for the most part we use the same sonar. You need to find a solid agent who can read the sonar for you so you know where to drop your hooks and someone who knows the best bait to use to catch the fish you want. You don't need a catfish guy if you are out there looking for muskie.


    Sending you MLS feeds is just one small part of what we do. Frankly zillow/trulia/realtor.com/redfin and countless others can send you listings meeting your requirements. You need someone who knows the inventory and inventory type you are looking for in areas you are looking and knows how to negotiate these types of properties. If you are looking for multifamilies, does your agent understand the metrics you use? If rehab, do they understand your basic total rehab cost per sf? Resale values and rental costs? Do they have other professionals they can refer you to (like a contractor, attorney, or inspector)? Find a professional you can work with to supplement what you know, much like finding an attorney for a particular type of case within a certain jurisdiction. A solid agent will have connections to other agents with pocket listings as well as their own to be able to maximize your lead exposure.

    I can tell you one thing - when I get a hot lead, it first goes without question to my clients I know are loyal to me. Those who understand and appreciate the value I provide them. If they aren't interested, that's when I start to make calls to others who I have on file as having interest in the area. It just makes sense to do so from a business perspective...I feed those who feed me.

    If you take nothing else from my post, please, don't go to the listing agents directly. Sure, they might drop their commission a little and split the difference with you, but unless you are well experienced in real estate in your area, I can almost promise you'll pay more than you'd save. The list agent represents the seller, not you, and they'll be sure to advise the sellers accordingly that there is an inexperienced person on the other end of the negotiations. And really, if you want to do all the buyer-agent's work, you could probably find a discount broker who would rebate half or more of the buyer-side commission to you (assuming this is legal in Ohio), which would be more than you'd get from the list agent. One final consideration: If a deal is only a deal because you save say 1.5% max by not using a professional, how good of a deal really is it?

    3Reply
  • Dhanush Kondoth
    OP
    Investor · Dublin, OH · Member since 2015 · 75 posts · 24 votes
    10y

    Thank you guys for taking time and responding. The only concern I had was about locking in with an agent whose quality was yet to be known. But over the last 18 hours,thinks have changed as I had respectfully declined to sign the exclusivity stating my concern and they have gracefully agreed to move forward without the exclusivity.  It's a win win. 

    1Reply
  • Gino BarbaroPro Member
    Rental Property Investor · St Augustine, FL · Member since 2014 · 2k+ posts · 1k+ votes
    10y

    @Dhanush Kondoth

    Hi Dhanush

    When I first began investing down south with my partner, a broker was sending us crappy deals and wanted us to sign an exclusivity. It felt sleazy, and we trusted our guts not to sign.  I found a deal 2 days on loop net and called the listing broker.  Our broker friend called and said he had a deal.  We told him that we saw it and had already called.  This pompous jerk flies off the handle and proclaims "You don't do business like this in this town.  You will never buy anything here!!"

    Fast forward three years, we have accumulated 675 units and he has not sold a single one to us.  I would never sign an exclusivity. You want the ability to cultivate relationships with a couple of brokers.  If they can't perform, then they don't get paid

    Gino

    Podcast Guest on Show The “Conveyor Belt” System That’ll Build You a BIG Rental Portfolio Quickly
    1Reply
  • Brent Coombs
    Investor · Cleveland, OH · Member since 2015 · 6k+ posts · 2k+ votes
    10y

    @Dhanush Kondoth, what @Gino Barbaro said!

    I'm very glad you arrived at the same conclusion already.

    (Before any history, is that Realtor promising to give YOU the best deals exclusively)?...

    Welcome to BP. All the best!

    0Reply
  • Gino BarbaroPro Member
    Rental Property Investor · St Augustine, FL · Member since 2014 · 2k+ posts · 1k+ votes
    10y

    @Brent Coombs

    Hi Brent

    Didn't want to annoy any brokers,  but I figured investors would see it our way

    All the Best

    Gino

    Podcast Guest on Show The “Conveyor Belt” System That’ll Build You a BIG Rental Portfolio Quickly
    0Reply
  • Dhanush Kondoth
    OP
    Investor · Dublin, OH · Member since 2015 · 75 posts · 24 votes
    10y

    @Gino Barbaro Thanks for showing me that this was not a one off situation :) @Brent 

    @Brent Coombs Thanks!

    0Reply
  • Mark UpdegraffBusiness Member
    Real Estate Broker · Rochester, NY · Member since 2010 · 1k+ posts · 690 votes
    10y

    you have the wrong attitude, and it means you're going to get a bad deal no matter what you do.  It all comes down to DUE DILIGENCE.  You should be performing this on your agent as well.  You're in a specific situation.  IE an investor that wants the BEST deals.  Guess what @Dhanush Kondoth SO DOES EVERYONE ELSE.  

    If you're not loyal to me, the best real estate agent for investors, I'm dropping you like a hot potato!!!!

    Seriously, you're LUCKY as hell if you can even do your due diligence enough to find me who is willing to help you.  Anyone that is good at investments that smells a hit of dis-trust from you is going to run the other way.  YOU NEED TO HAVE VALUE.  Think of it this way IF you have 10 Million dollars cash, I MIGHT want to entertain helping you.  If you don't you're more of a burden than an asset.  

    This is you:  "I MIGHT use you to close my 30k deal mr investor / realtor "

    This is me: "Go $%%^ yourself i made 50k on my last flip you're an idiot"

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  • Jerry W.Pro Member
    Moderator
    Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes
    10y

    Wow, @Mark Updegraff you seem to be taking this hard.  were you the realtor he was dealing with?

    My problem with tying to a single realtor is then I cannot change if the realtor does not perform.  As an attorney it is unethical for me to have a client sign a deal that says a client will only use me to do his legal work.  The reason is that people should be free to choose who they want.  The choice of who to use should be based on your ability and work ethic.  I lost a good deal because I had a realtor who was very smart, put me off a few days on looking at a property.  It sold 2 days after I called about it.  It was a great deal.  Had I said ok and called another realtor I could have bid on it.  If some is really a good realtor why demand the buyer can not look for deals anywhere else.

    3Reply
  • Mark UpdegraffBusiness Member
    Real Estate Broker · Rochester, NY · Member since 2010 · 1k+ posts · 690 votes
    10y

    @Jerry W.  i have NEVER required a buyers agreement.  All my people work with me because I DELIVER.

    my comments are on due diligence.  If I'm not doing my job, by all means call the next guy.  I'm pissed because I'm the best at my job and you want to be disloyal to me when then is my profession.  Respect the profession, or you're not using me.

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  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    10y

    I don't even waste time with all of that exclusive stuff. My clients CALL ME and want help.

    I decide if we are a match.

    I focus on quality buyers and relationships over quantity. On the commercial side I have an extensive network to pull from. You have to ask your broker or agent how they source deals? If it's just one approach that everyone else is doing then they do not add that much value.

    They need to offer value in analysis as well as locating properties. I don't focus on junker properties. My clients buy multi-million dollar commercial properties.

    I personally believe and hold the thought that the investor conveys what they want in the beginning of the relationship. I then tell them they are not realistic or they are for what they want.

    If we decide to work together that buyer should work with ONE BROKER  and see what happens. If enough time passes without seeing good prospects then either the investor is unrealistic, the area needs to be changed, or the broker isn't performing well.

    What a buyer DOES NOT want to do is be flaky and have multiple brokers calling around all over the place looking for stuff. The buyer will be known in the market for a flake and get a bad rep. Listing brokers and sellers will say that buyer is volatile so going under contract and having them perform to closing will be h&ll so we do not want any part of it.

    In residential maybe you do more one off stuff  but in commercial sellers own many properties and you do not want to burn bridges.   

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    2Reply
  • Brent Coombs
    Investor · Cleveland, OH · Member since 2015 · 6k+ posts · 2k+ votes
    10y
    Originally posted by @Gino Barbaro:

    @Brent Coombs

    Hi Brent

    Didn't want to annoy any brokers,  but I figured investors would see it our way

    All the Best

    Gino

    Well you annoyed at least one (who shall remain nameless, but whose initials are @Mark U)!...

    0Reply
  • Jacqueline Carrington
    Investor · Corona, CA · Member since 2014 · 746 posts · 372 votes
    10y

    I wouldn't send my best deals to someone fishing around. If me and said person had worked together in the past, that's fine. But not an investor asking for leads from any and everyone.

    I work for my clients and provide basic service to customers.

    1Reply
  • Nick Patterson
    Real Estate Agent · Chicago, IL · Member since 2013 · 386 posts · 218 votes
    10y

    Yikes, as a Realtor thats why we don't like working with investors.

    A first time home buyer needs a roof under their head, an investor does not.  

    If you are not loyal to your agent, there is no reason for them to be loyal to you.

    If you plan on being a full time investor looking at a lot of properties best option is to get your own license and do it yourself.  Other brokers will bring you listing once you are big enough.

    0Reply
  • Jerry W.Pro Member
    Moderator
    Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes
    10y

    OK guys I see exactly what @Joel Owens is saying I believe he is spot on. When it comes to SFRs I have a different view. The MLS in my area pops a listing onto my computer every time a new one is added. If a realtor is fishing to sell it without putting a listing on the MLS they are doing a disservice to their client. You want agent who will not do what is best for his client? It can make the difference between buying a house or not buying a house by getting the listing agent or broker to make your offer through. More than once I have offered to the listing agent and been told that their client has received a higher offer and their client would like me to make another offer. Whenever I sale a property I always go to the agent I bought it from and give them the listing if I publish it for sale. Saying you owe it to someone to only offer through one agent is bull. A realtor can rarely do anything but show you the listing and advise you on making offers. If they are good you want to go them, if they are not you should be free to look for a realtor that suits them better. Perhaps in some markets who your realtor is makes a huge difference. If you find one capable and who you trust implicitly then you don't want them to get away. Wanting you to sign an exclusive agreement after your first meeting for me would be a deal breaker. I would move on. I cannot tell you what is best in your area @Dhanush Kondoth.  Good Luck

    0Reply
  • Charlie MacPherson
    China, ME · Member since 2014 · 3k+ posts · 4k+ votes
    10y
    Originally posted by @Dhanush Kondoth:

    Thank you guys for taking time and responding. The only concern I had was about locking in with an agent whose quality was yet to be known. But over the last 18 hours,thinks have changed as I had respectfully declined to sign the exclusivity stating my concern and they have gracefully agreed to move forward without the exclusivity.  It's a win win. 

     Wow.  If an agent is that easily talked out of what is a reasonable position for him to take, I question how well he'll negotiate on your behalf.

    I have a specific Buyer's Broker agreement for investors.  It stipulates 3 things;

    1. If they (or their associates, family, company, etc) buy a property I've introduced them to, they'll buy it through me.

    2. If they resell it within 5 years, they'll sell it through me at a pre-discounted commission.

    3. There's a (very low) minimum commission, which ensures I have reasonable compensation for an ultra-low purchase price - typically it's a wreck and/or REO. We'll work every bit as hard for these purchases as we would for a $500K gem.

    If an investor refuses this agreement, I simply don't send them properties.  There's no reason to deal with an investor who feels free to buy a property directly from the seller or his cousin Vinny, the Realtor.

    0Reply
  • Michael Swan
    Rental Property Investor · San Diego, CA · Member since 2014 · 1k+ posts · 2k+ votes
    10y

    Never sign an exclusive deal. Get at least 20 agents working for you getting off market listings. Any realtor can get you MLS listings. Of course if they send you an off market pocket listing, then you don't bring in another agent to steal the deal away.

    Make it happen!!  

    Swanny

    0Reply
  • Dhanush Kondoth
    OP
    Investor · Dublin, OH · Member since 2015 · 75 posts · 24 votes
    10y

    Thank you everyone for the positive and negative feedback. I understand some methodology and ideology works for some and does not for others. I am not the kind of person who would get married to someone on our first date they can call my judgement as disloyal or whatever :)

    Update: I met with the agent today and had good conversation about what point of view the agent has and what point of view I have. Emails and text messages do convey a different message sometimes. walked through 6 properties with her and I am seriously considering offering for 3. Life is good!

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