Do I Have the Right Real Estate Agent

14 Replies

So while researching I have heard that the best agents are ones that have investment properties.  I followed this advice and just had a meeting with an agent that I know that has 20 units and owns a bed and breakfast.  During our first meeting moments ago I expressed my game plan: I am for looking for a multifamily in the 100K range and would like to rehab up to 150k.  I would like to be in up and coming area and am looking for a good deal (possibly something that has been on the market for a while so I could submit a lowball offer).  I told him my absolute max is 200k and really only wanted to go there if there was a screaming deal.  

During this meeting it seemed like every time I talked about the two up and coming areas I am interested in he brought up negative stories about those areas, and he seemed to always loop back to this property that is selling for $199,999 but still needed some work. Also when talking about financing I said I wanted an FHA 203k but said they're a huge pain in the *** and I should go conventional if I can. He was also talking about how fast some of the houses on the market are selling and how he overbid on new listing for another client by more than 10%! From my experience of checking the MLS multiple times a day it seems like houses aren't moving as fast as they were a year or two ago and many listings have actually dropped their prices more than once.

Long story short, I would love some feedback on whether this is valuable advice and I am just being naive?  Or, is this agent just better suited for regular buyers and not necessarily investors?  Thank you in advance for any answers, and just so everyone knows this agent is a wonderful person and I would like to work with them, but at the end of the day I am buying this house for an investment.

@Rudy Cecere Hard to say if this is the right agent for you and I will say that this agent could be very good at what he does but he may not be the right agent for you. If this agent is so busy with their own investments and they have been in the business a long time they may have such a long list of investors that they don't really need your business, especially if you are a 203k or conventional buyer. You may or may not be better off with a newer agent that maybe has lots of investment experience because they may allow you to monopolize more of their time. We don't invest in the 2% areas of our city because we don't like to deal with older homes and the tenants are harder to deal with but it aligns well with our investors because we do not compete with them for the same type of home as we prefer lower 1-1.5% rents with lower CAPEX in nicer areas. Philosophically it's different from what we want but it's our job to align with what our clients want. It does not seem like you are getting that from this agent, so the question is what would you lose by trying another agent?

@Casity Kao Thank you for the response!  And I think you are correct, I feel like this agent is definitely great at what they do, but may not be the right fit.  They definitely made me feel great about buying and it was a great experience. I don't feel the meeting was analytical enough for me, and I think a newer agent may be able to get more creative with my financing and property search.  I think I will try a few more meetings with this agent because I do think maybe things will get better , but if it came to it what would be the best way to move forward with another agent without burning a bridge?

@Rudy Cecere Building off @Casity Kao comment, I would also recommend connecting with multiple (say 5-7) agents and conducting a quick chat to see if they fit your criteria. As with most other relationships, this is one that requires a lot of trust and you have to go with your gut feeling. 

The more educated you become the better it is. Some successful investor relators have their own roster of clients. You are a cog in the machine. It could be good or bad, but it is what it is. Plus, it always pays to have multiple people be on the lookout for good deals. 

@Rudy Cecere - I have to agree with above. Also an agent who tells you that 203k loans are a pain in the a** might have had a bad experience with an inexperienced 203k lender. These loans are not that difficult at all when working with the right lender, HUD consultant and contractor.

My recommendation would be to find the right team and then go with that team to the agent. It can make it a much smoother process. Not all HUD consultants, contractors or lenders are the same or there level of expertise. Interview them as you would an agent.

203k's might be a little more work for your agent but for the instant equity and cash you keep in your pocket to me its a no brainier- this of course is if you plan to occupy one of the units as it is only for owner occupants (House Hacking is the way to go! )

Ive come back to this thread a few times.  Maybe the other peoples answers and your inclination is right, that you need a different agent.

Or maybe, like many many people on this site, they dont want to hear what the realities of the market are and would rather have someone tell them what they want to hear.

I have probably 25 conversations from "new investors" a year from the site, and they tell me I have no idea what Im talking about when I lay out the reality of the market for them.  So thats what jumps to my mind when I read a thread like this, but I dont know you, the agent or your market to give specific incite.

@Rudy Cecere Unless someone here know the area you live in, those two neighborhoods, etc. we won't be able to tell you if the real estate agent is giving you great or bad advice. The irony is that the easier thing for the real estate agent to do would be to say "sounds like a great plan" and then put you on an email drip campaign with MLS listings that meet your match. I can't imagine it's a good time for a realtor to say "Hey, those cheap areas you think are up-and-coming...well...they aren't." And, not for nothing, but anything that's old/stale/etc. is probably sitting on Realtor.com/Trulia/Zillow/etc. You can see the days on market, you can tell the realtor there are 3 properties you want to visit, you can ask for his/her opinion those three properties pre or post-visit.

Now I hate the "properties sell fast" line as much as the next guy, even when it's true.  We all know it's a "hot market" and nobody needs a realtor to beat it into their head.  I roll my eyes when I hear it and, frankly, it's usually comes across condescending.  Conversely, it's a hot market!  That's why *good* realtors won't waste their time with a potential client that wants to make a bunch of low-ball offers in the hope that one will be accepted.  There are better ways to spend their time.  

So here's what I would do in your shoes.  Go on Zillow and look for *SOLD* properties in those neighborhoods in your price point.  Some of those sold properties will have been on the market for 7 days and others for 7 weeks.  Either way, you have a good idea of what the free market is willing to pay for properties.  If you find 3 deals you would have paid what the buyer paid then it's simple, go to the real estate agent and say "I'd love to clone these deals!"  It might take 3 months or 6 months to find something comparable but you have an achievable goal.  If you look at 3 months of sold properties and you think that "everyone overpaid", well, ummmmmmm...start your direct mailing campaign?

If you have to ask, they probably aren't. Not to say they aren't a good agent, maybe not the right agent for you or for your goals. There aren't many agents that work with investors and that mindset is tough to convey to someone who works with owner occupied buyers, new clients all of the time. I'd go to an REI meetup and ask other people in your area who they work with. There's likely to be a few agent/investors there. It took me a long time to find an agent who gets it.

@Rudy Cecere I really don't think that agent would mind if you move on with somebody else.  If he had shown you a ton of houses and invested in a lot of time in you then yes I could see that, but you are being respectful if you recognize that it's not a good fit and are respectful of both your and the agent's time.  Tagging on what @Russell Brazil , someone who I do not know personally but have great respect for the content he brings to bigger pockets, if you are finding that with other agents you are hearing similar stories regardless of background then realize that it is probably you with the unrealistic expectations but right now I think it's too early to say.  

@Russell Brazil   That is what I am afraid of, I do not want to be one of those "new investors" or act like I know everything because in reality I am just getting started and do not know much about real estate except for what I have researched.  I guess we will see and I will definitely be consulting a few more realtors just incase.

@Russell Brazil @Casity Kao   I think the agent is probably using his expertise to keep the buyer from making a huge boo boo by buying in an area that will be tough to manage tough to rehab etc.

just like we get on BP and tell people that are new investors from the coast that a 40k house in any mid western cash flow market of any size is in the hood and will be a nightmare long term.. does not keep people from thinking we have some other agenda and they buy them anyway.. only to then get on BP and ask  HEY I need a new manager my PM is junk and its got to be their fault.. LOL.. when in fact its the investors fault from day one.. not realizing that as Casity said you need to be realistic on neighborhoods and tenant base if your going to be a landlord.

now if this is 203k its owner occ.. so that is somewhat different as this person wants to live there and if he wants to live in that area well.. then fine.. as an agent sell him what ever he wants to live in.

I think the other agent is probably saying without redlining that hey you may want to up your game a little.  I personally have not done a 203k as we rehab our houses or they are new construction.. but I do see them get done.

so bottom line is maybe the agent is trying to do this guy a favor and steer him to a better investment.

@Jay Hinrichs   Just for a reference, this neighborhood is a block away from one of the most desirable neighborhoods in Buffalo (Elmwood Village).  Some of the houses are pretty rough, but it seems like a lot of investors are flipping houses in that area now and a lot of restaurants are opening in that area as well.  I have seen rents in that area double in the past few years and house values are going through the roof.  Yes it is still a little rough still, but I do not mind and I am willing to make that tradeoff for the chance of a large appreciation in value and a growth in the rents.  

Also, from my understanding the 203k would be my best option for what I am looking for. It will be owner occupied and I do not have any experience with renovations. I will help out and add value where I can, but I have been told that FHA has to approve the contractor and the final work in order to issue the loan. Is there any other options for financing that you would recommend in this situation?

Originally posted by @Rudy Cecere :

@Jay Hinrichs  Just for a reference, this neighborhood is a block away from one of the most desirable neighborhoods in Buffalo (Elmwood Village).  Some of the houses are pretty rough, but it seems like a lot of investors are flipping houses in that area now and a lot of restaurants are opening in that area as well.  I have seen rents in that area double in the past few years and house values are going through the roof.  Yes it is still a little rough still, but I do not mind and I am willing to make that tradeoff for the chance of a large appreciation in value and a growth in the rents.  

Also, from my understanding the 203k would be my best option for what I am looking for. It will be owner occupied and I do not have any experience with renovations. I will help out and add value where I can, but I have been told that FHA has to approve the contractor and the final work in order to issue the loan. Is there any other options for financing that you would recommend in this situation?

 path of progress is where the money is made in real estate hands down..

Originally posted by @Andrew Johnson :

@Rudy Cecere  

So here's what I would do in your shoes.  Go on Zillow and look for *SOLD* properties in those neighborhoods in your price point.  Some of those sold properties will have been on the market for 7 days and others for 7 weeks.  Either way, you have a good idea of what the free market is willing to pay for properties.  If you find 3 deals you would have paid what the buyer paid then it's simple, go to the real estate agent and say "I'd love to clone these deals!"  It might take 3 months or 6 months to find something comparable but you have an achievable goal.  If you look at 3 months of sold properties and you think that "everyone overpaid", well, ummmmmmm...start your direct mailing campaign?

 I love this advice! I'll be stealing this for future use thank you.