I am a Realtor and investor myself and I find it "interesting" when working with Newbie investors. Balancing the true desire to build relationships and help clients attain wealth with tedious tasks and questions while they learn the process can be a time suck from my income generating activites. What are some of your tips, tricks, and thoughts in general? A few have suggested a "three strike rule" where if a client doesn't act on three deals that meet their stated criteria, then dropping them as a client altogether. Perhaps, some of the irritation is due to the low cost of homes/inventory in my market, resulting in a trivial amount of commission income upon a successful closing and more importantly, time away from building my real estate business and personal investments.
Thanks in advance!
@Brit Hale I'm happy to work with fix & flip and buy & hold investors as long as they're willing to write offers that are realistic. In a market where properties are selling at an average of 98% of average, offers of 65% of asking are just not going to work - and they're a waste of time.
For those that are realistic, I invest a tremendous amount of time helping them to find properties, run comps, write offers, negotiate and close deals and if they're rehabbers, market the property at resale.
I don't work with wholesalers for a few reasons.
Unlicensed wholesaling in Massachusetts and Maine (two states where I'm licensed) is illegal.
I have had dozens of conversations with newbies who are just starting out and have been convinced by a YouTube video, book or guru course that teach them that not only is wholesaling legal, but that it's a fantastic way to get into REI with little or no money. I do my best to educate them, but it costs me about 45 minutes for each of these calls. It's worth it if I can keep them from wasting time and money on more bogus seminars or mailing programs.
That and the entire wholesaling enterprise seems to largely rest on finding sellers who are either uninformed about the true value of their property or in a desperate financial situation - and then conning them out of their equity.
I won't be involved in anything like that. I'd rather go broke than make my living helping wholesalers to screw people.
I am a Realtor and investor myself and I find it "interesting" when working with Newbie investors. Balancing the true desire to build relationships and help clients attain wealth with tedious tasks and questions while they learn the process can be a time suck from my income generating activites. What are some of your tips, tricks, and thoughts in general? A few have suggested a "three strike rule" where if a client doesn't act on three deals that meet their stated criteria, then dropping them as a client altogether. Perhaps, some of the irritation is due to the low cost of homes/inventory in my market, resulting in a trivial amount of commission income upon a successful closing and more importantly, time away from building my real estate business and personal investments.
Thanks in advance!
Just like with any client, you have to investigate and go after their motivation. Sure, anyone is motivated if they can purchase anything 20%+ under its real value. But for many clients, their motivation is to get their $$ out of their savings account where its only earning 0.01% APY. So for those, you need to "reset" their expectations from the unicorn deals they'll read about here to reality. Remind them that as they are spending 2 or more years trying to find their unicorn deal, their money is making zilch with no hope in sight. Looking for a unicorn is a luck based strategy more akin to gambling than investing. I can usually get a read on folks that "know it all" vs. look to me for guidance within a couple conversations; go with your gut.
For those who you can't break through that barrier with, drop them. 3 opportunities are far too many. After the first deal, its time for a "come to Jesus" type sit-down talk. If they don't bite on the 2nd, part ways. Not only for the time you are wasting, but also because you likely won't be able to present the deal to a more serious investor, so you lose out double.
For low $ deals, team up with a buyers agent if you are generating enough business. You can get a slice of the commission for sending them the lead, and not have to be tied up when you could be working a lead spending multiples more.
Oh and lastly, get a POF or preapproval after the first conversation!
@Brit Hale I'm happy to work with fix & flip and buy & hold investors as long as they're willing to write offers that are realistic. In a market where properties are selling at an average of 98% of average, offers of 65% of asking are just not going to work - and they're a waste of time.
For those that are realistic, I invest a tremendous amount of time helping them to find properties, run comps, write offers, negotiate and close deals and if they're rehabbers, market the property at resale.
I don't work with wholesalers for a few reasons.
Unlicensed wholesaling in Massachusetts and Maine (two states where I'm licensed) is illegal.
I have had dozens of conversations with newbies who are just starting out and have been convinced by a YouTube video, book or guru course that teach them that not only is wholesaling legal, but that it's a fantastic way to get into REI with little or no money. I do my best to educate them, but it costs me about 45 minutes for each of these calls. It's worth it if I can keep them from wasting time and money on more bogus seminars or mailing programs.
That and the entire wholesaling enterprise seems to largely rest on finding sellers who are either uninformed about the true value of their property or in a desperate financial situation - and then conning them out of their equity.
I won't be involved in anything like that. I'd rather go broke than make my living helping wholesalers to screw people.
I’m not a realtor but I have bought maybe 40 or 50 properties from realtors. I sometimes will try to help out new realtors to help them see how to do the process as an investor to see if they’re going to make it as investor friendly realtors . As a realtor you should be able to pre-qualify even newbie investors. Ask things like what are their goals, what education do they have, what research have they already done, are they prequalified for anything etc. if you bring them a deal and they don’t act on it find out exactly why if they have a very good reason then fine if they’re just scared that they’re not ready to be an investor yet. I will buy more houses in a year than most people will do in a lifetime so for the right realtor they can make a lot of money with me.
@Charlie MacPherson States that he would only make offers that are near 98% of the market. And that’s fine but he’s not an investor friendly realtor. There is nothing wrong with that. He just has decided to work with a the retail buyer. Just as there are many facets of real estate for the investor, there are many paths that realtors can take. There’s no way an investor is going to make money when they’re paying full retail for a property. So there’s nothing wrong in his approach but he is a retail realtor. As an investor I want realtors who aren’t afraid to make offers. You can’t make money generally if you’re paying more than 65% of the price particularly if you’re going to flip it. I have offers that are excepted at 30% of the asking price because I make a good reason, for the banks particularly, to except my offers.
It is a personal choice for realtors as to what type of people they want to work with. A retail buyer may look at six houses before they put in an offer. I can put an offer after looking at a house for 10 minutes. So it’s a trade-off for sure some of my offers will not be excepted but the realtor is not running around spending time showing multiple houses.
Just yesterday I put a house on the market with a realtor that will be $325,000 and an additional property, land only, for $50,000. Ahalf-hour later a friend of mine who bought my book wanted to look at a house so I called that realtor back and now she has a new client of a new investor who is looking for houses but also wants to sell his own personal residence. So both approaches work it’s just a matter of deciding as a realtor what you will enjoy the most.
If you think they are serious and have potential its totally worth the upfront work. A loyal investor client who buys in volume is pure gold for commission professionals like us.
@Ed Emmons I might not fit your definition of being investor friendly, but I've done quite about 10 deals with BP members in the last few years. I also run a small REIA, so I'd say I'm pretty investor friendly.
As far as submitting serious lowball offers - and by that, I mean offers that are far below the actual market value - that’s just a waste of my time.
@Charlie MacPherson thanks for setting me straight. I am certainly didn’t mean that you didn’t work with investors but many real estate agents prefer to work with buyers rather than sellers so my point was just that there’s many fields in in realtor market just as there are investors but good luck to you
@Ed Emmons No worries, Ed! I've certainly submitted offers below asking.
But I've been approached several times by new investors who are offering me the "fantastic opportunity" to submit 200 offers per week (one actually said those exact words) that were about 60% of the current market value.
I had to explain that for all of the steps involved, each offer will consume about two hours from start to finish. Estimating that those offers would be successful at a rate of about 1 in 2,000, and factoring in the very low commission on lowball offers, I worked the numbers out. I would be earning at well below minimum wage.
Those are the people that I just can't work with. I simply can't afford to.
Now if you're looking for a fix & flip or a buy & hold, that's right up my alley!
@Brit Hale Been there. Not as a realtor but as the operator of a wholesaling company. What I've done to address this is hire one of my coaching clients and refer out new investors to either him or my marketing director. This strategy has free up my time and ensures all new investors get the same quality support that I would provide them. Moral is, build a team. Train someone using all of the usual questions and concerns you've seen from the newbie investors and allow the trainee to gain experience from you and let them deal with all of the newbies. All the best. Persist and you will WIN!!!!
Every investor was a newbie at some point. I want to work with realtors that know exactly what it is im looking for, which is tough to find. That alone will get rid of the "wasted time". My first realtor fired me, I made about 5 offers on homes that were too low in her eyes, but the offers were based off of numbers. Nothing more, nothing less.
I needed to be taught, so the one that taught me is the one that got the deal, and rather quickly. Too bad she retired, otherwise Id still be using her today.