How to pick a real estate agent

[Marcus Auerbach]

Almost every day I see a post of someone looking for a great agent somewhere in the US. A lot of people got burned by a bad agent and have lost faith in all of them. Some got lucky and found a rock star agent who made or saved them tons of money, caught potential issues, mitigated risks and connected them with other rock star industry professionals, lenders, contractors, etc.. 

I have been an investor much longer than an agent; I have been buying BRRRR's now for ten years, we manage a sizable portfolio in house with an assistant, I have done some lease options, flips and new construction - you name it. I have spent years looking for a great agent, and even now on every deal I make as an agent (about 50 per year) I wonder who is going to be the agent on the other side of this transaction - some good, some average and some really bad ones: believe me, I have some good war stories to tell!

1.) Expectations - what a good agent can do for you:

If you are not an industry veteran, here is what you should expect from a great agent: Help you with your strategy, validate it, maybe challenge it, help you refine it. Guide you through marketplace, suggest neighborhoods for your strategy. Provide numbers, metrics and statistics - just ask for it. Fair market value and after repair value - running comps is an art and a science, you only get good by doing it a lot. Getting it right is mission critical! Finding deals, sometimes, most importantly teaching you how to find/spot deals. Connections to other industry professionals: top lenders, home inspectors, contractors, other investors (need a mentor?). Risk mitigation; - one of the most underrated. A second set of experienced eyes validating your decision, challenging your ideas and acting as a your counsel. Strong negotiator - think inspections, concessions like closing cost credits or repairs. When you think about it, it all comes down to experience and experience comes from the number of deals done, crisis managed and disasters survived. Mastery after 10.000 hours.

If you are very experienced you may not need a lot of the above, you want someone who does a lot of legwork for you, has a lot of time at their hands, writes a lot of offers and is generally a hustler. This is a totally different set of attributes and you are probably best served with a young talent.

2.) Where to find a great agent:

#1 - here on BP! If you look on top, there is a tab called NETWORK. You can find all sorts of people there, including agents. I writing this at the San Francisco airport on my way to vacation - guess who comes up first as an agent: David Green! The nice thing about BP is that you can see an agents posts, number of deals and referrals etc and get a general sense of their experience.

#2 - ask other investors: look for someone who has done a lot of deals in your market, they will know the top players

#3 - go to a brokerage: every brokerage has agents that specialize in investors, perhaps own properties themselves.

In any case you want to look at a large number of agents before you find a great match. Most investors will work with the first agent they run into. You get out, what you put in...

3.) How to work with a great agent:

Two interesting stats: usually 10% of the agents do 90% of the business in a market. To show you how low the bar is: I am in the top 1% of 7000 agents in Milwaukee. And the drop out rate is close to 90% in year one, and again in year 2. Think about that for a moment - you wanted someone with experience? 

When you are looking for an investor-friendly agent, you have to ask yourself are you an agent-friendly investor? Let's start with the obvious: agents get paid a percentage commission on closed transactions. A $300,000 transaction literally pays 3 times the money than a $100,000 transaction. This creates a conundrum: investors often end up with agents desperate for a paycheck, even if it is just a small one. Top agents have literally a smaller incentive to work with investors. 

Bad agents care about their next paycheck and will do what they have to. Great agents care about the relationships - a happy investor client today will buy another property next year and may refer someone from his family to sell or buy a primary residence. If you appreciate your agent, refer someone who is looking to sell or buy a primary residence.

Hope this helps!

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Something fun and somewhat random at the end: Tim Smith from Coldwell Banker is an agent who specializes on ultra luxury properties in CA - clients expect a promotional video to be produced for their 25 million dollar home and they are usually professionally produced, but this one blew it out of the water: its a music video based on the classic "teach me how to dougie" and went viral! 

The song is awesome and you don't get to see the house or the agent until 2:30 minutes in: enjoy it here! 

The video sold the house - the buyer saw the house the first time when a friend sent him the song!