What info to get from listing agent?

Question

Getting ready to inquire about my first potential property, and I don't want to sound like a dufus. The MLS listing provided just enough information to make the listing interesting, but not enough to actually make an informed decision.

What do I need to request from the listing agent in order to complete my due diligence? Keep in mind I'm on the "tire-kicker" end of the scale, as opposed to the "I have an approval letter from a lender" end of the scale and I don't want to make some horrible breach of etiquette.

Ryan Dossey · Answer

Keep in mind Listing Agents have a fiduciary responsibility to their clients. So don't really expect them to tell you things like motivation, reason for selling, or flexibility.

What I would do is inquire about any of the material gaps you need filled.

Age of major systems, immediate repairs needed, updates? Are you planning on making an offer if there is a "deal" to be had? Or just exploring? If the latter... (and there's nothing wrong with that) Open houses are always a good idea. As is attending local REIA meetups and networking with other investors. Many guys will let you tour their projects if you take them out for coffee. Which could be a great way to learn. In Real Estate your name is your most valuable asset.

Brit Foshee · Answer

Andrew-

The biggest thing you're looking for as a RE investor is value.  So you need to make sure you have a grasp on the comps surrounding that house.  You also need to have a grasp on what it's going to take to get the property repaired.

All in all, I wouldn't trust a listing agent for reliable information. You'll really need to do all your own due diligence and research.  Their job is to sell you the property!

Best of luck!

Andre Green · Answer

Hey @Andrew Taylorfrom all broker/agents I would like to thank you for even asking the question! If you know what type of properties you are interested in it would help to be as specific as possible. To build good rapport with the agent you would be upfront with the agent and let them know you are looking for this type of property even though you are not ready to pull the trigger. A good agent should still be willing to assist you on your journey appreciating the fact that you know what you want but your just not ready to buy yet.

Let us know how the search goes!

Mike Makkar · Answer

@Andrew Taylor, just to expand on what @Brit Fosheesaid, get both type of comps. Comps of nearby sales as well as comps of recent rentals.

You don't want to portray yourself as a tire-kicker all the time. Be honest to a certain extent and work with an agent in a partnership approach. Good luck!

Andrew Taylor · Answer

Thanks for the tips, everybody. I've sent a couple of inquiries on a couple of different listings, but have yet to hear back from the listing agents. Not sure what that's about - they're either busy, lazy, or I sound too much like a tire-kicker to warrant a response.

My inquiry is something along the lines of, "Hi, saw your listing on ****.com and I'd like to get some additional information before scheduling a viewing. I'd like to get the rent rolls, P&L, and/or tax returns for the last few years if available. You can reach me at..."

I'm planning to attend a couple of networking get-togethers in the near future (there were two this week but I already had something scheduled both nights) to start to grow my network.

Zach Kidd · Answer

It sounds like you're serious about investing, but you still need some time to get up to speed.

If you haven't already, definitely learn the language (NOI, GRM, etc.) and be fluent. Learn to calculate these (standard calc is more than enough). You don't need to have a running spreadsheet in your head, but you need to understand and be able to apply these. You can do it over a weekend.  Seriously.

I'm sure you already have some sort of financing strategy in mind, and hopefully done some preliminary research in that department.  That's a great bonus too.

Do you have REIA in your area? You're a member already, right?!?!?

Take an hour. Contemplate and enunciate your current position and goals.

Your new introduction quote:

"I'm a beginning Real Estate investor.

I want to focus on multi-family properties like this one (example), and my comfort zone is between 10 and 50 units.

I intend to purchase at least one of these properties before December 2016.

Are you able and willing to help me?"

Time to find a good agent.  Work your REIA contact list.  Call that listing agent.  Call a few others.  Say that quote each and every time.

Find someone who gives you that "warm fuzzy" feeling.

Offer to take them to a (very?) nice lunch.  We agents can't resist offers involving food - it's our Kryptonite (shh - that's a secret).

Learn a bit about them, open up, form a friendly exchange as quickly as possible (before the main course).

Then say that quote again, and let them teach you all about your new strategy, who to connect with, and how to go about it.

Take notes.

Melissa Huk · Answer

Hey! First you must know the realtor or the agent you are targeting is licensed or not and verify each and everything about him.

Awen Thomas · Answer

Hi,

The listing agent has a legal obligation to deal with the benefit of merchant to get the most elevated conceivable cost for the dealer. He will asses the property and run a comparative market analysis on the home and will provide to the seller.

Thanks!!

Mike Makkar · Answer

@Andrew Taylor

Just use the very fundamental rule of thumb. 2% rule and 50% expense rule.

You need rental comps to determine what the cash flow is going to be. Rent should be closer to 2% of the per unit door price of the property. And expenses will run you 50% of your rent. For eg. if the rent is 600 to 700 per month, then you need the per unit door price to be around 30k to 35k. out of 700 bucks per month, expect 350 to go for expenses (PITI). You are left with the rest; 350 per month per unit in cash flow. Multiply that by number of units and 12 months and divide that by the purchase price of the property and you have your cap rate. These days, unless you can't get anything for a cap rate of over 10%, it may be too expensive.

Brit Foshee · Answer

Yes-  @Andrew Taylor

You still want to check comps, you would just generally check a multiunit like this differently. Typically using cap rate.

Some of the things you are mentioning I'm not sure it's worth doing all the due diligence until you actually have contract, but that's up to you.

I don't want to do a bunch of due diligence on a property that we will never agree on a price on. It's a waste of time.

With that being said you'll want to verify EVERYTHING once you have a contract.  Leases, taxes, is there a PM ? Cost of PM. How is the building metered ?  Structural integrity of the building.

What info to get from listing agent?

Most Popular Reply