Am I wrong? Am I expecting too much from my real estate agent?

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Am I wrong? Am I expecting too much from my real estate agent?

Jeff Terry
Investor · Chicago, IL · Member since 2021 · 31 posts · 22 votes

My wife and I are planning on relocating to East Tennessee to live and invest. We don't know much about the region other than what our research churns up (numbers, market forecasts, Google Earth views) and we really need a trusted partner to fill in those blind spots. 

Recently we've engaged with a realtor in Knoxville who has been willing to show us properties and fill in some details that aren't on the MLS listing. But when we ask "Is this a good neighborhood for rentals?" or "In your opinion, how many thousands will a rehab cost?" we get nothing. To the first question it's usually, "I have no idea," and to the second question, our agent won't even offer an estimate, a ballpark. We know that estimating a firm number on a rehab is somewhat foolish (things often go way over budget) but we are looking for a starting point and find a dead end.

My question to you fine folks: Am I expecting too much? I don't want to have someone do all our work and maybe I'm being a little selfish here. But this could be a beneficial relationship for us both as we plan on buying a 4 bedroom house to live in as well as several properties to rent for cash flow. 

I really don't know. 

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Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
5y

If they comment on the quality of the neighborhood, and there is a Fair Housing tester making that call, they may end up with a $16,000 fine for illegal steering.

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  • Damaso Bautista
    Rental Property Investor · Hawthorne, CA · Member since 2018 · 655 posts · 900 votes
    5y

    @Jeff Terry

    I think your misconception is that everyone knows or has the actual ability to run numbers on a rehab.  They might also not be comfortable giving an opinion about a neighborhood because they don't want you to buy based on that opinion and then it be way off.

    My suggestion for you is to find a realtor who is knowledgeable about rentals and rehab costs.  They will be able to give you the details you want.

    It might take some digging, but on these forums you can find agents for certain areas that have this ability.

    When I bought a home in Bloomington, Indiana, I got my realtor from these forums, he was also an investor so he knew how to answer all of the questions I wanted answered.

    Good luck!!

    12Reply
  • Brian Hendrie
    Specialist · New York, NY · Member since 2019 · 8 posts · 13 votes
    5y

    Jeff - 

    "I have no idea" is an alarming response from a real estate agent when asked about specific neighborhoods in their market. I would recommend trying to find an agent who works with other investors. This agent should then be familiar with good rental pockets in that market. They should also be able to point you in the direction of a property manager and/or general contractor who they themselves or previous clients have worked with. These are the people who will be able to give you better estimates on rehab costs. Finding the right team can save you a lot of time and money. 

    Are you in the stage of running numbers on potential investments yet? If so, and need a hand please send me a message. I consult with new investors to help them make strong investment decisions in order to ensure longevity in the real estate game. Strong financial forecasting and building the right team in a market make all the difference!


    Best,

    Brian H 

    9Reply
  • Waylon Zook
    Etna Green, IN · Member since 2015 · 207 posts · 157 votes
    5y

    @Jeff Terry is this a good neighborhood for rentals is somewhat a tricky question. The agent may be fearful of getting in trouble over the fair housing laws. I hear there are people out there testing agents for violations of this sort of thing and since he probably doesnt know you well doesnt want to answer.

    18Reply
  • Joshua Adlam
    Property Manager · Member since 2020 · 108 posts · 68 votes
    5y

    @Jeff Terry

    I personally dont think you are asking to much from a realtor. You are just asking to much from this realtor. From my experience as a property manager, most realtors do not understand the mind frame of an investor. The are focused on selling you a house to gain a commission. Always ask realtors do you invest in real estate yourself. You definitely want to find and agent who can understand where you are coming from.

    6Reply
  • Dave PoeppelmeierBusiness Member
    Realtor · Maumee, OH · Member since 2015 · 491 posts · 722 votes
    5y

    Yes @Jeff Terry, there are things that we as Realtors can and cannot say, such as answer "is this a good neighborhood for rentals?" Well, any neighborhood can be good for rentals as long as the numbers work out. Regarding rehab estimates, they should be able to saw what a house needs to be rent ready regarding the class of the neighborhood (you're not putting granite countertops in a D neighborhood and you're not getting the cheapest carpet possible for an A neighborhood), but to start giving you actual rehab estimates starts to get into the grey area. You really do need a Realtor who is also an Investor to truly see these properties through their eyes. However, it's up to you to educate yourself on what prices for floors, painting, appliances, etc are in your area. You can contact a local flooring company or go to Home Depot and see what general cost per sq foot are for carpet, vinyl plank, etc and take your room measurements from the MLS listing (or bring a tape measure on the showing) and go to town. Find out what appliances are going to cost for the grade required for the neighborhood. Are you going to do sweat equity of painting or fixing things yourself? Find some local investors here on BP for that area, they can likely point you in the direction of trusted companies that can help you with these estimates as well. If you do this enough, you won't need your Realtor to tell you because you'll be an experienced Investor.

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    5y

    If they comment on the quality of the neighborhood, and there is a Fair Housing tester making that call, they may end up with a $16,000 fine for illegal steering.

    [email protected]301-893-4635Podcast Guest on Show #192
    District Invest Group545 Reviews
    WebsiteView Page
    20Reply
  • Shawn McenteerBusiness Member
    Realtor · Boonton Township, NJ · Member since 2013 · 2k+ posts · 1k+ votes
    5y

    @Jeff Terry  I think both of your questions under those contexts are difficult to answer.  Back tracking a little bit have you had a discussion with your agent regarding your goals and what you are looking to get out of your investment properties?  Who's to say a warzone is not a good neighborhood for rentals if the numbers work.  If someone is suggesting work to be done to a unit and they are not backing it up with numbers to me that is slightly odd.  So my question is are you making rehab suggestions or is your realtor? 

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  • Caleb Brown
    Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
    5y

    Every agent is different. When I view properties for my clients I'll give my thoughts on rehab numbers(we verify with a GC), market rent and ARV. We can't steer you because there is limitations but they can give their thoughts. Usually the rental rates will give you an idea of the type of area

    0Reply
  • Cody Neumann
    Rental Property Investor · Surprise, AZ · Member since 2020 · 405 posts · 179 votes
    5y

    @Jeff Terry

    I think the realtor should at least be giving you some advise knowing that you’re not from the area and don’t know costs to fix certain things. I would say to find a different agent

    1Reply
  • Victor Jernigan
    Investor · Knoxville, TN · Member since 2011 · 205 posts · 91 votes
    5y

    @Jeff Terry - Realtors are not allowed to answer either of your questions - the 1st is a violation of Fair Housing Law and the 2nd is a legal problem in that it is considered giving investment advice. I suggest you reach out to any of several good investor/Realtors in East TN who are also involved with local investment groups - @Derek Tellier and Whitney Nicely for example. They can introduce you to other local investors and show you where they are investing. 

    7Reply
  • Karen MargraveBusiness Member
    Moderator
    Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
    5y

    It's all about liability. As licensed agents we are held to a higher standard.  We aren't allowed to tell you about the safety of the neighborhood, if it's a good area, etc. We can however refer people to Megans Law (Is that just CA?) for child predators, advise that you look at safety maps, etc. As for if it's a good rental area, we can say there are a lot of rentals in an area. As to the potential for income, there's too many variables to give someone advise, not knowing how they manage units, amenities, upgrades they'll make, etc. As for costs to rehab, same thing. If you want real numbers, get a bid from a licensed contractor, based on the price of materials.  If you're looking at a property, do your due diligence, and don't expect the Realtor to do it for you. Realtors can show you properties, give you comps on other properties that have sold in the area or are on the market.  They cannot tell you the value of a home, only an appraiser can do that, agents can give "opinions". 

    1Reply
  • Alexander Szikla
    Real Estate Agent · New York City · Member since 2020 · 818 posts · 639 votes
    5y

    Lots of agents are simply door openers - they will try and sell you on intangibles (i.e. "forever home" talk). Some, perhaps too few, agents are true professionals who know markets intimately and know about all facets of the real estate business. 

    Choose your agent wisely! 

    2Reply
  • Mike Dymski
    Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
    5y

    Financial analysis to determine whether or not a property would make a good rental...and estimating rehab costs are both specific skills that few agents would have or need to have.  Selling property does not require the same skills and investing in property.  I recommend networking to find agents who specialize in rental properties (and, even then, you will need to be skilled in both of those tasks).

    3Reply
  • Matt Nico
    Member since 2019 · 448 posts · 306 votes
    5y

    @Jeff Terry

    I just became an agent last year in addition to purchasing investments. When i have a client i put together the list of homes to show based on what the client wants/needs. These homes go onto a spreadsheet where i give the client a rough estimate of the mortgage payment, the homes condition, and my estimate of what a reasonable rent price would be.

    If the agent doesn’t know anything about investing and wont even give you rough estimates, please move on to an agent who knows better. In one of your initial conversations with them, tell them what you want him/her to do and as long as its reasonable you are not asking for a lot.

    Happy Housing,

    -Matt

    2Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    5y
    Originally posted by @Waylon Zook:

    @Jeff Terry is this a good neighborhood for rentals is somewhat a tricky question. The agent may be fearful of getting in trouble over the fair housing laws. I hear there are people out there testing agents for violations of this sort of thing and since he probably doesnt know you well doesnt want to answer.

    Exactly..  for rental areas one should be talking to a PM not a retail agent. also no way can you expect a retail agent to give you rehab numbers that totally not appropriate for you to ask or them to answer

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    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    5y
    Originally posted by @Victor Jernigan:

    @Jeff Terry - Realtors are not allowed to answer either of your questions - the 1st is a violation of Fair Housing Law and the 2nd is a legal problem in that it is considered giving investment advice. I suggest you reach out to any of several good investor/Realtors in East TN who are also involved with local investment groups - @Derek Tellier and Whitney Nicely for example. They can introduce you to other local investors and show you where they are investing. 

    Exactly the agent should explain this to the buyer to manage their expectations.

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  • Jeff Terry
    OP
    Investor · Chicago, IL · Member since 2021 · 31 posts · 22 votes
    5y
    Originally posted by @Damaso Bautista:


    When I bought a home in Bloomington, Indiana, I got my realtor from these forums, he was also an investor so he knew how to answer all of the questions I wanted answered.

    Thank you! This is likely how we'll pursue our future partnerships. 
    And Bloomington is beautiful, BTW.

    0Reply
  • Jeff Terry
    OP
    Investor · Chicago, IL · Member since 2021 · 31 posts · 22 votes
    5y
    Originally posted by @Brian Hendrie:

    Are you in the stage of running numbers on potential investments yet? If so, and need a hand please send me a message. I consult with new investors to help them make strong investment decisions in order to ensure longevity in the real estate game. Strong financial forecasting and building the right team in a market make all the difference!


    Best,

    Brian H 

     Thank you, Brian. Yeah we're running the numbers (and little else) I'll take you up on your offer!

    0Reply
  • Jeff Terry
    OP
    Investor · Chicago, IL · Member since 2021 · 31 posts · 22 votes
    5y
    Originally posted by @Waylon Zook:

    @Jeff Terry is this a good neighborhood for rentals is somewhat a tricky question. The agent may be fearful of getting in trouble over the fair housing laws. I hear there are people out there testing agents for violations of this sort of thing and since he probably doesnt know you well doesnt want to answer.

    Yeah I can see that, and perhaps I need to rethink my questions. We're really trying to gauge if the neighborhood is flooded with rentals or desirable for young professionals, access to nightlife and jobs and commute-friendly. I don't like not knowing and need to learn the city myself and there's no substitute for that. Thanks for responding!

    1Reply
  • Jeff Terry
    OP
    Investor · Chicago, IL · Member since 2021 · 31 posts · 22 votes
    5y
    Originally posted by @Joshua Adlam:

    @Jeff Terry

    I personally dont think you are asking to much from a realtor. You are just asking to much from this realtor. From my experience as a property manager, most realtors do not understand the mind frame of an investor. The are focused on selling you a house to gain a commission. Always ask realtors do you invest in real estate yourself. You definitely want to find and agent who can understand where you are coming from.

    Very true! But to put another wrinkle in the discussion, this realtor just revealed that she also flips homes. My wife and I were a little shocked because we just assumed she didn't have the investor mindset. Now we're wondering if she sees us as competition. Thank you for responding. 

    1Reply
  • Jeff Terry
    OP
    Investor · Chicago, IL · Member since 2021 · 31 posts · 22 votes
    5y
    Originally posted by @Dave Poeppelmeier:

    Yes @Jeff Terry, there are things that we as Realtors can and cannot say, such as answer "is this a good neighborhood for rentals?" Well, any neighborhood can be good for rentals as long as the numbers work out. Regarding rehab estimates, they should be able to saw what a house needs to be rent ready regarding the class of the neighborhood (you're not putting granite countertops in a D neighborhood and you're not getting the cheapest carpet possible for an A neighborhood), but to start giving you actual rehab estimates starts to get into the grey area. You really do need a Realtor who is also an Investor to truly see these properties through their eyes. However, it's up to you to educate yourself on what prices for floors, painting, appliances, etc are in your area. You can contact a local flooring company or go to Home Depot and see what general cost per sq foot are for carpet, vinyl plank, etc and take your room measurements from the MLS listing (or bring a tape measure on the showing) and go to town. Find out what appliances are going to cost for the grade required for the neighborhood. Are you going to do sweat equity of painting or fixing things yourself? Find some local investors here on BP for that area, they can likely point you in the direction of trusted companies that can help you with these estimates as well. If you do this enough, you won't need your Realtor to tell you because you'll be an experienced Investor.

     Thank you Dave. The granite countertops and cheap carpet examples are exactly the types of insights we were hoping for. As well as being pointed in the direction of GCs and PMs. Most of what we are asking for is info into the area and the people so we can follow those leads and educate ourselves. Just a jumping off point. 

    And yes, while we're out of state, we'll need partners there, but once we relocate, I plan on putting in some sweat equity and being much more hands on. Maybe even managing a few of the properties myself. 

    0Reply
  • Jeff Terry
    OP
    Investor · Chicago, IL · Member since 2021 · 31 posts · 22 votes
    5y
    Originally posted by @Russell Brazil:

    If they comment on the quality of the neighborhood, and there is a Fair Housing tester making that call, they may end up with a $16,000 fine for illegal steering.

     Your response and several others have made this point perfectly clear and I appreciate it. I'd never want to put any realtor in professional/legal jeopardy. I'll be sure to rethink my questions that might come off as steering. 

    1Reply
  • Jeff Terry
    OP
    Investor · Chicago, IL · Member since 2021 · 31 posts · 22 votes
    5y
    Originally posted by @Shawn Mcenteer:

    @Jeff Terry  I think both of your questions under those contexts are difficult to answer.  Back tracking a little bit have you had a discussion with your agent regarding your goals and what you are looking to get out of your investment properties?  Who's to say a warzone is not a good neighborhood for rentals if the numbers work.  If someone is suggesting work to be done to a unit and they are not backing it up with numbers to me that is slightly odd.  So my question is are you making rehab suggestions or is your realtor? 

     We assumed we were clear with expressing our intentions/goals. But maybe wires got crossed since we have dual goals of securing a property to live in and properties to invest in. And it might be simpler if we engage her for our home and use a different realtor for our investments. 

    0Reply
  • Jeff Terry
    OP
    Investor · Chicago, IL · Member since 2021 · 31 posts · 22 votes
    5y
    Originally posted by @Caleb Brown:

    Every agent is different. When I view properties for my clients I'll give my thoughts on rehab numbers(we verify with a GC), market rent and ARV. We can't steer you because there is limitations but they can give their thoughts. Usually the rental rates will give you an idea of the type of area

     Yes! And that's all we're looking for. Just thoughts and a ballpark. Can we get a good cash flow? Things like that. I think it all comes down to the realtor. Thank you for responding!

    0Reply
  • Jeff Terry
    OP
    Investor · Chicago, IL · Member since 2021 · 31 posts · 22 votes
    5y
    Originally posted by @Cody Neumann:

    @Jeff Terry

    I think the realtor should at least be giving you some advise knowing that you’re not from the area and don’t know costs to fix certain things. I would say to find a different agent

     I would say I completely agree with you. Thank you, Cody!

    1Reply
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