THIS is why your Realtor is Ignoring you-DATA says they Should!

[James Wise]

If you spend any measurable amount of time browsing the BP forums you have probably come across a thread or two that was started by a new investor who's having a heck of a time getting a Realtor to work with them in an out of state market. As you can see by my post count under my dashingly handsome headshot, I've been on BP for quite some time, and I can tell you that I have personally read 100's of these types of threads.

So the question is, why is this? Why is it so hard for an out of state investor to create a mutually beneficial relationship with a Realtor in an out of state market? Is it because Realtors are bad at their jobs? Or is it because out of state investors are bad clients?

The simple answer is YES to both questions.

Yes it's hard for out of state investors to work with Realtors because Realtors suck at their jobs.

AND

Yes it's hard for out of state investors to work with Realtors because out of state investors are horrible clients.

___

Now before all you out of state investors and Realtors start jumping down my throat, let me explain. Ya see this is not simply an opinion piece, I've got the data to back it up.

As for the Agents in the equation. Industry wide close to 9 out of 10 agents will leave the industry every single year. That's a nationwide statistic and it's been like that for decades. So if you are thinking it's the Agent's fault as to why investors and agents can't create a mutually beneficial relationship you'd be right about 90% of the time.

___

Why do so many agents leave the business?

The 1st thing we need to look at is money. Most out of state investors are looking at properties in the "turnkey" space and the price points are sub $100k. Often times way less than that when investors want to do BRRRR deals and things of that nature. So if you're an investor and you are looking at doing these deals and are trying to connect with a Realtor to do them you've got to understand that the Realtor is looking at a commission that's going to fall anywhere in the $500 to $2,500 range. Myself I've sold over $200 Million worth of this type of property to investors and I can say the commission of an investor focused Realtor is roughly $1,250 when you average it all together. Having done 1,000's of sales I've got a good amount of data to say that's a very fair estimate.

Now as an investor you may be thinking that's a good chunk of money because you are going to buy several properties from this agent. You are probably thinking you are a heck of catch because of all that residual income they will be getting because you are a big bad investor. Surely if an agent meets you they will be the 1 out of 10 who are making good money and staying in the business. Right?

No. Not at all. In fact, you're probably the type of client who's going to earn them an hourly rage far below minimum wage. Burger flippers are actually going to pull down a much higher dollar per hour than agents working with out of state investors.

Many of you know that I run a show called The MLS Search & Analysis Show. What this is, is how I work with investor buyers to help them buy rentals from the MLS. This is a paid show. You must pay me up front to work with me. I will not work with you as an agent unless you pay up front. The reason behind this is simply math. I would not make enough money working with you if I didn't. This is why the agents working with investors often fall into the 90% that quit the industry.

Prior to this show I was selling investment properties but knew that the pay rate was not sustainable without an up front fee. With the show being a numbered episodic show it's become very easy for me to track the data and really hammer down exactly how little money these agents are making when they work with you guys.

Here is what the data says.

Over the last 10 months or so I have been hired by investors to analyze properties for them and submit an offer on said property if they were interested in buying it after my analysis answered all of the questions investors ask on everyone of these properties. Basic stuff but basic stuff that takes up an agents time to get to you such as current rent, market rent, mechanical ages and things like that.

Over the last 10 months gone over about 1,100 properties for investors. In going over 1,100 properties for these investors it's resulted in roughly 95 sales. With an average commission of $1,250 we are looking at $118,750 in gross commission or an average commission per property looked at of $107.96.

Now how long does it take to look at / go over a property with an investor? An hour? Two hours? Three? Are you an investor who wants to fly into town and drive around all day? If yes, let's call it 4 hours between 

• Driving to the house
• Touring the house
• Having "coffee" to get to know one another
• Writing the offer
• Negotiating the offer terms with the seller
• Setting up the appraisal
• Setting up the inspection
• Answering all the questions during escrow etc.
• Post closing questions and follow up etc.

___

Effective Dollar Per Hour $26.99.

___

Of course agents have to advertise to bring in clients. If nobody knows who you are how can they work with you after all? They can't. Lead generation is the most important part to an agent's success. So let's reinvest 20% of that revenue into lead generation. 

___

New Effective Dollar Per Hour $21.60.

___

But wait, we aren't done yet. No, ya see most Agents working with low commission properties like this haven't sold $200 Million in real estate. Most agents working these super low commission deals are new agents who have yet to move onto the high cost suburbs with owner occupants. Most agents don't have a sophisticated TV show with 10 Million+ views. Most agents aren't working with buyer's who are so committed to buying that they have paid money up front, many of their hours are spent combing through all of the tire kicker's endless questions so most agents working with investors aren't closing sales at the rate I am. They are probably at best able to close their deals at a about a third of the rate I am.

___

New Effective Dollar Per Hour $7.20

___

But wait, there is more. These agents are not business owners, no they are working for a Broker so guess what, they've got to pay a commission split. Let's call that 20%

___

Final Effective Dollar Per Hour of an Investor Focused Agent is $5.76

___

So there you have it folks. If you are wondering why you are having such a tough time getting an agent to be excited about working with an investor no you know why. You represent a pay rate of $5.76 an hour to these people. With an effective dollar per hour pay rate of $5.76 is it a surprise that 90% of the agents talking to investors are terrible at their jobs? What quality human being is going to work for $5.76 an hour? Working with you as an investor isn't this magical carrot that all of these agents are chasing. Nope, not even close.

[William Beck]

 I work pretty much solely with investors and truly the biggest thing that helps me is if someone actually helps by showing excitement and doing proactive research into purchasing in my market area. I don't have the time to be a personal research assistant. We only get paid when the deal closes. If someone turns into a data pumper, that's a huge turnoff and I generally don't continue working with them. That being said, I do everything for my clients and give them my all when they show their loyalty and respect in return. 

Also, Let's not even bring up deals that fall through. 

[Joshua D.]

@James Wise

I am not an agent... But here in Montana agents are so happy to have an out of state person call because the are selling their California houses in droves and moving here. They are buying up all our 350-700k homes. (Usually that price point was harder to sell)

So here, my understanding is that agents love these out of state sight unseen buyers. No showings and full price offers.

Sitting in church this morning and we have 5 families who have moved here from California this summer. For a town of 3000 that's a big deal. And those are just the ones in church... This is a crazy time for Montana.

[Michael Plante]

easy way for an agent to know you are a serious buyer 

Google their name Billy Smith cel #.   This gets around the Zillow filtered phone number 

Text them a picture of drivers license and a screen shot showing proof of funds   As well as a screen shot from the county websites for the 4

Counties I own property in, showing the list of properties I own 

I also text  Hi this Is Mike Plante   I saw a property you listed which I am interested in.

Are you able to write the offer if I decide to make one?

So far has always worked like a charm 

[Peter Tverdov]

I filter out a TON of people and am very picky with who I actually work with. Most buyer leads go to my other realtors now that I'm a broker. Sad to say I get 1 good lead for every 10 people who contact me on BP. The site is littered with tire kickers.

[Jarrod Askin]

@James Wise

Good read, Well done. I’m in Boston so we do a little better than $5.75, but your point is well made and valid. I think what new RE agents must realize is the amount of knowledge you can gain from a good investor. You can’t put a dollar value on that.

Where do I find your show?

[James Wise]

Originally posted by @Russell Brazil:

Originally posted by @James Wise:

Originally posted by @Scott Mac:

James talks until he is blue in face--hopefully people will take his advice.

[James Wise]

Originally posted by @Jarrod Askin:

@James Wise

Good read, Well done. I’m in Boston so we do a little better than $5.75, but your point is well made and valid. I think what new RE agents must realize is the amount of knowledge you can gain from a good investor. You can’t put a dollar value on that.

Where do I find your show?

 I'm not going to be able to run afoul of BP's advertising in the forums rules (as much as I'd love to) so you'll just have to hit google. It ain't that hard to find.

[Jarrod Askin]

Ahh my bad. Didn’t mean to set you up like that. I already found it. Thank you. 

[Steve Miklashevskiy]

@James Wise can you shorten your posts? My ADD kicks in after the second paragraph (oftentimes after the first), I don’t finish reading your posts, I’m sure they are very valuable.

😉😉❤️❤️

A realtor should not ignore the client, until and unless the client shows absolutely no interests and/or does not engage, does not participate in the conversation

[James Wise]

Originally posted by @Jarrod Askin:

Ahh my bad. Didn’t mean to set you up like that. I already found it. Thank you. 

[Jay Hinrichs]

Originally posted by @Michael Plante:

easy way for an agent to know you are a serious buyer 

Google their name Billy Smith cel #.   This gets around the Zillow filtered phone number 

Text them a picture of drivers license and a screen shot showing proof of funds   As well as a screen shot from the county websites for the 4

Counties I own property in, showing the list of properties I own 

I also text  Hi this Is Mike Plante   I saw a property you listed which I am interested in.

Are you able to write the offer if I decide to make one?

So far has always worked like a charm

Clever..  !!!

[Jay Hinrichs]

Originally posted by @Joshua D.:

@James Wise

I am not an agent... But here in Montana agents are so happy to have an out of state person call because the are selling their California houses in droves and moving here. They are buying up all our 350-700k homes. (Usually that price point was harder to sell)

So here, my understanding is that agents love these out of state sight unseen buyers. No showings and full price offers.

Sitting in church this morning and we have 5 families who have moved here from California this summer. For a town of 3000 that's a big deal. And those are just the ones in church... This is a crazy time for Montana.

I was just up in Bozeman area fishing out at a nice lodge and private water,  when I got back to BoZ airport I had time so picked up a RE mag prices are higher there than many west coast cities etc.. looked like 700k or so was the median price point. and buy a ranch or land and then jump to 2 to 20 mil.. and more.. I can remember land in Mtn back in the late 70s and 80s was very cheap. so those who bought land there have really made some Monster profits on appreciation..  Oops not suppose to talk about appreciation LOL

[Steve K.]

Certain markets (like mine, and like Montana that has been mentioned) have a VERY high percentage of deals being done with both out of state buyers and sellers, and we're obliged to work with them. However the median price point is also much higher, which adds a few zeros to your hourly wage calculation, so it's all good. 

[Wale Lawal]

@James Wise

I guess you are able to executed this service and payment system because you are your own broker.

How do you advise Investor-Agents that are not yet a broker like yourself to navigate the Broker rules that says all money must come to the Broker and the broker will pay the Agent.

Thank you

[James Wise]

Originally posted by @Wale Lawal:

@James Wise

I guess you are able to executed this service and payment system because you are your own broker.

How do you advise Investor-Agents that are not yet a broker like yourself to navigate the Broker rules that says all money must come to the Broker and the broker will pay the Agent.

Thank you

 That's a good question. I think the only way to answer it would be to say that it's got to be a question for you and your broker to discuss. Maybe they are interested in it, maybe they aren't. Maybe it makes an agent interested in opening up their own shop when they otherwise wouldn't. Maybe it doesn't. Lots of variables to unpack in that question.

[Drew Sygit]

@James Wise have recommended agents charge upfront for their time for a couple of decades!

Started after I read an agent interview in the local newspaper, where the agent actually bragged about their commitment to their client in showing them over 100 houses before they found the right one.

I actually copied the article and included it in my presentations at real estate offices with a estimated breakdown of how much that agent actually made per hour - very similar to your math:)

We're also cautious in working with OOS investors. We'll have a 30 minute discussion with them to "sell" ourselves and then tell them about our program where we charge $x upfront for our time, that we'll credit towards any property they buy through us or hire us to manage within the next 90 days. We'll do a limited desktop review for free, but charge a fee for visiting a property and taking a walk-thru Marketing Evaluation (we do NOT call them inspections for legal purposes).

It never ceases to amaze me that so many newbie investors wnat to write an offer on a property they found on Zillow, but have done VERY limited market analysis. There's so much info online now.

I'll add one other tidbit to think about: If an investor claims they want to buy a $50-$150k rental, how serious are they if they can't afford, or see the value of paying a nominal upfront fee?

[Joe S.]

Originally posted by @Peter Tverdov:

I filter out a TON of people and am very picky with who I actually work with. Most buyer leads go to my other realtors now that I'm a broker. Sad to say I get 1 good lead for every 10 people who contact me on BP. The site is littered with tire kickers.

So you give the potential tire kickers to your rookies as a favor? 😂

[James Wise]

Originally posted by @Joe S.:

Originally posted by @Peter Tverdov:

I filter out a TON of people and am very picky with who I actually work with. Most buyer leads go to my other realtors now that I'm a broker. Sad to say I get 1 good lead for every 10 people who contact me on BP. The site is littered with tire kickers.

So you give the potential tire kickers to your rookies as a favor? 😂

 Lol...Can't learn how to spot a tire kicker if you've never worked with one before. He's just speeding up the training process.

[James Wise]

Originally posted by @Drew Sygit:

@James Wise have recommended agents charge upfront for their time for a couple of decades!

Started after I read an agent interview in the local newspaper, where the agent actually bragged about their commitment to their client in showing them over 100 houses before they found the right one.

I actually copied the article and included it in my presentations at real estate offices with a estimated breakdown of how much that agent actually made per hour - very similar to your math:)

We're also cautious in working with OOS investors. We'll have a 30 minute discussion with them to "sell" ourselves and then tell them about our program where we charge $x upfront for our time, that we'll credit towards any property they buy through us or hire us to manage within the next 90 days. We'll do a limited desktop review for free, but charge a fee for visiting a property and taking a walk-thru Marketing Evaluation (we do NOT call them inspections for legal purposes).

It never ceases to amaze me that so many newbie investors wnat to write an offer on a property they found on Zillow, but have done VERY limited market analysis. There's so much info online now.

I'll add one other tidbit to think about: If an investor claims they want to buy a $50-$150k rental, how serious are they if they can't afford, or see the value of paying a nominal upfront fee?

 Lol...100 hundred houses.....Bless her heart.

[Chris Clothier]

Originally posted by @James Wise:

Originally posted by @Russell Brazil:

 ...Especially those whom I don't think have the ability to close. I spend a lot of time bluntly telling them why I think they are a flake. From there they learn and adjust or in some cases give up but at least we're equipped with a reality check at that point...

I had to laugh when I read this.  I think there is an outside chance I would actually pay money to see this conversation!

I think there are a lot of business owners, not just realtors, who would do well to understand what you are really saying here.  You save yourself a lot of headache and wasted time this way.

[Joe Splitrock]

Originally posted by @James Wise:

Originally posted by @Drew Sygit:

@James Wise have recommended agents charge upfront for their time for a couple of decades!

Started after I read an agent interview in the local newspaper, where the agent actually bragged about their commitment to their client in showing them over 100 houses before they found the right one.

I actually copied the article and included it in my presentations at real estate offices with a estimated breakdown of how much that agent actually made per hour - very similar to your math:)

We're also cautious in working with OOS investors. We'll have a 30 minute discussion with them to "sell" ourselves and then tell them about our program where we charge $x upfront for our time, that we'll credit towards any property they buy through us or hire us to manage within the next 90 days. We'll do a limited desktop review for free, but charge a fee for visiting a property and taking a walk-thru Marketing Evaluation (we do NOT call them inspections for legal purposes).

It never ceases to amaze me that so many newbie investors wnat to write an offer on a property they found on Zillow, but have done VERY limited market analysis. There's so much info online now.

I'll add one other tidbit to think about: If an investor claims they want to buy a $50-$150k rental, how serious are they if they can't afford, or see the value of paying a nominal upfront fee?

 Lol...100 hundred houses.....Bless her heart.

 I would never hire an agent that showed someone a hundred houses. Anyone who doesn't respect their own time, will not respect my time. I always laugh when people talk on BP about getting a hundred offers rejected to buy one house. I always wonder what real estate agent in their right mind would participate in such nonsense. 

The customer is not always right. Not all business is worth having. Focus on profitability, not scaling unprofitable business models. There is an old business joke, "we may lose money on every transaction, but we will make it up in volume". 

[Mike Reynolds]

Originally posted by @James Wise:

Originally posted by @Mike Reynolds:

OK, I am not a realtor so different perspective here. I hired an OOS realtor last year and he is awesome. He is also a BP member now since I have used him. I understand, it is a business but often you never know who will be a whale or a minnow. (I am a crappie but wanting to be a whale)

He found a property and as luck would have it we bought the first one from him. It was his (and my) first commercial property. It wont be the last though. I would pay this guy a retainer if he asked. He is awesome. No, I wont buy every property he puts in front of me. But I will buy only from him as he has more than proven himself as an asset to my company. At least in that state anyway. 

 Well the thing is, I've never had a potential client reach out to me and say "hey man, I'm probably going to be a crap client. I assume that I won't close anything and will be way more work than a typical client of yours for less money. Can we work together?"

In other words, everyone seems to think they will be the "whale" as you put it. In reality, I know the overall probability of closed sales to properties reviewed so most everyone is going to get the same treatment. No need to play the guessing game. I put the onus of getting a deal done vs being a tire kicker on the investor. If they close deals, cool we close deals. If they don't close deals, that's cool with me too.

To put it another way. Imagine a gym that would only charge it's members based on the amount of weight they lost. I know some are going to be thinking "ohh man that's great. I only have to pay if I lose weight" but that's the incorrect thinking. That'd be a complete failure for everyone involved. Gym wouldn't make any money and thus wouldn't be able to provide it's members with a decent place to work out. Without a decent place to work out they'd be more likely to lose less wait. Everyone fails.

 I get it. I'm in construction so I deal with the same type of people. If I sign a contract today they want it done tomorrow even though I have several I am already working on. 

We all hear horror stories about realtors, builders, mechanics, etc. But it's always one side of the story. Same thing goes for LLs, tenants and customers. 

[James Wise]

Originally posted by @Chris Clothier:

Originally posted by @James Wise:

Originally posted by @Russell Brazil:

 ...Especially those whom I don't think have the ability to close. I spend a lot of time bluntly telling them why I think they are a flake. From there they learn and adjust or in some cases give up but at least we're equipped with a reality check at that point...

I had to laugh when I read this.  I think there is an outside chance I would actually pay money to see this conversation!

I think there are a lot of business owners, not just realtors, who would do well to understand what you are really saying here.  You save yourself a lot of headache and wasted time this way.

 lol I aim to entertain.

[James Wise]

Originally posted by @Joe Splitrock:

Originally posted by @James Wise:

Originally posted by @Drew Sygit:

@James Wise have recommended agents charge upfront for their time for a couple of decades!

Started after I read an agent interview in the local newspaper, where the agent actually bragged about their commitment to their client in showing them over 100 houses before they found the right one.

I actually copied the article and included it in my presentations at real estate offices with a estimated breakdown of how much that agent actually made per hour - very similar to your math:)

We're also cautious in working with OOS investors. We'll have a 30 minute discussion with them to "sell" ourselves and then tell them about our program where we charge $x upfront for our time, that we'll credit towards any property they buy through us or hire us to manage within the next 90 days. We'll do a limited desktop review for free, but charge a fee for visiting a property and taking a walk-thru Marketing Evaluation (we do NOT call them inspections for legal purposes).

It never ceases to amaze me that so many newbie investors wnat to write an offer on a property they found on Zillow, but have done VERY limited market analysis. There's so much info online now.

I'll add one other tidbit to think about: If an investor claims they want to buy a $50-$150k rental, how serious are they if they can't afford, or see the value of paying a nominal upfront fee?

 Lol...100 hundred houses.....Bless her heart.

 I would never hire an agent that showed someone a hundred houses. Anyone who doesn't respect their own time, will not respect my time. I always laugh when people talk on BP about getting a hundred offers rejected to buy one house. I always wonder what real estate agent in their right mind would participate in such nonsense. 

The customer is not always right. Not all business is worth having. Focus on profitability, not scaling unprofitable business models. There is an old business joke, "we may lose money on every transaction, but we will make it up in volume". 

 Unfortunately in a lot of the relationships involving a new investor and a new agent neither of them are aware that the agent isn't actually making any money. Then of course the agent eventually figures it out and poof we get a thread on BP with an investor trashing lazy agents.........It's a vicious cycle man.

[James Wise]

Originally posted by @Mike Reynolds:

Originally posted by @James Wise:

Originally posted by @Mike Reynolds:

OK, I am not a realtor so different perspective here. I hired an OOS realtor last year and he is awesome. He is also a BP member now since I have used him. I understand, it is a business but often you never know who will be a whale or a minnow. (I am a crappie but wanting to be a whale)

He found a property and as luck would have it we bought the first one from him. It was his (and my) first commercial property. It wont be the last though. I would pay this guy a retainer if he asked. He is awesome. No, I wont buy every property he puts in front of me. But I will buy only from him as he has more than proven himself as an asset to my company. At least in that state anyway. 

 Well the thing is, I've never had a potential client reach out to me and say "hey man, I'm probably going to be a crap client. I assume that I won't close anything and will be way more work than a typical client of yours for less money. Can we work together?"

In other words, everyone seems to think they will be the "whale" as you put it. In reality, I know the overall probability of closed sales to properties reviewed so most everyone is going to get the same treatment. No need to play the guessing game. I put the onus of getting a deal done vs being a tire kicker on the investor. If they close deals, cool we close deals. If they don't close deals, that's cool with me too.

To put it another way. Imagine a gym that would only charge it's members based on the amount of weight they lost. I know some are going to be thinking "ohh man that's great. I only have to pay if I lose weight" but that's the incorrect thinking. That'd be a complete failure for everyone involved. Gym wouldn't make any money and thus wouldn't be able to provide it's members with a decent place to work out. Without a decent place to work out they'd be more likely to lose less wait. Everyone fails.

 I get it. I'm in construction so I deal with the same type of people. If I sign a contract today they want it done tomorrow even though I have several I am already working on. 

We all hear horror stories about realtors, builders, mechanics, etc. But it's always one side of the story. Same thing goes for LLs, tenants and customers. 

 More often than not the horror stories we here about realtors, builders, mechanic etc.....It's often rooted in folks doing business with the cheapest possible folks. If you're always looking for those swimming at the bottom of the pool you're always going to have a high probability of issues. This is universal to all industries. Folks just don't learn.