How to Find a REAL Investor Friendly Real Estate Agent

[Chris Dawson]

Finding an Investor Friendly Real Estate Agent

Are you looking for the elusive creature they call the “Investor Friendly Agent”? Have you searched Zillow and Realtor.com only to find imitations? Is the realtor your best friend’s nephew’s daughter’s mom recommended getting frustrated with your multiple low ball offers? Did your current agent give you the “deer in the headlights” look when you told him “It has to at least match the 1% rule?” Have you simply given up on finding this mythical being?

Well, you are in luck because I am going to give you the “Definitive Guide to Finding an Investor Friendly Real Estate Agent”!

OK, all kidding aside, there is a very real difference between a Traditional Real Estate Agent (TREA for short) and an Investor Friendly Real Estate Agent (IFREA for short). If you want to have any success in real estate investing; ESPECIALLY if you are investing out of state (like say Kansas City….), you MUST find a REAL IFREA!

So how do you find a possible IFREA, you ask?

• You can start by asking other investors who they use.
• Call the local real estate association and ask them for a recommendation.
• Most brokerage websites have a list of their agents along with a short bio. Look for the bios that talk about working with investors.
• Call the local REI clubs and ask for references.
• Search Bigger Pockets for agents that provide intelligent responses to forum posts and blogs. “PM me, I’m an agent and I can help” is NOT an intelligent response!

O.K., so now you have a few possible candidates, but how do you know if they really have the knowledge and experience to be an IFREA? After all, most agents don’t turn down business, so if you just ask them if they work with investors, chances are they will say, “Yes”.

Here are the questions you need to ask along with the answers you need to receive to know for sure that you have a true IFREA:

1. Are you a Full Time agent or a Part Time agent?

A. You only want a Full Time agent! Part Time agents are part time because they either are newbies and they are not yet making enough income to support themselves or they are part time because they are not able to make enough income to support themselves. Either way, you are settling for less than the best if you go with a part time agent.

2. How long have you been licensed?

A. I wouldn’t work with an agent who has had their license for less than 4 years UNLESS they are working on a team where the team leader has more experience and will be available to help, if needed. Don’t forget to verify their answers! Licensing info for every state is available to the public and in most cases is available online for free. Just Google the state you are investing in and “real estate commission” and you should be able to quickly find out if your agent is lying about their experience.

3. What percentage of your business is done working with investors?

A. The higher the % the better. If the answer is 60% or less, I would find another agent. If it was my money being invested, I wouldn’t settle for any agent doing less than 85% of their business with investors.

4. Approximately how many investor related transactions have you completed in the past year, and in your entire career?

A. Obviously, the more the better. Don’t be surprised if they don’t know the answer off the top of their head. Busy agents don’t have time to stop and count how many transactions they have done; but they can still give you an idea. The average number of closings per residential agent, per year, across the country is always around 11 or 12. You certainly don’t want average but you definitely don’t want below average!! If you want a residential IFREA then you should be looking for somebody that closes at least 20 deals a year. If you want a commercial or multifamily IFREA, the number of transactions may be much lower, but the dollar amount per transaction should be much higher (in any market).

5. Follow up to Question #4 – Show proof of your transactions.

A. This one might startle the agent as they aren't used to people asking them to prove their statements! After all, we are sales people and everyone knows that sales people tend to embellish sometimes…. Simply ask them to print off an MLS report showing how many transactions they have closed. It is the same thing a broker will do when he is trying to hire an experienced agent from another firm. This will work well for transactions recorded in the MLS, but your agent may state that "most of their deals are done outside of the MLS". This can be true; especially for commercial and package deals. If this, in deed is the case, then simply ask to see a few of the contracts. Every agent should be keeping a copy of all of their transactions electronically so emailing a few docs over isn't a major request. If the agent is unable to prove or unwilling to prove their answer to Question # 4, then find another agent! Most likely they just got caught in a lie!!

6. Are you an investor?

A. This can be a tricky question. If the agent answers “Yes”, then you need to follow up and make sure the agent won’t be keeping all of the “good” deals and leaving the bad ones for you. At the same time, if an agent hasn’t invested for themselves, then how will they truly know all of the ends and outs to investing? Look for an agent that has invested in the past or currently is investing, but one who won’t be competing with you for deals.

7. What kind of education/certifications/memberships do you have?

A. I wouldn’t get too caught up in this question because real life experience is way more important than fancy framed certifications and degrees, but I do think that a really good IFREA will have some form of education above the high school level needed to get your real estate license. Look for an agent who at least has a 4 year degree. Certifications related to investing are always a plus as are memberships in real estate related clubs. I would also suggest putting more emphasis on a broker’s licenses as opposed to just an agent’s license.

OK, now you know how to find a real Investor Friendly Real Estate Agent. So what are you waiting for?

Go build your own winning team… and good luck investing!

[Joanna Gossett]

Very helpful post, Chris! Thanks for sharing. I'm new to the investment world and the experience I've had with average agents thus far (for primary residences) has been subpar. I can't imagine what our experience would be like trying to use one for investment properties.... So this will definitely be helpful advice going forward !

[Joe Villeneuve]

Here's my list of questions:

1 - Are they HUD certified? A large number of your offers will be HUD, and you need to be certified to make these offers. They are done online, and with a long form.

2 - Will they submit all of your offers, or will they say you're offer is too low?  Your offer is based on your numbers, and not based on what you think you have to offer to get the property.  If you don't get the property, you don't get it.  If you don't make the offer you have no chance...and you never know how low of an offer will be accepted. (Now before I get all kinds of grief from some agents thinking I spend my day low balling offers, I don't.  Go back and read the first sentence after this stated question.)

3 - Will they make all your offers before you inspect the property?

[Kathryn Williams]

I've actually had an agent question my offer.  I am running the numbers my own way and since I'm a new investor, unfortunately my financing and commission costs isn't the greatest while starting out.  Some realtors don't understand that. 

[Stanley Kong]

Thank you for the great tips @Chris Dawson ! 

[Darwin Verdugo]

Thanks for sharing these tips, Chris Dawson I'll take them into account when looking for IFREA agents.

[Sharee Mason]

Just a couple of things to point out about this article:

-Some agents, like me, have been investors for a while but only recently became licensed.  It's important to ask for the fully story.  Just disqualifying someone because of their time licensed may mean that you miss out on working with investor-savvy agents who know the process first-hand.

-85% of business coming from investors is ridiculously high.  I don't know a single successful agent who has that amount of work from investors.  I may be a relatively new agent, but I've been investing for years, grew up in the business with my entire family either agents, brokers, investors, or flippers, and I still can't think of an agent that does more than 40% of their business with investors.  Keep in mind that agents make less on their investor clients per deal on the buying side.  It's important for us to have a well rounded group of clients to keep a healthy cash flow coming into our business.  

[Chris Dawson]

@Joe Villeneuve, just to clarify, there is no HUD certification for real estate agents. If your agent is telling you they are "HUD Certified" they are either lying or they got duped into paying for a worthless certification!

A licensed real estate agent needs only 2 things to be able to submit an offer on a HUD property:

1. Their managing broker must be registered with HUD and have an active NAID (Name Address Identifier Number). There is no education involved with this. Its just a simple registration process....that takes about 2 months!
2. The licensed real estate agent must then be registered with HUD, under their broker's NAID. Again, no education or training involved with this process.

There are no tests, no certifications, and nothing else to stop your average, uninformed, real estate agent from making offers on HUD properties. This is why it is SO IMPORTANT to make sure that you are working with a real IFREA!

I agree with your 2nd and 3rd questions....especially when dealing with HUD. Of all of the banks and government entities, HUD is by far the easiest and quickest to submit offers (it is NOT the quickest for everything else).  Your agent only needs to fill out an electronic form and hit submit.  They don't need your signatures, your proof of funds, or your deposit unless the offer is actually accepted.  There is no excuse for an agent to complain about sending in lots of offers on HUD properties.  It literally takes 5 minutes per offer!  

I will add though, that HUD has a rule about how much below the list price they will accept. It has been a couple of years since I was a HUD listing broker, but back then our asset managers told us no offers more than 15% below list price would even be considered. At the time, the asset managers told us that they only had the authority to sell the property for up to 10% less than list price. Between 10% - 15% would require HUD approval; which means weeks of waiting for a response. These numbers may have changes some but I am almost certain they haven't.

[Joe Villeneuve]

Originally posted by @Chris Dawson:

@Joe Villeneuve, just to clarify, there is no HUD certification for real estate agents. If your agent is telling you they are "HUD Certified" they are either lying or they got duped into paying for a worthless certification!

A licensed real estate agent needs only 2 things to be able to submit an offer on a HUD property:

1. Their managing broker must be registered with HUD and have an active NAID (Name Address Identifier Number). There is no education involved with this. Its just a simple registration process....that takes about 2 months!
2. The licensed real estate agent must then be registered with HUD, under their broker's NAID. Again, no education or training involved with this process.

There are no tests, no certifications, and nothing else to stop your average, uninformed, real estate agent from making offers on HUD properties. This is why it is SO IMPORTANT to make sure that you are working with a real IFREA!

I agree with your 2nd and 3rd questions....especially when dealing with HUD. Of all of the banks and government entities, HUD is by far the easiest and quickest to submit offers (it is NOT the quickest for everything else).  Your agent only needs to fill out an electronic form and hit submit.  They don't need your signatures, your proof of funds, or your deposit unless the offer is actually accepted.  There is no excuse for an agent to complain about sending in lots of offers on HUD properties.  It literally takes 5 minutes per offer!  

I will add though, that HUD has a rule about how much below the list price they will accept. It has been a couple of years since I was a HUD listing broker, but back then our asset managers told us no offers more than 15% below list price would even be considered. At the time, the asset managers told us that they only had the authority to sell the property for up to 10% less than list price. Between 10% - 15% would require HUD approval; which means weeks of waiting for a response. These numbers may have changes some but I am almost certain they haven't.

OK. Change the word "certified: to "registered"...and there is training, and although it isn't mandatory to get registered, it is mandatory by me for me to use a RE agent on HUD deals. There are a lot of specific items that they need to know in the process, and the form is long and detailed.

Minimums and maximums change all the time.  Offers not made are the only ones that will never be accepted.

[Peter R.]

Originally posted by @Chris Dawson:
This will work well for transactions recorded in the MLS, but your agent may state that “most of their deals are done outside of the MLS”. This can be true; especially for commercial and package deals. If this, in deed is the case, then simply ask to see a few of the contracts. Every agent should be keeping a copy of all of their transactions electronically so emailing a few docs over isn’t a major request.

I'm probably misunderstanding the intent @Chris Dawson are you asking an agent to email a potential client copies of contracts they have prepared on behalf of other clients?  As in asking to see actual submitted contracts?

[Jake Thomas]

I am a very investor friendly agent and multiple BP members could attest to that, but I disagree with this guide. It has good intentions but these are not all true. I invested for years before getting my license, just because I have only had it for three years doesn't mean I don't have enough experience. I am technically a part-time agent, but a part-time agent that has closed about 40 houses in the last 12 months. You even say the average agent closes 11-12 I think I far surpass that as a part-timer. Only 30-40% of my transaction are for investors, its not for lack of trying its for lack of inventory. Nobody cares about your certifications. Not once has anyone ever asked me about any certifications. 

In my opinion the best way to find investor friendly agents is get a referral from a fellow investor. If they like them then they must be at least decent at what they do. The other option is get your license since no one knows what you want better than yourself.  

[Shefali R.]

Personally I like working with agents who are or have been investors themselves (with a strategy similar to mine) and have a deep understanding of the micro market I am targeting. I give them details about what exactly I am looking for and share a simple formula for my investment threshold  (eg multiply monthly estimated rent by xyz) and suggest that they only bring deals to me when it meets that price criteria. This ensures that I don't waste their time and they don't waste my time. 

on a completely seperate note, I often get better deals and priority when I directly work with sellers agent (i.e. They get both sides of commission). 

[Chris Dawson]

@Peter R., if the agent is stating that they can't produce any records from the MLS or from CoStar (commercial database), then yes you should ask to see some submitted contracts. The agent will of course need to block out any personal or financial details about the buyers or sellers but the details of the sale are all public knowledge and available from the local county assessors office (usually online and for free).

[Bill Kenny]

Here is an even more simple list of questions..

1) What kind of cap rates should I expect in your market?

2) How many rentals do you own?

If they don't understand cap rates and how to use the factors that drive cap rates to determine value they may just be shooting from the hip. Must agents look like a deer in the headlights when you tell them you want your rents between the 1% and 2% rule. I've had to educate a lot of the more experienced realtors in the investor side of the business. Largely because they only dabble with investors. They ask what you would pay for it.. I tell them.. they think I'm crazy, then I show them the #'s and how to back out a sales price from a rent estimate. 

You will really never get to understand the human side of the business if you have never owned a rental when working with newer investors who are looking for buy and holds. Fix and Flips are #'s and locations, and its very important to understand you market and geographical area.  Rentals are whole different animal. see the following quote.... 

"Many novice real estate investors soon quit the profession and invest in a well-diversified portfolio of bonds. That's because, when you invest in real estate, you often see a side of humanity that stocks, bonds, mutual funds, and saving money shelter you from."

- Robert Kiyosaki

[Jia Liu]

THanks for the post! Very helpful!

[Andy Chen]

I'm still a newbie, but I interviewed a broker that owns her RE business and she offered to do the following:

- Have lenders that she relies alot on that can help fund my projects.  She called up her contact at some bank and already settle on a rate that I couldn't get myself.  Still needs to do paperwork but it was WAY better than other lending firms I've called up recently + no closing cost + without credit check.

- She has several contractors in several markets and all are licensed.  She even insures them herself even though she's not a GC as she used them to build up her own office and her rehab projects.

- The rehab supplies she gets are wholesale.

- She's willing to help me incorporate.

- She's an investor herself and just recently closed no a flip that's ~$1Mil and she still does this on the side.  If I remember right she also have several commercial real estate that she owns.

- Also willing to split commission and commission rates are negotiable.

- She also have legal contacts that can help with legal issues in case one day if you want to rent out your property and get into legal trouble.

- Most importantly, she is only 1 block from my house and she always answers her phone so getting hold of her is easy.

Based on the above, is she considered a strong candidate?

[Tammy Tivis]

Wow, thank you for this info @Chris Dawson!  We are looking for an agent and this is great food for thought and very helpful questions to ask.  I would not have thought to ask for such specifics, such as showing how many transactions they've closed in the past year.  

@Joe Villeneuve, thanks for the idea of asking if they will submit ALL offers.  If we run the numbers, we can only make an offer based on that.  I like the idea of submitting the offer prior to inspecting the property as well, leaving (I assume) a contingency of a couple of days for approval based on how well the inspection goes?  

[Lisa Guerin]

Thank you Chris for taking the time to list the questions and information for finding a great agent.

[Shiva Bhaskar]

Originally posted by @Andy Chen:

I'm still a newbie, but I interviewed a broker that owns her RE business and she offered to do the following:

- Have lenders that she relies alot on that can help fund my projects.  She called up her contact at some bank and already settle on a rate that I couldn't get myself.  Still needs to do paperwork but it was WAY better than other lending firms I've called up recently + no closing cost + without credit check.

- She has several contractors in several markets and all are licensed.  She even insures them herself even though she's not a GC as she used them to build up her own office and her rehab projects.

- The rehab supplies she gets are wholesale.

- She's willing to help me incorporate.

- She's an investor herself and just recently closed no a flip that's ~$1Mil and she still does this on the side.  If I remember right she also have several commercial real estate that she owns.

- Also willing to split commission and commission rates are negotiable.

- She also have legal contacts that can help with legal issues in case one day if you want to rent out your property and get into legal trouble.

- Most importantly, she is only 1 block from my house and she always answers her phone so getting hold of her is easy.

Based on the above, is she considered a strong candidate?

 If all of this is correct, she sounds great! It's nice to have one person who offers the whole suite of experience.