Real estate agents' perspective
Insurance Agent · Las Vegas, NV · Member since 2019 · 158 posts · 80 votes
I usually hear about qualities we need from our real estate agents as investors, but I don't generally know what agents need, especially when working with investors.
What does your ideal, investor, working relationship look like? What are your expectations from him/her? What value do you generally bring in your relationship with them? How much collaboration goes into making offers?
I'm legitimately curious about this subject as my first investments came outside the help of a realtor.
Simple answer. Cut the ********, dont waste my time. I dont mind opening doors, but trust my professional opinion when I tell you something like your offer of 70% of asking price for a house thats been on the market 3 days wont fly.
Your the investor, im the agent. I wont run your #s for you, thats your job. No reason to increase liability for me, and we may value things differently. Dont get cold feet. I can handle cold feet from first time homebuyers, but your supposed to be a professional. Act like it.
Im here to open doors, run comps, and do my best to get an offer accepted and get the transaction to the finish line if buying. List side is getting the listing marketed correctly and getting you the best offer the quickest in addition to guiding the transaction to its conclusion.
When I find you something that meets your criteria, your job is to pull the trigger and get your ducks in a row so we can close.
Agents only have so much time in the day, and for 99.999% of us we are 100% commission. I would rather work with first time homebuyers than a newbie investor, and that says a lot.
Professionalism goes both ways, you should expect your Realtor to be professional, and you should be professional towards him/her. Questions are ok to ask. General questions are probably better saved for google, though.
Really the most important thing is just this: 'Dont waste time'. Every minute I spend working with a newer investor is a minute I am taking away from another client of mine who I know will close. For some agents, that is not worth the risk.
Hope this helps, Good luck!
Most of this has been said, but just to reiterate the view from where I sit... I love it when a client recognizes my value and respects the time and effort I put into them. I do not write offers to come in second place, so writing un-realistic offers that have 0% chance of getting accepted is a no-fly zone for me. When clients have realistic expectations on the local market it makes everything run smoother, and I can actually deliver the goods. Loyalty is huge, especially if I tap into my network and resources to enhance a clients experience.
@Jacoby Atako - as an investor friendly agent, my favorite clients are active buyers who are ready to make a reasonable offer anytime they see a deal. They are qualified and have access to both cash and financing. I will use my expertise to negotiate them the best price and double check their numbers (ARV, rental rates).
They will contact me with properties they want to see after receiving my daily MLS email update. Sometimes they do offmarket / fsbo deals by themselves. I'm not involved and that's OK.
The clients I don’t enjoy are first time investors who say bring me a deal and when I do, they don’t buy anyway because they don’t have financing or confidence. I also do not like anyone expecting me to be sorting through addresses for them on a regular basis and emailing them weekly about properties to see. If I find a great deal in my area that you didn’t bring up to me first, I’m buying it. I can make a lot more on a good deal than a one time commission. Obviously if my client tours a property with me, I give them first chance to make an offer before I will.
A great investor friendly agent is also an investor. Many real estate agents are not investors. It is a completely different skill set to excite a couple about a flipped house’s gorgeous kitchen vs estimating rehab numbers with an investor in a smelly, dated house. Now I know that building that kitchen in any house will cost me about $17,000. I tend to prefer the beat up houses at a steep discount because I can know for sure that the hardwood, hvac etc I put into the house is going to last a long time.
@Jeremy G.
That's a pretty good point. How much did you rely on your agent for a running comps, and getting a discount on the property you chose? Or did you already have those numbers for yourself?
@Alissa Engel
This is interesting. I'm an insurance agent and work on commission only as well. So I know there's also different markets. When real estate is hot, is imagine it's not worth an agents time to work harder for investors. But when the market is soft, those same agents will probably best down my door knowing that investors with cash are the only ones able to buy. I could be wrong, but that's my assumption.
@David M.
That's really interesting, it seems like a long term outlook, and setting up the seeds for a fruitful relationship vs the things that are making realtors more money right now in the hot market.
Right now is imagine anyone can sell a house, not meaning to belittle realtors, but it's a good market with low rates.
@Lesley Resnick
Do you mind me asking if you can give an example of something going wrong?
@Angelo Forzano
Yaaaaa, all about the market. If the market tanks and credit freezes up, investor relationships will keep realtors alive
@Natalie Schanne
This is EXACTLY what I've always wondered about agent/investor. Doesn't that deter investors from working with you? Knowing that a good deal that you found, you'd but yourself, which means the deals investors get are either found by them or less stellar?
@Jacoby Atako everyone is different and investors have to start somewhere. All I ask is that my client has taken the time to educate themselves, understand the terminology, understand what they’re getting themselves into, whether they are going to get a loan and put down 20%, pay cash or get hard money. I don’t want to client that went to one of those seminars were they blew fake sunshine up their *** and make them believe that they can be an instant investor.
@Jacoby Atako - there are enough properties for us all to be financially free and happy. There are many properties and many different areas (towns). Most investors like to cluster their purchases for economies of scale (handymen, supplies, showing properties) in particular towns and/or focusing on particular types (condos, fenced-in pet friendly, multifamily 2-4 unit).
Most DIY flippers or DIY rehab-then-rent investors can only do 1-4 projects a year. So they get their deal and they’re focused for a while. In my area there are new foreclosures every week. I want the client who says - hey, lets go see 133 Main Street (just listed), and while we’re at it, let’s go see 1 Smith St and 2 Broad St. Then they’ll write an offer on 0-3 properties. They’ve already sorted out things they definitely don’t want (septic, oil tanks, etc.)
LAST Point - don’t assume that giving a listing agent the double commission will give you the best price. I’ve known “unrepresented” buyers who paid a high price because when you use dual agency, the agent isn’t allowed to be on your side and help you anymore. So while the seller was willing to offer a $5000 repairs concession, you didn’t ask for it, so you didn’t get it. The double ending agent is not supposed to suggest anything to you in favor of one side or the other. Whereas, as a sole buyers agent, I’d always try to bargain significant repairs off the seller. I’ve met several friends who got great deals on foreclosures or short sales after winning a highest and best multiple offer situation because they found new material facts (hvac not working, buried oil tanks) and reduced the price by a lot.
Right. Again, it depends on what is needed for the "relationship." When I working a full time job 100+ hrs a week, my Realtor took care of things doing the day for me when I wasn't available. I think some full time investors don't realize or understand that notion of timing and availability.
Regarding the potential conflict of interest as an "investor with a real estate license," I tell my clients (investors and non-investors alike) that I don't compete with my clients. If they ask me to show a property, they basically have first dibs. I'll draw the line where if I've already put my own bid on it. I'm not going to compete against my own clients as that would not be serving my fiduciary responsibility. Yes, I've "lost" a few potential deals, but that's what happens when you do both simultaneously. Also, it works well when when I have clients who have different interests/capabilities. For example, I have a few clients who are more interested in tear downs; I not comfortable with building a house from scratch. So, it works out fine since we are not in competition. Meanwhile, I can still help advise / consult (bounce ideas off..) on the possibilities.
Its all part of the conversation and building a rapport. I understand what my client's needs are and they better understand my experience and expertise. There is one investor client who I think works with my mainly because I give her the time of day, and because I also invest...
@Jacoby Atako If I submit something to you that you haven’t seen I feel confident that a good investor will 1) give me feedback on their thoughts 2) respect me as the procuring cause, if they have not seen it 3) this is not necessary, but the real pros write their own LOIs and submit them to me in an email I can fwd to a listing agent or owner.
If there's interest, I will hop on the phone and give you my impression of why I thought this was a good opportunity (there's always a story) and the back of the napkin numbers that anchor my thinking: market lease rates, lease up time, scope of work of improvements and the value of the property once stabilized based on a conservative cap rate and NOI estimate based on my assumptions. This isn't an Argus analysis, I usually can do this on the calculator on my iPhone because I've done my homework. You'll have to plug in your lending costs and other hard and soft costs - I trust a good investor will do this work.
@Matthew Mazur
This is how I hoped working with a realtor would be. It seems like a lot of realtors don't go this far in terms of knowing a basic idea of the numbers.
I would love to write my own LOIs. Is there a specific format or fillable document that you give your clients? The first house I bought I literally googled "Nevada purchase agreement" and found an E-forms contract that I used.
Forms and contracts should be State specific since State law should govern. If NV is anything like NJ, commercial properties are basically unregulated which is where we use LOI's. A written contract is part of the offer on a residential property -- but that's NJ. Some other States don't start with a contract which is written up by the attorneys from what I hear. What was done with the other transactions you've done? Just use their format...
I suggest you connect with a NV agent or NV investor. Maybe the latter since you are trying to cut out the former it sounds like :)
@David M.
My first purchase was my primary, which we went through a realtor, but I actually found the home myself (before I decided to invest). The next 2 were off market with the contract I googled.
Truthfully, in this market, it just seems like the best opportunities I find are outside of using a realtor. Doing that helps me cut out a lot of costs, but it's way more time consuming.
I'm not a super investor, but want to buy 1-2 houses a year for the next few years and then let them build on their own. So doing a little leg work when I start shopping isn't really that bad since at this point it only takes a few months to find a good deal (so far).
I own an insurance agency and never realized how many opportunities I come across through clients. Hitting up your insurance agent is a really good, untapped resource. Houses that have flooded, or distressed situations come up often.
Yes, its normal that the "better" deals (at least for reno) are found "off market" (i.e. not on the MLS). That is a whole 'nother form of lead generation.
@Jacoby Atako I think most people (including myself) just have a word doc template that they build over time and print to pdf. Most investors also have specific language they have pulled from the contracts they use or even had their attorney provide.
My tip is to make an all encompassing LOI template that has a table with 3 columns - 1 for numbers 2 for category and 3 for the actual language. You hide the lines when you're done. Create a field for everything you would potentially include then when you want to make an offer you just save as, full in the blanks and delete anything that's not relevant. For example, you can have an offer with a financing contingency and language for no financing contingency offers. You can probably reference former offers put together by agents or counter offers as a starting off point.
@Matthew Mazur
That's awesome. Thanks
In this hot market where I am right now; having financing in place, a willingness to perform the required inspections before going in with an offer so that we don't have to have that condition (contingency) plus the ability to see the properties during business hours if at all possible. As it will likely be sold and gone by the weekend if the numbers work for other investors. The other part I enjoy about my repeat investor buyers is when they see the BIG picture. Location, condition, ability to BRRR these are all good things. I hope that helps answer your question at least in part Jacoby!
Cheers..lb
Its that a Canadian thing about showing during business hours? Or, are you working in commercial? I'm getting some clients feel they have to be available during the "9-5." Normally, residential Realtors are showing houses up to 8pm (or later on the vacant distressed properties) on weekdays AND weekends. That's the business for us anyway...
Hey David thanks for the follow-up question.. Not a Canadian thing Specifically no. It works best for my investors and buyers alike when we can see the property during regular hours. meaning listings go live first thing in the morning and we are able to see it at say 10 am have an offer written up, signed, sealed, and delivered by the end of the day (if they are not holding offers at a later date). We can confirm with lenders that financing will still work and line up any other ducks we need to. Add to that being a bit more northernly than NJ it gets dark quick and seeing a property in daylight is extremely helpful. To some extent as well it helps sort out those who are more serious about making a purchase; if they are willing to take time off of work to see a property. I know some people absolutely cannot do this because of work or commitments and I certainly accommodate those buyers. If I can't then I refer them to someone else who can. Though overall most work with me nicely on my explanation of the benefits of doing so. Knock on wood I don't seem to spin my tires nearly as much as some other realtors, and thanks to cooperation from the majority of my clients we are successful in a good amount of our offers and I have the ability to have a life with my bride and kiddos. An added bonus is that I am not overly tired writing an offer at say 8 pm which in turn lowers my chance of missing an important detail or being able to source the information I need from a lender or a lawyer.
I see a little bit different market I suppose. Many investors that I work with have day jobs. Besides, in the winter the sun sets around 4pm anyway... I always carry a flashlight anyway even in the summer as there always dark areas inside...
Thanks for the perspective, and take care
@Joe Cassandra that’s exactly how I read those comments. I appreciate your insight.
Well, some brokers do come up with good deals. However, they'll share them with people they think have the wherewithal to close and reasonable expectations (e.g. I want a 15% CapRate at half price is NOT reasonable).
Have you impressed upon the brokers you talk with either of these points?
Believe me, I'm not saying all brokers are great (lot of post-and-pray types) and the good ones are in the minority which makes them that much more valuable.
Well, some brokers do come up with good deals. However, they'll share them with people they think have the wherewithal to close and reasonable expectations (e.g. I want a 15% CapRate at half price is NOT reasonable).
Have you impressed upon the brokers you talk with either of these points?
Believe me, I'm not saying all brokers are great (lot of post-and-pray types) and the good ones are in the minority which makes them that much more valuable.
I am not sure if that comment was intended at me, but I can tell you my initial conversation with the "investor friendly" realtors was pretty similar. I told them I wanted a 6%+ cashflow. I gave them my parameters in terms of the type of property I was looking for (area, 3/2, min square footage, age of the home, etc). I got my letter of approval from a bank and proof of funds in case I decided to buy in cash.
A few properties came up but never met my criteria and I was told that it was going to be pretty hard to find those numbers in Vegas because the market was so hot. I started doing my own search and turned my notifications on and was able to find a GREAT opportunity that hit everything. I got the notification at 9pm at night, went to see it at 8am the next morning, then decided to call the listing agent directly. She was very open and gave me her insight, but then also mentioned there were already 3 offers on the property and they were planning on doing a highest and best. I was a little discouraged, but also realized that I could find houses myself and just had to be willing to work outside of a realtor. None of the realtors I had spoke with before even had time to get to that property by then.
A few days after that I approached someone I knew from my full time profession (off market) and ended up buying that house. Was pretty enlightening on working outside of a realtor.