How do I motivate Real Estate Agents?

40 Replies

Hi everyone,

I love this bigger pockets thing, I learn every time I come in and participate.  Now I want to learn how to motivate real estate agents.  I have asked three separate realtors to put in offers for me in the New Port Richie, Florida area.  none of them have even bothered to reply, now I understand that I am putting in offers at 20% below asking price, but that's what I am willing to pay for the properties, the way I look at it I'm exchanging my money for homes, and that is a serious commitment.  I want to buy 10 properties in that area this year, but I'm looking to make money, that's why they have to be good deals I know it's going to take a lot of work, but I'm willing to put in the work. 

 I even had one of the realtors tell me, "it would be good if you could get that property on those terms, but it would be unlikely." This particular property is a short sale, so I would think that this is a motivated seller.  Some people are not willing to put in the effort, but I am, so I will keep insisting.  I could offer to pay their commission upfront, but that would make it an awful deal for me.  I don't want to dog on realtors, I know I have to raise my game and that's why I'm procuring my license, but in the meantime, I always try to speak to the listing agent, I also changed my strategy and spoke to a non listing agent, but that didn't work either, anyone have any other strategies?

Referring to the 80/20 rule mentioned on one of the podcasts, 80% of the work is done by 20% of the agents. Keep looking for the right agent that is willing to do the work; they are out there. I would recommend going to local REI meetups to try and meet agents there. While you are there, also get agent recommendations from non-agent investors. You should come away from the meetup with a handful of contacts and hopefully one of them will be a good match for you and your business plan.

Best of luck.

Pay them $350 per offer. They will get paid instead of wasting their time. No one likes to work for free, and they likely know writing the offers you want will be them working for free.

I do not have experience with agents but I do have experience with math. You need to find the right agent.

The 80/20 rule is definitely true but I'd like to introduce you to the Pareto principle. Almost ALL the work is done by an extremely small amount people. This same rule applies to agents as it does to a game of monopoly. What happens at the end of every single monopoly game? One person gets everything. In the case of agents; pretty much 10 agents or less will do an extremely high amount of work. 

"If you want something done then give it to the busy man."

Thanks, @Adam Detig and @Cody Evans I'm actually in the middle of reading the 80/20 Sales and marketing book, by Perry Marshall.  He touches on the Pareto Principle, It makes me excited to know that my competition may be lazy, and I'm not just being delusional.  I do feel you Mr. @Russell Brazil I  have to find a happy medium, but paying upfront fees is not going to do it for me.

Originally posted by @Luiny Tavares :

Hi everyone,

I love this bigger pockets thing, I learn every time I come in and participate.  Now I want to learn how to motivate real estate agents.  I have asked three separate realtors to put in offers for me in the New Port Richie, Florida area.  none of them have even bothered to reply, now I understand that I am putting in offers at 20% below asking price, but that's what I am willing to pay for the properties, the way I look at it I'm exchanging my money for homes, and that is a serious commitment.  I want to buy 10 properties in that area this year, but I'm looking to make money, that's why they have to be good deals I know it's going to take a lot of work, but I'm willing to put in the work. 

 I even had one of the realtors tell me, "it would be good if you could get that property on those terms, but it would be unlikely." This particular property is a short sale, so I would think that this is a motivated seller.  Some people are not willing to put in the effort, but I am, so I will keep insisting.  I could offer to pay their commission upfront, but that would make it an awful deal for me.  I don't want to dog on realtors, I know I have to raise my game and that's why I'm procuring my license, but in the meantime, I always try to speak to the listing agent, I also changed my strategy and spoke to a non listing agent, but that didn't work either, anyone have any other strategies?

 You seem to have rejected the obvious answers that have been given. Enjoy your "fantasy world", but you won't be getting offers submitted.

from the homework I have done on this topic, I figure the only way to get an offer through is to contact the owners directly.  could I do it through direct mail to the home address?

That’s just a bad idea.
As for a short sale property, the owner may be motivated but it is the bank that makes the decision, and they are looking for close to market value.
The $350 an offer is a good way to get a decent agent to submit offers. If it takes 10 offers per acquired property, that seems reasonable.
Otherwise, you need to find a newbie agent who may be willing to play the game if they have no business. But with a newbie agent you’re running risk since they just don’t know a lot, Especially with short sales.

@Luiny Tavares   You should start by asking agents what the average list / sell percentage is for similar homes sold in your area over the last 6 months.  In my local market properties on average are selling at 98.2% of list.  

Your local number will give you an idea of whether you're wasting his time or not.

Assuming that the property is priced somewhere near actual market value, and you're coming in 20% lower, I can tell you that I wouldn't bother working with you either.

It takes about 2 hours to get an offer submitted and followed up.  I'd guess that offers that are 20% below market have about a 1 in 500 chance of succeeding.  It might well be worse than that.

That means that you're asking your agent to do 1,000 hours of work to get an offer accepted.  Not only that, you're low balling, and his commission is based on the sale price, meaning that he's probably going to gross something like $2500 - which is then split with his broker.

In other words, @Russell Brazil is exactly right.  Pay that agent well.  I like his $350.00 per submitted offer idea.  

Or, continue to work on getting your own license and see how much YOU like working for free.  I bet you'll change your mind very quickly!

You won't change the agent, just keep trying until you find the investor friendly one.  Most agents work in the retail world so you have to find investor friendly ones.

@Luiny Tavares ,

For the short sale piece, the seller will accept $5. Because it's not them that takes the hit it's the bank, as @Wayne Brooks stated. The bank has a number that it will cost them to remove the existing owner, hold the property and also the deductions they get to take as well as the money back in late fees and maintenance if it;s a govt backed loan. So they usually are not overly motivated sellers. 

The biggest motivator for an agent in my opinion is a solid proof of funds. Let them see the cash you are ready to spend and your track record. If you have an account with $3Mil in it, then they need to know that and have proof to submit with the offers. The biggest way to not get a response from me personally is to say "Trust me, I can get the money when we find the right place", when I ask for a POF. I have ran around enough times for people that cannot close to learn to make sure my ducks are in a row before we even begin.

I personally don't shotgun out lowball offers all day. Now I have no problem submitting them if the property actually has that value. If someone listed a 200K property at 240K, I have zero reservations about submitting something in the 180K range. I will happily defend that offer. But I won't continue to work with someone who just runs around throwing out 180K offers on properties listed..... and worth 240K without getting some form of compensation. Because someday after paying $X per offer that person is going to realize this strategy does not work. If I continue to do it for free then they will never realize the strategy does not work and "want to double our efforts" which means "Double my efforts for the same cost of zero".

Just my 2 cents and good luck!

Thanks @Wayne Brooks i will also try the bank directly.

Are you providing these agents you are reaching out to with a pre-qual or proof of funds and showing them you have the means to buy the property if your offers get accepted? That may help you get your foot in the door with an agent that is worth working with.

Excellent point @Charlie MacPherson in Massachusetts, just like in my local area of New Jersey, Real Estate tends to hold value.

The issue with this area of Pasco County Florida is that I see comps at very different price points, and that might just be a factor of me not knowing the local market as much as I should.  But that stat analysis that you gave me will help me will help me in comparing deals.

Hey @Ian Walsh I hear you Wholesale and retail worlds are different ballgames. What I didn't know is that it takes two hours to write up a proposal, that's something I'm going to have to try to systemize, to make it easier for agents.

Originally posted by @Michael Noto :

Are you providing these agents you are reaching out to with a pre-qual or proof of funds and showing them you have the means to buy the property if your offers get accepted? That may help you get your foot in the door with an agent that is worth working with.

 This is a good point  some  folks are tire kickers ,meaning not really able  to buy house but want A agent  to think they are really able to buy a house .Big first step you need to  shop and get a mortgage i.e prequalify .

Thanks, @Mike Cumbie I've thought about making cash offers, the hesitation I have is that some of these properties come with past sinkhole issues, and I'm afraid of not being able to get refinanced by a bank.  I think I'm going to have to study Geology, and Risk Management to invest in this area because sinkhole insurance is very expensive, I like to think It's going to swallow my profits as well as the property.

Hi, @Michael Noto I will go with the proof of funds route, but will also prepare the pre-qualification paperwork, cause I will need to get these properties refinanced anyway. 

@Luiny Tavares

Shortsales don't really work the way you are trying to put in offers. Sellers have zero motivation. They aren't getting anything at closing since the mortgage is more than the value of the property. They are basically just showing the property until they are forced out.

Typically, shortsales are listed at a slight discount to the market value to attract buyers. So, your attempt at 20% off is on top of the already built in discount.

The list price is not the accepted short sale price unless the listing specifically states so, which is rare.

Banks only review offers as signed contracts. They then review the hardship paperwork from the owner along with the contract. A negotiator is assigned to review the everything and determine if the seller is even eligible for a shortsale. This can take months before you even get an answer to your offer from the bank.

At the end of the day, the bank is likely to counter any offer you make well above list price because they want as close to market value regardless of the condition of the home.

If you come to an agreement on price with the bank, it can take months to get a final shortsale approval letter, which also has to go through the mortgage investors and the mortgage insurance company.

Your cash doesn't mean much to a bank because a shortsale can take over a year to close.

Most shortsale deals fall apart. People get fed up with the time involved and the stubborn banks and mortgage investors.

Most investors I know avoid shortsales because they've been burnt too many times by them. Since inventory is super tight, some investors are being forced to look at shortsales, but would still rather avoid them.

Originally posted by @Luiny Tavares :

Thanks @Wayne Brooks i will also try the bank directly.

 You will get nowhere by contacting the banks directly. In the case of a short sale, it's the owner of the property who needs to first accept your offer. In the case of a bank owned property, the bank will only deal with the listing agent.

Originally posted by @Luiny Tavares :

Thanks, @Adam Detig and @Cody Evans I'm actually in the middle of reading the 80/20 Sales and marketing book, by Perry Marshall.  He touches on the Pareto Principle, It makes me excited to know that my competition may be lazy, and I'm not just being delusional.  I do feel you Mr. @Russell Brazil I  have to find a happy medium, but paying upfront fees is not going to do it for me.

I mean... you could find an agent so new and inexperienced that they don't understand that they are working for free, and have them write the spaghetti-at-the-wall lowballs. 

@Luiny Tavares I think @Chris Mason actually has the best answer here.  If you find someone new that doesn't have anything better to do then you could just use them to literally write out your offers.  Not really use them for showings, comp analysis, etc. but have them push paper for you.  I've never come across a really successful agent that does this but it's not like my sample size is huge.  Now if you go 0 for 10 or 0 for 20 even a few agent is going to probably start rolling their eyes.  

I do think the dynamics change once you've done a few deals through an agent.  I have one that I use and she'll make offers for me that are what I would phrase as "lean but fair".  But I've bought multiple apartment buildings through her before so she knows that I can/will close if the price is right.  So while she might be "working for free" with many of the offers there will be a "working for a hefty paycheck" when one closes.

Wao, Love it, thanks for the reality check @Christopher Phillips every day I spend on this site is like a crash course, all of you are awesome.

Yep @Andrew Johnson I guess the wet behind the ear Real Estate agent I'm looking for is my self, I will also test out to see if I can entice those willing to write the "lean bur fair" offers your speaking of, but I understand that will come when I have a proven track record.

Short sale is a strategy for home owners to stall foreclosure.  No home owner really wants to lose their home. The likelihood getting approved these days offering at full or higher price with 1 week closing is less than 20%. That being said these days lenders do not even counter back for more after offers are submitted. They post it on auctions sites. Buyer pay 5% fee if gets accepted.  You can DIY online.

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