Investor/Realtor Relationship- How it can help you be Competitive

I make a point of working with Realtors as an investor. I suggest that students seek out those Realtors who understand the concept of lease options and can help their sellers understand lease options. Not all Realtors are completely familiar with sandwich lease options. However, this has become such a successful investment method that many Realtors have added it to their skill set. Most Realtors take continuing  education classes with sandwich lease options becoming a popular choice with realtors over the years.

Working with realtors as an investor brings competitive advantages as a path less chosen!

You Want to Help Realtors Better Understand Lease Options

Many Realtors are mostly interested in shiny new kitchen appliances and the latest trend in new home technology. You and I are a different breed by looking at things like qualified tenants and maximum sale prices. We’re more interested in a decent rent spread from the sandwich lease while a lot of Realtors only focus on preapproved buyers and staging a seller’s house for sale. But that doesn’t mean working with realtors as an investor can’t be a good fit.

Often, the first thing you need to do is inform Realtors that you are a knowledgeable and enthusiastic sandwich lease option investor. This is as simple as sending a letter or email to listing agents explaining your strategy and offering to share a short presentation with the details.

Something that Realtors have in common is they are always looking for new leads. A buyers’ agent is looking for the next buyer and a listing agent is looking for the next seller. Their repeat business is far and few between.

As a sandwich lease option investor, you offer repeat business to Realtors!

What to Share When Working With Realtors as an Investor

The type of seller that you are looking for through a Realtor is a seller that doesn’t immediately need to pull their equity out of the house. A seller that is more interested in receiving top dollar rather than fast cash. A sandwich lease option brings top dollar but it can take a year or more. That’s the seller, but what does the Realtor want…?

What you need to understand when working with Realtors as an investor is that he or she needs to be paid for what they do. You don’t want to make the Realtor wait a year or more to be paid in full. If you do make him or her wait, they will not suggest your offer to sellers. One technique that I’ve used in a seller’s market is giving the listing agent a portion of the commission upfront. This comes from the option fee that is applied to the purchase price when the tenant/buyer completes the purchase. You should be collecting an option fee between 3% and 5%. The total Realtors’ commission is typically 6% but this is split 3% and 3% between the listing agent and the selling agent. You can pay the full 3% to the listing agent.

You may also be able to let the Realtor “Double-Dip” when he or she collects the selling agent portion when the deal closes in a year or more.

Why would you do this? It’s simple logic because the Realtor is also going to bring you repeat business. That’s one of the big benefits that come with working with Realtors as an investor. You’ll be sharing part of the money but you’ll be collecting the lion’s share at the closing table. With a few emails and short presentations, you can soon have 3 or 4 Realtors bringing you several sandwich lease options every month – as much business as you want.

When a Realtor hears a seller say, “If my home doesn’t sell soon I might have to RENT it!” – the Realtor should immediately think of you.

Finding the Right Fit When Working With Realtors as an Investor

Ideally, you want Realtors who have an understanding of real estate investing. They are easy to find because most Realtors are investors themselves. Realtors interested in investment properties hang out at the same places as other investors – at real estate investor clubs and groups across the country.

It can also be worth your time checking out Realtors who specialize in the types of houses and neighborhoods you invest in. Drive through these neighborhoods looking for “For Sale” signs. Also, call on these listings in the MLS.

Key to working with Realtors as an investor is finding agents who:

Own investment properties. You want to know how long they’ve owned these and what types (single-family, apartments, commercial, etc.).

Have worked with investors. Have they closed any deals for investors? How did they feel about the process and the business relationship?

What types of investment deals were these (flips, rentals, sandwich lease options, REO, probate)?

How many investor deals have they worked on and how many closed?

Have they ever worked with lease options and sandwich lease options?

Which neighborhoods, price ranges, and other attributes do they know well and are suitable for your investing goals?

How time-sensitive are they to investor needs?

They should be able to talk in the lingo of investors. Still, if he or she isn’t already familiar with lease options, it’s not necessarily a deal-breaker. You may be able to draw on experience they have putting together seller-financed deals or other creative financing. Having third party financing sources can seriously enhance why you want to be working with Realtors as an investor.

Ask if they are interested in something like a rent-to-own or a lease option with their commission paid in full. Let them know you are a rent-to-own buyer looking for homes in their area. Do they have sellers open to something like this?

Also, don’t hesitate being clear about your needs. The more he or she knows about your objectives, the more effective a Realtor will be at tailoring their efforts to help you achieve your goals. The more you educate a Realtor about your unique advantage using sandwich lease options, the more you both will benefit. 

Wendy