About a year ago, I went to a REIA meeting and landed one of the best house flips I’ve ever done.
At this particular REIA meeting, I was given the chance to get up in front of the group and ask the group what I was looking for at the time. This is one of the really cool things about REIA meetings and is something we do in our own MeetUps as well.
I said I was looking for short sale opportunities in any market. Lo and behold, there just so happened to be a short sale specialist in the crowd.
I spoke with this woman after the meeting and quickly discovered that she was a real deal short sale specialist real estate agent. After we spoke, she put me on her very “short” (yes, bad pun) list of people to contact when she comes across a short sale in her market.
Her market is a good 30 miles from my office, but I kept her card on file and emailed her the next day telling her it was great to meet her.
About a month later I got a call from her. She said she had a short sale property in Scituate, Massachusetts that I had to see immediately. She had other real estate investors are list, but she had called me first because of our meeting.
Needless to say, I drove up to see if the next day. She ran some comps and I then put in an offer.
It was accepted the next day and off to the races we went.
To make a long story err, rather short (sorry, that’s twice now), we made over $42,000 in profit on that flip before taxes.
That flip alone made me a tried and true FAN of real estate agents…and it’s not just because my wife (the lovely and talented Christine LaCava) just so happens to be one too!
How to Estimate Rehab Costs!
Estimating rehab costs accurately can make or break your real estate business, and it takes years of experience for even the best rehabbers to master the art. However, you can expose yourself to less risk and get more accurate with your projections by learning how the pros think when estimating construction costs.
Real Estate Agents and House Flipping
Suffice to say, some of the best house flips I’ve ever done – many in markets I really didn’t know all that well – came from real estate agents.
Although most of the ways in which we find houses to flip are found through non-MLS listed listings, never discount a good real estate agent who knows your market to uncover excellent potential house flips for you.
Here are some tips on how to work best with them:
1. Take the Good with the Bad
As with anything in life, the good comes with the bad. There are good general contractors and there are bad ones. There are good plumbers and there are bad plumbers. There are good electricians and there are bad electricians.
The same holds true with real estate agents. It’s definitely true that not all agents are good to work with. Some are great to work with and others are simply not quite as competent.
And keep this in mind when you’re building any member of your house flipping team. But with real estate agents, work with as many as you possibly can and we out the ones you really think are competent and the ones who are less so.
For me, I worked with dozens and dozens of real estate agents. But I only really do business with a handful of them. You can probably expect the same kinds of percentages
Clearly, the agent from Scituate is one of the really good ones who are kept in touch with very closely.
I can’t say that for all the real estate agents have worked with, but when I get a phone call from her next, I’m getting in the car that day and going to see whatever it is she has.
2. Agents Are Businesspeople Too
Never ever forget that agents are in business too. They want to make a lot of money and time is money to them.
So your goal when you’re talking with them is educating them and making them understand your business model so they don’t feel like you’re wasting their time.
But likewise, keep in mind that most real estate agents are out for themselves. As with any profession, this is the rule rather than the exception. It’s the very rare and successful business person who is out for themselves and the same time out for you as well.
The smart ones realize that if they can help themselves while helping you enormously, you will both be successful. And that’s the best way to do business.
3. Training Is Okay
With some real estate agents, you’ll need to explain to them your business model, the demographics of what you’re looking for, as well as the geographic areas that you want to buy houses.
This is perfectly fine as most real estate agents are used to dealing with the retail sector and not the real estate investing sector.
Keep in mind that for agents that may not understand your business, you shouldn’t automatically exclude them either.
If you “train” a newer real estate agent into what you do and get them to hunt down properties for you, you both make plenty of money. Some of the best real estate agents I’ve worked with a relatively new agents who are go-getters and ambitious.
Your call with these types of agents is to build a relationship with them, get them to understand your business model and keep in close contact with them in your target market.
At the end of the day, they can make money both selling the property to you as well as selling the property for you when the renovation is all done.
4. Make Sure They Know You Roll…
When you first start networking to find good real estate agents for your house flipping business, you should talk to them about how you work.
Make sure you talk to them early on what it is that you do and how you’re going to be approaching your deals. This should involve you explaining to them that you may need to put in ten offers to get one deal. This also means that they may need to show you many properties – perhaps far more than the average home buyer.
As a house flipper, that’s just how you roll…and they need to know that up front.
When you talk to them about this at a networking event or over the phone, you’ll quickly get a sense as to how motivated they are. Finding houses to flip takes lots of legwork when you’re a real estate agent. If you sense them lacking enthusiasm on this initial consultation, you may have found a real estate agent that you don’t want to work with.
Likewise, if they appear motivated and ambitious and excited about the prospect of working with you and all the multiple deals your bringing in, that may be an early indication that you’ve really found a winner.
5. Build Rapport and Understand Them
Remember that as with any member of your house flipping team, the most important factor that keeps them on your team is the relationship you have with them. Make sure you understand from their point of view what motivates them and how their business operates. It’s not just all about you – to get them to work with you, you need to understand what’s in it for them as well.
In this comes from building relationships and understanding what they want as well is what you want.
6. It’s Not Just MLS
Properties listed in MLS are where most of your agents are going to source deals for you.
But also bear in mind that sometimes, they get deals outside of MLS as well. And in many cases, real estate agents have listings that are currently “off market”. These may be deals where the seller is just feeling out whether or not they want to sell. Real estate agents will have access to these kinds of properties.
But to get the best deals, you shouldn’t just wait around for things to be listed at the correct price in the MLS. Sometimes properties are overpriced and the real estate agents will understand that and know that, but in many cases still know about properties that are coming up for sale prior to them being listed in MLS.
7. Look Out for Short Sale and REO Agents
If a real estate agent has a direct link with the asset managers from a bank and they’re the REO broker, they’re going to know ahead of anyone else when deals come available.
So if a property is listed at $150,000 and for an investor it’s only worth $100,000, a good broker will inherently understand this. In that case, don’t waste your time, don’t put your offer in because the banks aren’t going to accept anything that’s too far out from what they’re expecting to sell for.
Actively seek out these kinds of specialized real estate agents, meet them, befriend them, have a cup of coffee with them and keep them in your Rolodex as well as make sure they keep your card in their Rolodex when they get a good deal.
For me personally, real estate agents have worked extremely well for me. Many other real estate investors would disagree and may tell you that you never want to buy anything on MLS due to the fact that everybody knows about it. And when everybody knows about it, the chances are that the price is going to be out of your range to make your numbers work.
This is precisely the reason why you should meet and get to know as many real estate agents as possible. If most real estate investors think this way and you do the opposite, you now have a leg up on the competition.
If you keep the ideas from above in mind, you too will find plenty of excellent house flips from real estate agents.
If you’ve made it this far, please leave a comment below! What do YOU think about working with real estate agents? Please leave a comment and share your thoughts!
Photo: Alan Cleaver