Real estate investors and real estate agents often overlook the benefits of working together. Both parties can help each other close tough deals and find motivated sellers and serious buyers. True, a realtor takes a commission, and an investor buys at a lower ticket value, but the benefits of such a partnership can be priceless. Here are seven reasons real estate investors should partner with a realtor.
1. Realtors Can Provide Off-Market Deals
An off-market property means it has not been publically listed on the local multiple listing service (MLS). There are multiple reasons why an agent does not list an opportunity. For example, the seller doesn’t want the tenants to know, or the agent already knows which buyers to call.
There are many benefits for agents to work with investors and vice-versa. Agents have seller and buyer lists, and you, as an investor, want to be on those lists – or at least the buyer list, so when there is an opportunity, you get a call or email. You need to establish yourself as a serious investor. Brand yourself appropriately, and build a relationship with the agent, and, most importantly, show you can close tough deals. The agent can then become a source of TLC and buy-and-hold, off-market properties.
2. Agents Can Help You Find Cash Buyers
Ideally, if you are wholesaling, you have a buyers list, and you want to find properties that meet their requirements. Your profit is the “finders fee,” which makes up the difference in how much the cash buyer is willing to pay versus how much the seller agreed to receive.
Sometimes, however, wholesalers find themselves in a situation where they do not have enough buyers in their list, or their buyers are not purchasing, and they have a property under contract. Agents who strategically work with investors have relationships with multiple cash buyers and even corporate investors. They can help you find the right buyer but, of course, at a cost. Expect to give part of your “finders fee” to the agent as a “referral fee.”
3. Agents Market the Finished Fix-and-Flip Properties
If you fix-and-flip on a consistent basis, you may become an “agent’s best friend.” It’s all about profitability and you, as a real estate investor, play two roles: first as a buyer of distressed properties and, after rehabbing the property, as the seller, listing the property for sale.
Investor-friendly real estate agents favor this type of relationship. They will even give preference to it, if you prove you’re a serious investor, and a reliable “buyer” and “seller.” It can turn into a very profitable relationship for you both.
Your agent will find fixer-uppers, and then help you sell them once they’re fully renovated. This saves you the time spent on marketing to find and sell properties, and instead you can focus on closing and flipping.
4. Investor-friendly Agents Act as Lead/Acquisition Managers
When you are the one finding deals, you either have a team of lead managers and acquisition managers, or you do it all yourself. But, when you have an agent finding you off-market houses, the agent is the one having the conversations.
Not having to talk with sellers saves you a lot of time to instead focus on other aspects of your real estate investing business. The agent is the one speaking with the seller and negotiating on your behalf. When the agent understands your requirements and budget, he or she can do it all themselves, and simply seek your approval to get the deal closed.
5. You Can Monetize Every Lead
Although the simplest and easiest way to establish a profitable relationship with a real estate agent, many wholesalers and real estate investors still leave money on the table every day by not doing it.
Chances are you’re looking for motivated seller leads using multiple strategies, from cold outreach via cold calling, driving-for-dollars, and door knocking, to more sophisticated cross-channel marketing campaigns or inbound marketing, via PPC or Facebook ads. However, not all seller leads who want to sell are good leads for wholesaling and real estate investing.
You can provide retail leads to an agent and earn a referral fee. It’s important to have it documented and set how the fee is calculated. Sometimes it’s a flat fee, but usually it’s a percentage. For example, 1% of the selling price, or 35% to 50% of the listing agent’s fee.
Understanding how your real estate partner gets paid is irrelevant:
- If they are agents, technically the broker gets the commission and then pays them. Only then can they give you the referral fee from what they received.
- If they are brokers and doing the work themselves, they receive the entire commission, and the only cut is the referral fee they give you.
- If they are brokers and have agents working for them, the commission is split among everyone. They keep a cut, and the rest is split with the agents. Usually, investors get paid based on what the broker got to keep, or they are treated like an “agent.”
The “referral fee” is often paid once the house is sold. When drafting an agreement on how you get paid, don’t get too greedy. Some money is better than no money, and you are doing none of the work to get the house sold. On the other hand, the agent may be more motivated to work with a property that has a high potential for profit, if they know they’ll get a big cut from the referral. Take everything into consideration when negotiating.
How to Find Agents or Brokers Who Work with Investors
The answer is simple: if you are looking for brokers, contact the State Board of Realtors. If you are looking for agents, network and do online searches.
The State Board of Realtors has a list of all the brokers in your state, and there is also a list on the buyer side, with brokers that find the most buyers and ones that find the least. You want to target the top 20 on either list – those that appear on both lists are the ones to focus on, market to, and build a relationship.
If, instead of a broker, you are fine with having agents, then the best place to look for investor-friendly agents is referring to and asking your network or even a mentor. You should also search online, looking for agents that advertise the types of real estate you want, such as commercial, multifamily, or TLC single-family residences. Or, if you are looking exclusively for an agent to monetize retail leads, look for one that has a high rate of sold houses.
It may be easier to work with an agent who currently works with investors. They’ll add you to their buyer’s list, but you can expect competition with other buyers. You may also find agents that have never worked with an investor but are willing to give it a try.
Signs That You May Have Found an Investor-friendly Real Estate Broker or Agent
There are a few qualities that make the relationship between agents and investors easier, ranging from personal attributes to skill level. Here are some of the “must-haves” you should look for:
They Understand the Market
Regardless if they are helping you find a property or sell a rehab house, it is vital that the agent has an expert understanding of the local market, which relates to their level of experience and skill in:
- Pulling accurate “comps”
- Grasping which properties meet your requirements
- Understanding and foreseeing trends in the marketplace
If you do virtual real estate investing, or you are outside the city or state, it is imperative to partner with an agent who has a lot of experience in the area. They will provide the knowledge and guidance you need to make offers which are not too high or too low.
If you focus on wholesaling and flipping, you should identify the Hottest Zips for that market. So finding an agent who is an expert in a “micro market,” meaning they focus on neighborhoods, the surrounding area and counties within your market area, is a major advantage.
They Know the Numbers and Can Analyze Deals
What agents usually look at in seller properties versus what they look for for home buyers is very different from what they search and provide investors.
If the goal is to partner to get off-market deals and sell rehabs, ideally, you want to find a broker or agent who already has experience working with investors and understands the “lingo” and requirements, such as “cap rate,” “ARV” and “MAO”, and how to calculate the numbers. While the terms may not be familiar to agents, the concepts should be.
If the agent is new to working with investors, you probably need to spend time educating them on those concepts, even if all you want them to do is sell your rebah property. They need to understand the baseline, so you can profit on the property.
Experience Working with Investors is a Plus
It isn’t always possible, but working with an agent or broker with previous experience in investment deals makes the entire relationship easier and the process smoother for reasons mentioned above.
An experienced agent is also comfortable making the offers, and almost acts as a lead / acquisition manager, as they negotiate the entire process on your behalf. This is the dream. If you find them, make sure not to lose them.
Similar Values and Commonalities
It’s important to approach this as a long-term relationship. Think transparency and similar core values. You need to know what they are comfortable doing and how they perceive the relationship. If the agent sees investors as scammers that want to trick people out of their money, it is doomed to fail.
The priority is to find an agent who will boost your real estate business. Aligning your values and processes, and growing a relationship which may start as a business relationship and develop into a friendship can do great things for both you and the agent and business. This, of course, doesn’t happen overnight. It can take months to build a solid broker / agent relationship.
It usually takes about five weeks to see the first deal, if you expect to see off-market properties. The first may not be ideal, so always provide constructive feedback, as the agent learns your property needs.
Working with an Investor-friendly Real Estate Agent can Boost Your Business, BUT Make Sure You Have More Strategies
One deal every five weeks, or whenever it comes along, may not be enough, especially if you’re wholesaling. The key is to have ongoing lead generation and marketing.
GoForClose is the only all-inclusive marketing agency for real estate investors and wholesalers. That means we market to motivated sellers for you, using outbound marketing tactics, such as text messaging (SMS), ringless voicemails (RVM), cold calling, and emails. We have a specialized team, including trained VAs, better known as our Inside Sales Associates (ISA), who do the cold calling and live answer lead replies, prequalify, and schedule appointments to your calendar.
If you have questions or are curious to know more, request a free consultation below.
Wayne Hudson
Wayne Hudson has a background in sales and real estate - but with a passion for economics. He uses his knowledge of economics and real estate to help clients think strategically and make decisions to optimize their outcome.
As the company's business developer, Wayne works to help GoForClose grow.
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Wayne Hudsonhttps://www.goforclose.com/knowledge-base/author/opsgoforclose-com/
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Wayne Hudsonhttps://www.goforclose.com/knowledge-base/author/opsgoforclose-com/
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Wayne Hudsonhttps://www.goforclose.com/knowledge-base/author/opsgoforclose-com/
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Wayne Hudsonhttps://www.goforclose.com/knowledge-base/author/opsgoforclose-com/
