Using a Real Estate Agent

[Karl D. Gardner]

I am a new investor looking for suggestions on what is the best way to utilize a real estate agent to help find deals?

[Charlie MacPherson]

@Karl D. Gardner As @John Warren pointed out, you have to narrow down to one area of focus.  Otherwise, agents will think that you're an unguided missile who will just waste their time.

Next, prove that you're serious.  Have your funds all ready to go and prove it.  Get a REAL proof-of-funds - not a worthless piece of fiction that you can print off from a hard money lender's website.

Don't expect your agent to do anything but the most cursory financial analysis.  That's on you.

Clearly state your goals, for example: "I'm looking for fix & flip opportunities in Plymouth County, MA.  I'm looking for 2 bed, 1 bath homes in need of rehab, with at least 1,300 sq ft of living area that would be a candidate for a value-add by means of an additional bed and bath.  Town sewer or 3 bed septic is a must.  Maximum acquisition price of $275,000."

If you were to give me something like that, I know exactly where to look and how to rule out a good portion of the lemons.  We'll work very well together!

However, if you come to me and say "I'm looking for investments.  Send me anything good."  That's so vague as to be useless, and you wouldn't believe how often I hear that.

Worse, I get calls from "new wholesalers" looking for agents to work with.  These are the people who have seen a YouTube video, read a book or have spent a pile of cash on a guru course.  I end up having to educate them on the illegality of wholesaling in MA.  (Even discussing a home for sale that you don't already own is a license-required activity in MA)

Remember that we operate on 100% commission. We get no salary, expense account or benefits. We pay for our license, continuing education, NAR membership, state and local Realtor board membership, MLS, E&O, marketing, lead generation, websites, desk fees, gas, etc.

And if you're thinking that we're making a killing on our commission, don't forget that on a 5% deal, that is commonly split 50/50 between the listing and selling office.  Once in the office, I pay a good chunk off the top of the remaining 2.5% to C21 for franchise and marketing fees.  Then I split the remainder with my broker.

If we sometimes sound harsh about not wanting to invest a ton of time with a new investor who needs a lot of hand holding, now you know why - and now you also know why about 85% of new real estate licensees are our of the business within 5 years.