What makes an Investor Friendly Broker?

Question

We have all heard the term "investor friendly" realtor/agent, and I know there is tons of good information on BP about what makes an agent investor friendly. But what makes a broker investor friendly?

If you're an investor, what do you look for in a brokerage?

If you're an investor/agent, or an agent who works primarily for investors, what do you look for in a brokerage?

Trevor Ewen · Answer

@Andy Gross

I will give an answer via brief anecdote:

About two years ago my wife and I started looking at multi-family, house-hack properties in Jersey City. We were referred to an amazing agent by a loan-officer friend in Florida. This realtor picked us up from the train station, had bottled water and snacks ready for us, showed us great listings, and peppered the history of each neighborhood throughout the conversations.

He was a brilliant man and huge fan of classic prewar buildings. In the end, when we pulled out our spreadsheets he was a little confused, assuming that the emotional pull of the property would do the job.

I say this to illustrate the point that this very excellent and talented agent was not investor friendly. He was looking for owner occupants who wanted to live and love the neighborhood for 20+ years. He was looking for the people who could find and release the nostalgia in the walls. Who could look at a high (New Jersey) tax bill and say: "For this house, I'll do it." He was looking for people who plan to own one house at a time, and each time they do, it's a dream home.

In reality, the investor friendly agent is the one who shows us stuff that makes sense via numbers. Investor friendly agents know they may have to go through 20 listings, and it's not (supposed to be) the heart strings that will get us to the table. When you find this person, you will recognize the difference. They also recognize that it's not this sale that will keep them in business, it's all the sales over the course of a relationship.

Lisa Kohl · Answer

@Andy Gross A brokerage that is understanding of investor type deals as some are done outside of the box. Also if you're out there pounding the pavement and doing your own deals your broker should be flexible in regards to any sales quotas or goals they may have. Flat fee brokerage or small commission splits are important to me as all fees etc add up.

Jake Thomas · Answer

@Andy Gross Being an agent I looked for a very flexible broker when I started. My broker charges a flat fee per transaction, allows me to sell my own properties for no charge and doesn't care what I charge for commission. He understands that he only gets paid when I get paid.

If you are looking for an investor friendly broker or agent as an investor I always suggest working with an agent that also owns their own investment properties. The majority of agents only work with retail buyers and don't understand the first thing about rentals or flips. Talk with the agent and you should be able to figure out within a 5 min phone call whether they know what they are doing or not.

Robert O'Keefe · Answer

An agent like myself that knows the numbers, cap rates, absorption rates looks at these deals everyday, straight shooter, tech savvy.

Jessica Gonzlez · Answer

@trevorewen can you refer that agent to me please

Christina Carey · Answer

As an agent, I grew very tired of trying to find a broker that didn't disallow something - or several somethings, such as:

• A lot of brokers in Ohio don't permit property management - not that I want to be in that field, but occasionally something would come up where it was warranted (and worthy of my time), but alas, I had to refer the business elsewhere.
• I won't even get into the wholesale/assignment of contract topic - I was with another broker for a long time (also an investor) who allowed it, because he understood it. It was that same broker who would not allow me to take a listing at a reduced commission or for a flat fee.

So I solved that problem by getting my broker's license. : ) That said, I'm really an investor first, and a broker second, but now I can do all of the things I was "not allowed to do" before. I also do consulting for other investors, such as helping them develop scopes of work on a rehab - not that that requires a license, but it's more of a package deal for those who feel they need it, in addition to the licensed services.

I don't have an office - I work from my home, and my agents do the same. Therefore, there's no "floor time" or "desk duty" - something I never understood. If a broker is trying to recruit and they pitch floor time as a benefit, what I really hear is "I'm too cheap to hire an admin to answer the phone, so we need you to do it for free."

I don't charge my agents any BS fees like many larger firms do in order to offset their high overhead - yet another things that irked me when I was at the mercy of a broker. I remember closing one several years ago when I was with one of the national franchises - it was a small REO deal, like $30K, and the commission was a flat amount of $1,000, or something like that. I was on a 70/30 split, but wait, there are fees that come out of that 70%! So after the franchise fee, the technology fee, and there was some other fee, my real split on that deal was something like 55/45. Given there are plentiful low-priced sales in this part of the country, and with me being an investor-oriented agent, there was NO benefit in me sticking around with that firm.

Something else that was a struggle was finding a broker that offered a fair commission plan, which I think ought to relative to the agent's experience level - in other words, how much of my time is this agent going to need from me as a broker during their normal course of business? If they've been in the business awhile and have closed enough transactions, they ought to have the basics down, so I would expect to hear from that agent only when something weird comes up, and they need to know how to handle it and remain compliant with license law. Also, there isn't a one-size fits all model; someone closing mostly $200K sales will be better off with a flat transaction fee per deal closed. On the flip side, someone selling a bunch of $30K or $50K houses is probably best suited with a % split.

The bottom line is, as an investor-oriented agent, you need a broker who is flexible, and that understands more than "traditional transactions", or isn't so closed-minded that they aren't willing to learn something new!

What makes an Investor Friendly Broker?

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