Why Do Real Estate Agents Flip with I Mention Flips?

Question

I have been attempting to create a network of real estate agents and brokers who might feed me potential deals with the intention of providing monetary compensation for their efforts. It seems however, a lot of agents with whom I speak glaze over when I tell them I am an investor looking for undervalued properties to fix and flip.

Common reactions are “isn’t everyone?” or “there are no deals to be had in this market” or “I don’t want to work for free,” or, once I tell them I’m already working with an agent, the conversation stops all together.

I have a broker with whom I am currently working. We have an understanding that he will represent me as my agent on deals. He set me up with an automated listing service that I can customize with keywords to find undervalued and distressed homes in my market. I find a property, drive by and look at them, check the neighborhood etc.; he provides seller’s reports so I can better analyze the deal; if something looks good, I get my contractor involved and we all talk about it.

My agent and I also have an understanding that I need to network with other agents to increase my deal potential, he gets that. What I find is other agents aren’t interested once they know I’m already working an agent.

I see the term “investor friendly real estate agent.” Am I to presume that many agents prefer to work retail only, but others are also interested in working with investors, as is my agent?

What is the proper approach or etiquette for talking to agents about networking with them to find fix and flips?

What kind of monetary incentive will agents expect if they feed me a property? At that point do they want to be my buyers agent, making the offer and receiving the commission, or do they just want a finders fee if the deal goes through? Perhaps it’s different for each agent?

I am interested to better understand the relationship between investor and agent.

Thank you.

Russell Brazil · Answer

Time management. I can not afford to spend time on clients who are not exclusive. With limited time I only work for people Im 100% confident Im closing a deal with. If Im spending time on you, and you are closing a deal with a different agent, then Im losing money.  This is going to be the case with pretty much any top agent....they need to use their time wisely to make the most money with their time.

Mike Cumbie · Answer

Hi @Jarid S. Johnson

It is against the REALTOR® code of ethics to get between a client and their agent. Once you say
"I am working with an agent" I am done with you Period. Anyone with the REALTOR® designation should be as well. Send your agent to contact me about the property I have listed. You will hear "Tell your agent to call me" more times than you can count.

Now if you are working with 15 agents and the one who brings you the property is the one who gets the deal (and more importantly gets the fixed up listing at the end), then sure... I'll call you when I see something that fits your criteria. But if I am going to get $327 for this junker and then you fix it and give it to your agent friend to list when all pretty for a $3400 commission, don't expect another call when the next homerun comes across my desk. Many investor agents don't expect loyalty, but do expect loyalty to a property we present. If someone else brings you an off market deal, I am good with that. If you take my deal and then push me out of the back end... ouch.... you cut me..... you cut me deep.....

Hope it helps and good luck in your investing!

Dylan Vargas · Answer

@Jarid S. Johnson Welcome! I am not exclusive to any agent. I tell all agents that if they bring me a deal I will use them as my buyers agent on that deal. I typically will use them as my sellers agent when I flip the house as well. The agent bringing you deals has to have a monetary incentive for bringing you deals. I would never go exclusive unless you have a home run agent that can feed you all your fixer/flip deals which I dont envision this happening. I will use certain agents for MLS deals but those deals are rare. Most agents want to work with me then call/email me with MLS deals (which I tell them not to unless they have inside knowledge of a deal) I am aware of the deal 8 hours or 8 days before the agent is aware of the deal. I would not say " I am working with an agent" and your agent should understand that in order to get deals from other agents you cant be exclusive. Any house an agent shows me I will only use that agent for that house they had shown me. Its only fair as their time should be compensated. Good luck and keep us posted.

Mike Cumbie · Answer

Also as @Russell Brazil alluded to.

People call us with their "off market properties" so that either they are sold "quick" or they want them "On Market for best price" which puts them on the MLS. If they just want it gone (taxes coming due, want to liquidate for a new car or boat, kid needs braces, cousin Fred is in Jail again and needs bail) Those go right to exclusive clients. If nobody bites quick, then I dig through my DB of "interested investors" and send it out. I expect some of those to have agents calling on. You know who moves those in the area and you react accordingly.

Jarid S. Johnson · Answer

Thank you everyone for your responses.

Wayne Brooks · Answer

Yep, agree with all the above. For the last 5 years Everybody wants to be a flipper, most don’t have the solid financial ability and have unrealistic expectations.

And no agent can live off of referral fees.

James Stinnett · Answer

Hi Jarid,

To be honest, I have definitely been that agent before, glazing over with mention of flipping (mine was definitely an internal glaze, no obvious outward indications - LoL).  I understand the points the agents above made and agree with them, but I'll give you my experience and perspective here in Southern California, because some of the reactions you are getting may be based on the same.

From 2009 to present I have regularly been approached by flip investors asking me to call them when I come across a good deal. Now on an MLS listed deal I would make the commission offered, on an off-market deal I would want either something comparable to that, either from the Seller or Investor or a combination, or even a promise from the investor to list the rehabbed property with me. So, why the glazed look? Because I had so many investors that were willing to have me send them a good deal, yet all I really needed was a few for each type of property or area, that were solid investors. Today, I have maybe 3 that I work with and they have there ducks in a row - updated POF (not 3 months old), they let me write clean offers, they are all-cash, and they shortened their contingencies and they follow through on the purchase and then re-list with me. So, as agent, when you have a good deal, finding an investor that is willing to compensate you is not hard, finding the good deal is the hard part. So for me at least, in my market it was a matter of saturation - I had plenty of investors that wanted good deal and not as many good deal.

Now if the agents you are approaching are being told they would get a finders fee but not the commission or listing because your Broker would get that then they might be thinking well then I'll just take it to a broker that will allow me to write the offer, earn the commission and even list it when rehab is complete. Hope this provides some insight, best of luck!

Why Do Real Estate Agents Flip with I Mention Flips?

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