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Updated about 10 years ago, 11/11/2014
Real Estate Agents: dealing with non-buying investors
Question for all real estate agents: How do you deal with people who looks at lots of properties, but never seems to buy any?
As an investor, I look at a lot of homes and properties and I go for months, if not a year without buying anything (on the MLS anyways - I do buy off the MLS all the time), and all the while, my realtor is driving around showing me all these properties. I feel bad. I truly believe that no one should work for free.
To be honest, I would be ok with my realtor saying "hey Bao, I'm not going to show you any more properties because frankly I don't want to invest in the gas and time anymore". I'd be perfectly fine with that honesty, it would make it easier for me to just call up the listing agent of the property, and I'd just hop from listing agent to listing agent, instead of sticking to 1 agent that might sell me 1 property every 12 months, after 50+ showings during those 12 months.
So for now, due to the need to be loyal, I keep calling up the same realtor and feeling bad that this person is driving around showing me properties that I most likely not close on, and this hesitation to look at as many properties as possible might hurt my chances of finding a good property.
So how do you realtors out there back away from people like me? Perhaps my realtor is already giving me these signals, but I'm too dense to pick up on it. :-)
@Bao Nguyen Do you at least drive by these properties to check out the neighborhood before you request a showing ? Is there a reason why you aren't buying ? Is it because you're afraid or is it because you can't find anything worth buying ?
If you know you're some what abusing the relationship you have with this agent why not make a nice gesture and take him/her to lunch to discuss what the issues are with the properties you're viewing or give them some type of small stipend for their time and gas. If you feel like this agent needs to be a part of your team then you have to do something to keep them motivated to work with you. I work with a lot of investors but I haven't ran into this issue. I think if you start driving by the properties before you request a showing it will cut down on the amount of showings you request but I'm still interested in knowing why you're not actually buying anything.
@Cierra Seay The reason why I don't buy is because it's not a good investment that would return the COC rate I'm seeking. The properties I look at are properties below 50k that requires rehab - listings only take good pictures, and leaves out the damaged areas. Only once we see the house in person can we fully assess what the repair costs are, and factoring repair costs, it does not make sense to purchase.
I find that agents are really good at giving me a listing of "predefined, database queryable" properties: 3/2 properties in x, y, z areas that are under xxxxx thousands of dollars..etc. As an investor, I'm willing to buy in all areas, no matter the condition nor the number of bedrooms or baths, as long as that property (fully fixed up) can return k% COC. It appears that my criterias are not what realtors are used to working with.
It's true that I think everyone should get paid, but at the same time, I don't think it makes a lot of sense for me to pay my realtor since I have not received any properties from him that is investment worthy. I do try to help him out by always calling him to show properties that I think could be investment-worthy so he can get some commission if I do purchase. However, I'm starting to lean towards just dealing with the listing agent of each property to make things easier.
Bao, I could have written your original post myself. I am in exactly the same situation and not long ago said to our realtor "I feel bad, you keep showing us all these properties but they just don't work out" and he responded with "that's OK, you're a good client and that's my job", but I'm only a good client when the ratios of show to sell is in my favor, and that ratio is quickly dropping! And he hasn't been all that enthusiastic lately, to be honest. I too think it would be so much easier to just work with the listing agent but I feel guilty for dropping our realtor out of the picture at this point.
There are two places I want to look at right now and I'm hesitating because I don't know if I'll buy either one and I hate asking my realtor to show me more properties, again.
I'm sure that a frank conversation would solve the problem but I don't know if my realtor would be honest. He's a friend too, so that complicates the matter. If I went behind his back it's almost a guarantee that *this* would be the one I would buy, and he'd be angry and I wouldn't blame him.
I just don't know the right solution, so no help here really, just the same situation.
@Bao Nguyen Just curious if you found a property you like you would then allow the listing agent to represent you and the seller ?
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#1 Personal Finance Contributor
- Rental Property Investor
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You could ask the listing agent to show you the property, maybe even around when they are doing another showing. I do that by e-mailing them. You can let the listing agent know you are working with somebody when you see the house. If you get serious enough to write an offer, then ask your abused buyer's agent to help. Do some site-seeing on your own. That's what I do those few times a year when the NWMLS has something worth seeing!
I'm not much help either, but this is exactly why I got my license - so I could have 24/7 access to MLS - including all the agent remarks - go see thousands of houses and submit as many offers as I wanted without wasting anyone's time but my own. I felt bad enough having an agent show me houses that we didn't like when we were buying our first personal residence ;)
Sounds like what you need is not so much a "buyers agent" but perhaps a partner that is an agent. If you buy one house per year at around 130k, you'll recoup the cost of a license. Maybe if there's a Mrs. Bao she might be interested?
I think there are a few things to consider.
Are you comfortable writing up offers, pulling your own comps, and familiar with the various steps in the purchasing process...do you need that assistance, or no?
I was in a similar situation, not getting any deals done. But I'm my case, I was writing offers, just not getting them accepted, and I wasn't low balling either.
I was initially seeing properties my agent suggested.
Then I started to do my own we qualification. Sitting down every day to browse through new listings and price changes, going to weekend open houses, look at pictures, do a drive through outside, look up permits, violations, and use my agent to get comps. Once I narrowed it down I go with my agent to see the properties first hand.
Still not getting any scores, so I spoke to my agent, and she suggested I deal with LA directly and I may be losing deals because seller agents aren't double dipping on my offers.
Then I moved to a phase I will call up LA directly to inquire and request showings, when they asked who I am I tell them I am a cash buyer who can act fast once I see the property, but "I travel a lot and may use a buyer agent to represent me if I am too busy or not available..." and to gauge the LA's reaction.
Originally posted by @Cierra Seay:
@Bao Nguyen Just curious if you found a property you like you would then allow the listing agent to represent you and the seller ?
Certainly I would. I see nothing wrong with this.
Honestly, I would have fired you unless you were using me to help you purchase & list the non-mls properties you were picking up and rehabbing. (especially since these properties are sub $50k). But I am more direct.
I usually go with my gut on whether someone is going to actually buy a house or is just another tire kicker. I also will request proof of funds or a pre-qual letter from a lender before even showing property.
If you aren't using the agent to list your properties, then do him a favor and talk to the listing agent directly.
An Agent must be willing to have a candid conversation with clients and customers alike. Working on commission generally forces a certain amount of honesty, even if it is uncomfortable.
You didn't mention if you fix and flip, or if your buy and hold. If you fix and flip, you could list all of your flips, whether you purchase through your Agent, FSBO. This will help ease the blow and financial expense to the agent. AND/OR you could use your Agent on the FSBO's you purchase as well. You might find your Agent can secure a better price for you, with a FSBO. My investors have me call the FSBO's and I let them know I am working with a capable Buyer who I would consider introducing their purchase too (I prefer to be the one in contact with the FSBO). I want to know if they will pay for the Buyer's representation if I can find a Buyer to close a deal for them. Almost everyone says yes.
It is all about loyalty and a mutually FINANCIALLY rewarding experience. If your Agent is giving up other paying opportunities to serve your needs, then your business could actually be costing them. The cost of working with non-producing clients is rarely as low as gas and time.
You mentioned that your agent is not bringing you good enough deals for you to buy. Well, perhaps if you had a deal where you were loyal to your agent on all of the deals you put together, they will start proactively seeking out deals for you. Sending letters, contacting FSBO's, prospecting. Ask the Agent how you can create a lucrative business together. If they don't have any ideas, find another agent!!
You can do other things to help your Agent remain interested in your goals regardless of your lack of production. Every investor i regularly work with send ALL Of their friends, family, and colleagues to me, which is GREAT for my business. Now, they NEVER send other investors to me, for obvious reasons. My investors have become exponentially more valuable to me, because the people they refer to me respect their recommendation to hire me, and value their experience as a successful investor. It all comes full circle.
I work with a low number of investors at any given time. Everyone is in the market for a good deal, so finding a buyer for a good deal is never a problem. You are also talking about low dollar purchases, so the competition is fierce. Investors can bankrupt Agents by abusing their time, so I appreciate your concern for your Agent. Sounds like your relationship might need a little tweaking, but you are certainly off to a good start.
@Sam Leon I am comfortable with doing my own due diligence: figuring out recently sold comps, writing offers, etc, I am from my area, and do drive-bys everyday, so I know these neighborhoods in and out - I have even befriended some closing companies and property inspectors that are ready for me to give them work. I only need an agent to unlock the door. I agree with you though, that going directly to the LA seems like a better idea since they get double commission, and more inclined to help you close the deal faster. I would follow your advice and hook up my agent with a few closings on some properties that I found to make up for "abused history", but there's no incentive for me to keep calling my buyer's agent if I'm the one that's finding all the leads.
@NA Jones "Mrs. Bao". lol! No Mrs. Bao yet. I think it might be easier for me to just go knock on doors to find sellers than finding a willing Mrs Bao to help. All kidding aside, it's the time, and not the cost, that's the issue. Being a licensed Realtor means I have to work a minimum number of hours with a broker to keep my license current and active. I can't/don't want to afford that time spent working for a broker. Although this might be something I should re-think.
Originally posted by @Matt M.:
Honestly, I would have fired you unless you were using me to help you purchase & list the non-mls properties you were picking up and rehabbing. (especially since these properties are sub $50k). But I am more direct.
I usually go with my gut on whether someone is going to actually buy a house or is just another tire kicker. I also will request proof of funds or a pre-qual letter from a lender before even showing property.
If you aren't using the agent to list your properties, then do him a favor and talk to the listing agent directly.
I'm a buy and hold investor, so no selling from me, just buying. I am an all cash buyer. Again, the reason why I don't buy is not because I can't - it's because the properties presented to me are not investment worthy. The agents I've worked with are usually very good at presenting great properties for couples that could fall in love with the neighborhood, the updated kitchen, or the unique purple siding, etc. My decisions lack emotions and is based all on what kind of returns I can get from my purchase.
I would appreciate an agent that is blunt and honest and tell me to go away, I'm ok with that.
It seems like your agent doesn't have an issue with it. Not yet at least. I'd wait until they spoke up and then address the situation at that point, you may be worrying for nothing. In the mean time utilize this resource while you have it and see as many properties as they will show you.
I thought about becoming an agent my self but you have to get a brokerage to carry your license. Seems like too much of a hassle when they are plenty of agents out there praying for the 3%.
My agent is pretty good about working with me even though I am in the sub $50k market. We are hopefully closing on a $20k house next week that didn't take too much of her time, but did run into a small snag yesterday that would have been sorted out in five minutes is the listing agent had picked up the phone at any point. She is pushing me to hurry up and get my license and said she would be interested in my hanging it with her brokerage. Then I can do everything myself. I think it is partially in the hope she can pawn other people like me off on me since she is a one person office.
One thing I try to do is drive by each place I am interested in and take as good a look as I can from the outside. If it is empty like most I am looking at, I will try to look in all the windows and judge the interior condition. I then run all the numbers with a couple rough levels of repairs needed and I can get an idea of if the property is even worth a showing.
@Dave Alexander Abuse my agent until he speaks up? lol. Not a bad idea..haha! But I still feel bad. Although you're right: I do have the tendency to worry more than necessary. Agreed, not worth it to be a licensed Realtor if I'm not going to make it my full time job as well.