The Role of RE Agents?

Question

Hi BP Forum!

I'm a first-time investor (already own a primary residence condo), and while I realize that getting great rentals would require buying off-market or doing some kind of value add (flipping) I'm buying off the MLS as a means to simply get started.

What do you think the role of RE agent in the buying process should be?

I've been talking to a few realtors in my local area, and they simply seem interested in setting up a search on the MLS and sending me the results (something a Redfin/Zillow search does). I've pressed them on what their qualification process looks like (e.g. 1% rule or anything market-specific), but I'm getting a lot of "narrow it down, and we'll figure out the best." Is that normal, or am I not finding the right agent for my purchase.

Granted I'm looking for a 200k-ish condo (instead of a 500k-600k MF), so the commissions are lower, but I still think they should be qualifying what they send me somewhat.

What are your thoughts!?

Bob Okenwa · Answer

@Victor Menezes

There are two ways to look at it:

1) From the investor standpoint, it seems like the agent is doing the bare minimum and going about their business, not really caring about your investing needs.

2) From the realtor perspective, working with/for someone they do not know, has never closed a deal, and spending time analyzing properties on their behalf is more likely to end up as time wasted, so minimum effort is given until that investor proves themself.

I personally don't feel that it's the realtor's job to analyze deals/do the homework for the investor, although I will assist in double-checking the numbers on a property that my client is interested in. If someone brings me something they're interested in, then I will help them analyze that property. Investors need to remember that odds are you are not the only client that realtor has, and time is money, which means their time will go to people that bring them money.

When an investor I haven't worked with reaches out to me and asks for me to find them deals, a test I like to do is send 2 or 3 solid properties I find right off the MLS that seemingly meet their criteria and ask the investor for their thoughts on each. 90% of the time I get no response so these people weed themselves out and I don't have to waste my time with tire kickers.

Ultimately, it's your job to narrow things down and find a few properties that stick out as potential leads. I only set people up on drips if they request it, but the way it works is you're supposed to funnel things down by either finding properties in the drip, or having the drip adjusted with very specific parameters. I can't help you find properties if you don't know exactly what you're looking for. Once you prove yourself as a serious buyer, then an agent will work harder to find you deals both on and off market.

Victor Menezes · Answer

Thank you both for your insights!

@Bob Okenwa

I think you bring up a good point. I suppose it's still up to the investor to set the criteria (e.g. condo with x price point, HOA, etc) and have the realtor setup searches that gives the investor a list to evaluate. The realtor can then validate the investor's assumptions based on their pulse of the market (rental comps, etc).

@Jonathan Greene

What are some smart questions you can ask a realtor during an initial call to gauge their experience working with investors? I've had a realtor recently tell me "if the rent pays the mortgage, then you're set." Suffice to say that was a quick call.

Drew Sygit · Answer

Most markets have a few agents that have refined their processes for working with serious investors.

Try to find these agentsby looking at the agents involved on "investor special" deals, or "handyman specials", etc., and small multi-family transactions.

Then you'll have to work your way up their list as they'll have relationships with other investors already.

Jonathan Greene · Answer

@Victor Menezes a good tip off is to ask them how they check rental comps for multi-family units. If they just say they run the same bedrooms, they are wrong. You do that and look in rentals in multi only. When an agent includes apartments as comps, they don't know what they are doing.

You can also ask, as others have said, how many investors they work with and if they invest themselves. Do they use CAP rate and when? If they don't know that CAP rate applies to 5 units and up, they are not going to help you going forward and probably don't know what CAP rate really is.

You can ask if they know wholesaler or work off-market themselves. You can ask what expenses you should factor in to your calculations. If they don't talk about property management (or doing it yourself), as well as insurance and CapEx, they don't know anything.

Alecia Loveless · Answer

@Victor Menezes The agent I work with brings me deals that are in house at his agency if he thinks I might be interested as soon as they arrive. He knows what markets I’m primarily interested in in our region and understands many of the things that attract me to a deal.

If I haven’t been in touch with him in a two week period he sends me a text to check up on me and see what I’m up to. Now I’ve known him for about 23 years as both a Realtor and a friend but we’ve also closed 4 deals in 24 months. He’s sent more than that but my workmen are stretched thin and it doesn’t make sense to me to keep buying more properties when I’ve already got things under rehab now.

So I’d say once you’ve found a Realtor to work with begin to develop a relationship with them. I’d personally build up at least a few properties in one location before moving to another town/region/state. Having a good team of a realtor, contractors, plumbers, electricians is hard to develop sometimes so staying in one area just makes sense sometimes.

Caleb Brown · Answer

I focus on investors. When I help clients I....

1) I never set investors on search(unless they really want it), I set myself up on one and review the new listings that hit the MLS. From there I analyze rent, ARV, area, etc and send it out.

2) I connect you with local PM, GC's and other vendors.

3) Hunt off market for deals so we aren't relying on the MLS.

4) Help guide you to the hot spots.

Biggest thing is finding an agent that does this and understands the space. Agents that love investors will help you find a deal and build the long term relationship. Hard to find but you'll know when you do

Bob Okenwa · Answer

@Victor Menezes

Ask perspective Realtors how many investment properties they own, then ask how many investors have they recently worked with. Simply asking yes or no questions doesn't give enough context to their level of experience.

A very good agent should be able to ballpark rehabs as well.

Russell Brazil · Answer

You need to know what you want before you can have someone help identify it. Every person wants something different in a property. They are not an all knowing seer that knows what will work for you.

Jonathan Greene · Answer

99% of real estate agents don't know anything about investing, however, that same 99% of real estate investors don't know what they are looking for when they get started and do make the net too wide by saying things like " find me a good deal" and "I will invest anywhere that cash flows well" so there are errors on both sides.

If you haven't narrowed down your towns to 3 or your HOA to be between a certain amount then they might be right, but if you have that all lined up just tighten up what you want and make it easy for them. With condo investing, you don't really need an amazing investor-friendly agent to do the data, you just want someone who can run rental comps in the same complex so you know what your expected rents will be against the HOA and taxes and payments.

The Role of RE Agents?

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