What to Look For in a Strong Listing Agent/and Agreement For My Many Unused Investor/Agent Leads?

Question

Caution - seven lonely paragraphs ahead..... In response to my marketing, I speak to many people who respond that would like to sell their properties, but who want top dollar despite their properties needing at least some fix up to obtain highest value.

Realizing that I'm throwing away valuable leads that I've done the work to obtain, I would like to work with a strong listing agent and obtain the referral commission which I understand is usually 20-30% of the selling agents gross commission. I know that @J.Scott mentions that he does quite well from the referral commissions too.

I'm not sure what to look for in a listing agent, or the agreement/arrangement to have. I can look up an agents ID and see what their sales activity is in the MLS as either buying or selling agents,  and recently spoke to a buyers agent who offered assurance about doing the listing work, but the experience level didn't look so strong. It wouldn't hurt to provide a handful of leads and see how they do with them though.

I'm slow to realize it as it wasn't in my general business plan, but I see that I"m throwing away good referral leads, time, and the coin to get them. Any suggestions on what to look for in a listing agent and how to structure this business agreement? I dont see any form for it at the state's website. I don't know if a really good listor works as hard for 20-30% less, but referrals are common and I'm in a relatively strong sellers market now.  Any suggestions on how to structure such an agreement or what to avoid?

How to transition from a fixer lead to a retail lead also needs sharpening, and maybe the listing agent could help with this - I'm currently thinking of something along the lines of "The property isn't quite what I"m seeking, but it looks like you could get full market value if it were listed....and I know someone that would work hard for you that I could put you in touch with."

Apparently the listing agent submits the referral fee info to the title company for the closing, but sometimes the listor can "forget" to do so, so perhaps there is something more proactive to do upfront. I also include a link to thread of an agent who had a problem collecting his referral fee, and would like to avoid that and I'm sure he doesn't want to go thru it again.

Similar to Goldilocks, I think I'm leaving a trail of wasted money on the ground. Hope the length of my post isn't a threadkiller.....but unused leads can certainly be put to better use. My coach reminds me I need to "monetize" all that I can.

[url]http://www.biggerpockets.com/forums/21/topics/78226-a-fellow-keller-williams-agent-refuses-to-pay-my-referral-commission---help

J Scott · Answer

It sounds to me like you're asking two separate questions:

1.  How do I find a good agent who I can pass the leads to when I can't use them; and

2.  How do I benefit from passing on those leads.

The first question isn't too hard to answer.  You're likely either looking for a good retail listing agent (if your leads have equity and are interested in selling) or you're looking for a good short sale agent (if your leads don't have equity and want to sell short).

If you're looking for a retail listing agent, drive the neighborhoods where your leads tend to be, and look for the agents who seem to be selling the most houses in that area, that price range and that style of house (you can see the agents by the signs they put in the yards).  You'll mostly likely find that there are a handful of agents who are doing 90% of the listings -- these are the agents you want to call.

If you're looking for a short sale agent, that's a little tougher, but you can find them.  These days, they may advertise on billboards, on the radio or in the newspaper.  Short sale agents are doing a lot of advertising these days, and they work on volume, so they'll fight over your leads.  If you can't find them via their advertising, find an agent who has access to the MLS, and ask them to do a search of some of the listings in your target area -- find a few short sale listings and see who the agents are.  Again, 90% of the short sale listings will likely be handled by a handful of agents.

As to your second question, that's a bit harder...

If you're not licensed, it's probably illegal for an agent to refer you any part of their commission (I believe that's the case for most/all states).  So, you can either get licensed (my recommendation) or you'll have to figure out another way they can compensate you.

The best way I can think of to get compensation is to use these agents to list your properties when you sell, but to do it at a reduced commission to compensate for the leads you sent.  You can also ask them to pay for your marketing costs, ask them to provide MLS access/data, etc.  You'll have to get creative.

Mike S. · Answer

@Curt Smith I am also not licensed and have leads from yellow letters of sellers that want full price and are looking to sell this year and have plenty equity in their property.  I was thinking of selling the leads using a cost per lead structure.  Something like $100 a phone number and the agent keeps all the commission as I believe that this is not considered a referral fee and is therefore within the legal boundaries.  I still need to run this by my attorney.

A good way to find brokers/agents willing to pay for leads is to just type "sell my house" in google and click on the ads of local brokers running online ad campaigns.

Any other ideas on monetizing these leads?

Curt Smith · Answer

I hear folks saying that there's no business model for full retail priced leads if you are not an agent.

A yellow letters campaign turns up MORE of these types of leads than motivated sellers who will sell to an investor in todays market.  Especially that it's getting to be Spring time.

Any brain storming ideas for non-agents to monitize these leads?

curt

Misty W. · Answer

Another great way to pass on these leads is to a creative investor, they can earn on  deals with lower equity, for example doing a lease option and either assigning it or doing a sandwich lease. I get a lot of leads from wholesalers that they can't make work, and I offer 15% of what I earn.

Wayne Brooks · Answer

Your broker, where your license is, should have their own "referral fee agreement" form they use on a regular basis.  That form will be signed by the listing agents's Broker, not just the agent.

Burt L. · Answer

Slow in replying, but I do have an agents license, although I spend most of my efforts looking for properties to fix-up. Most all of the potential sellers I talk to have equity, instead of short sales.

I have heard both approaches - to look for a top listing agent to refer sellers to that have (or believe they have) properties that will sell for retail values. Conversely, since top listing agents don't have a need to split their commission with someone who referred them a deal, that I should look instead for a hungrier agent that isn't necessarily a top or established listing agent yet.

As for assuring that I will actually receive the commission split itself some months later, and there is no state-approved form for referral fees, its also been suggested that I should do a JV agreement with the person(s) I would refer retail seller deals to. Dont know if I need to bring an attorney in for drafting one, or use a standard agreement, if there is one.

If this can come together, it would seem that one could do as well or better with referrals than fixers, as my local market is becoming stronger and stronger.

How to transition from inquiring about a property as a fixer, to transitioning it into a referral lead is also something that I will need to develop as experience grows. This is the central core of the topic for me - what level experience agent to refer to, how to structure the agreement, and how to transition a fixer lead to a referral lead on the same phone call.

Sandy Blanton · Answer

Unless you're an agent you won't get any fees or other compensation. In Florida an agent is kissing the license good bye. If you are licensed, refer the leads to the strongest seller agent in your office.  Effective seller agents are the great minority. CRS.com is a good source. For short sales, refer to a CDPE, see CDPE.com.

J Scott · Answer

Just to follow-up (now that I know you're a licensed agent)...

I generally get 25% of the commission for the deals I refer.  I know other investors getting up to 35% of the commissions, but since I focus on short sales, the listing agent is already likely taking a reduced commission (banks generally only allow 2.5%) and the short sale prices tend to be a good bit lower than retail.  I don't want to be greedy, and the 25% is enough to cover all our marketing costs and then some...

What to Look For in a Strong Listing Agent/and Agreement For My Many Unused Investor/Agent Leads?

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