What to Ask a Realtor

Question

One of my close family friends is the principal broker at a local realty firm. He has about 80-100 agents working under him I believe and I was wondering what are some questions that I could ask him that might be able to benefit my wholesaling business? Should I ask if any of his agents specialize in wholesale properties? Or if I could get the contact info of any cash buyers they've dealt with? I'm sure he is a great source of knowledge and knows TONS of people, but I was just wondering what are some things that you all recommend doing when networking with a realtor. Thanks!

Mitch Kronowit · Answer

I would ask about short sales. Often times, when somebody is trying to get rid of their home, they call the agent/broker/Realtor they used when they bought the place. If they're underwater (currently about 250% of homeowners according to the general media), they will be looking to short sale their home. Now, many many many real estate professionals do not like dealing with and are not interested in short sales, so they probably turn away these clients elsewhere.

This is where you come in. Learn the short sale business and get those leads! Then you'll potentially have a supply of wholesale properties. You will then ask those same agents, provided you get the short sale approved by the lender, to find buyers for your EQUITY, not SHORT, sale. You do what you do best; they do what they do best.

Best of luck.

E. Jacobs · Answer

Correct me if I'm wrong, but there should be no conflict of interest because of the fact that the agent never had a listing agreement in the first place with the distressed homeowner. As Mitch said, the agents will shy away from a short sale because it is not worth investing time and resources into promoting a property in which there is great uncertainty about whether or not the bank will allow it to be sold and for what price. Therefore, after the agent has told the distressed homeowner that there isn't much they can do to help, there is no fiduciary duty, and in fact the agent may be HELPING the homeowner by later on discovering a buyer who may be able to free that owner from their upside down home. Even if the agent knew that a wholesaler would be interested in the property when the distressed seller first approached him/her, the highest price the agent would be able to achieve would be just that- a wholesale price. I'm not sure how this all works in practice, but that's how I see the situation. I would of course love to hear arguments going either way though because my only goal on BP is to gain objective knowledge to help me succeed in REI.

Brian Haskins · Answer

Most realtors won't know anything about wholesaling. They may be able to point you in the right direction of distresses property they have listed but it won't be wholesale deals where your working with the homeowners. The agent will be involved and to be honest it would be a direct conflict of interest because it's the listing agents job to get the most for a house and it's your job as a wholesaler to find the cheapest deal so it probably won't work. You may be able to find reo deals or distressed houses but understand agents will be involved. I always recommend working directly with homeowners.

Brian Haskins

Ali Samana · Answer

Here is a blog that I found helpful on SS:

http://www.biggerpockets.com/blogs/523

Steve Babiak · Answer

I tend to question the source of such "information".

Mitch Kronowit · Answer

Bingo!

There are several others here with much more experience doing this than I. But you have the general idea and that's precisely what a few investor friends of mine are doing.

Many real estate agents aren't interested in "nursing" a short sale for months and months, waiting for bank approval. So when a client calls them and says, "Hey, I'm underwater and need to dump this house. Can you help me?", many of these agents send them somewhere else, maybe even outside their brokerage.

But those are the leads you want. You contact these sellers, get their property under contract, then negotiate with their lender to approve the short-sale. If and when approved, you can then contact the same agent that provided you the lead, tell them, "Remember me? I got 123 Main Street approved for a short sale. Let's list it at $xxx,xxx."

You may or may not fix it up. Depends on the end-buyer you're targeting. To do all this you're going to have to get familiar with submitting short-sale packages, talking to sellers, and negotiating with banks. That's why I haven't done it... yet.

Good luck and go get 'em!

Ali Samana · Answer

Great idea Mitch...In this market there is alot of money to be made with the short sales.

Yes, E., I would ask them to market my wholesale properties for me so I can eventually build my database.

E. Jacobs · Answer

Thanks Ali, that sounds like a good idea. So I should ask if any of the agents market wholesale properties (hopefully to investors who buy with cash or private financing) so that I will have access to his/her buyer's list and eventually make it into my own buyers list too?

Mitch, your idea is interesting but I'm a little confused. Would you mind explaining a little more about what you mean by "You will then ask those same agents, provided you get the short sale approved by the lender, to find buyers for your EQUITY, not SHORT, sale." Are you saying, the agents will not be interested in handling a short sale (because the bank might pull out at any time), so I would negotiate the short sale with the bank, buy the property, fix it up?, then have the agent who gave me that lead take the commission on finding me an end buyer for market value?

Ali Samana · Answer

Hi E,

I would ask if she would help you market some of your properties.  With some of her connections you might get away with charging a bit wholesaling fee and it would make it worth splitting the fee with her.

Also, it would help you sell your props faster which might also make it worth the split.

Also, you would be building your buyers list while she helps you.

What to Ask a Realtor

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