Realtor-Investor Relationship: Art, Science or Unicorn
Perhaps there is no relationship that is thought of more and executed less that the Realtor – Investor relationship. It should be so easy. The Realtor has access; deep understanding of the market and most of all can be the eyes and ears of a trusted Investor. The Investor has cash or at least access to hard money and wants to buy a deal. It should be so easy, not!!!
I sometimes joke about a good Realtor-Investor relationship as being ‘The Unicorn” of Real Estate.
The reasons are endless:
Rookie Investors call asking a long list of never ending questions, waste time and buy nothing or worse buy from someone else!!!
Agents immediately discount an investor call because of the last 10 calls produced work and no commission!!!!
Rookie Investors are looking for “The Deal” and want the agent to call them with the next one. How silly is that?
In this market agents sometimes let Asset Manager take a higher offer knowing it is going to blow up because the buyer is untested.
Rookie investors lock a property up by paying more than a good investor would only to blow up the deal by asking for price reductions in escrow or somehow getting cold feet. I hate the practice of lowering offers while in escrow. I understand there are legit reasons for it but I know many investors will over pay with the plan of lowering the price while in escrow.
I call offers that are purposefully high to lock up a property only to be reduced during escrow “Terrorist Offers” because they will blow up and take innocent bystanders with them. All parties and especially the investors that execute this process should be ashamed of themselves!!!
As an investor I see all types of behavior and unfortunately most of it is bad. That is why I have created 5 standards that I abide by at all times. I share these with you as perhaps they can become the standards investors hold themselves to and agents measure investors, because you never know when a Unicorn might show up.
Standard 1) When talking with a new agent always call them on a specific property and be very prepared. The agent’s time is valuable and you should not waste it. There will be time for relationship building as the process moves along. Don’t get upset on the first call if they blow you off. However, if they blow you off a second time move on there are a lot more agents than true investors.
Standard 2) Always – Always – Always do what you say you are going to do. Never say you are going to do “X” without doing “X”. Don’t over commit. If you can’t get by the property for 2 days don’t lie and say you are driving by it tonight. Also please follow up. If you drive a property or get a piece of data tell the agent what you thought even if there is no deal on the specific property. Would you like to be left hanging with no feedback loop? I thought not.
Standard 3) If an agent does work for you on a certain property they are getting paid if I buy that property period. Never – Never change horse. Agents are paid commission and they deserve their piece of the action regardless!!! I don’t care if you suddenly find the perfect agent after a few weeks and you want to throw them a bone. If a different agent did the leg work use the other agent, period end of story.
Standard 4) When I go into escrow I have 100% confidence I will close (I am 39/39 in closings). The only thing I ask for in this market is a walk through and this is the only time I will back out. I haven’t yet but I can see a situation where I see a Major flaw, a city violation or other major obstacle that I did not calculate in my cost structure that could cause me to back out, but to date all my agents have shared this data upfront so I have the best cost structure possible going in so I don’t have these surprises. As mentioned before I deplore the behavior of investors constantly reducing prices while in escrow. They should do their homework early!!!!
Standard 5) This is a people business and if you plan to be in the game more than 5 minutes you should NEVER forget that people make this business work.
Investors need Realtors and Realtors need true investors (Be a Unicorn!!!)
Good Investing
I sometimes joke about a good Realtor-Investor relationship as being ‘The Unicorn” of Real Estate.
The reasons are endless:
Rookie Investors call asking a long list of never ending questions, waste time and buy nothing or worse buy from someone else!!!
Agents immediately discount an investor call because of the last 10 calls produced work and no commission!!!!
Rookie Investors are looking for “The Deal” and want the agent to call them with the next one. How silly is that?
In this market agents sometimes let Asset Manager take a higher offer knowing it is going to blow up because the buyer is untested.
Rookie investors lock a property up by paying more than a good investor would only to blow up the deal by asking for price reductions in escrow or somehow getting cold feet. I hate the practice of lowering offers while in escrow. I understand there are legit reasons for it but I know many investors will over pay with the plan of lowering the price while in escrow.
I call offers that are purposefully high to lock up a property only to be reduced during escrow “Terrorist Offers” because they will blow up and take innocent bystanders with them. All parties and especially the investors that execute this process should be ashamed of themselves!!!
As an investor I see all types of behavior and unfortunately most of it is bad. That is why I have created 5 standards that I abide by at all times. I share these with you as perhaps they can become the standards investors hold themselves to and agents measure investors, because you never know when a Unicorn might show up.
Standard 1) When talking with a new agent always call them on a specific property and be very prepared. The agent’s time is valuable and you should not waste it. There will be time for relationship building as the process moves along. Don’t get upset on the first call if they blow you off. However, if they blow you off a second time move on there are a lot more agents than true investors.
Standard 2) Always – Always – Always do what you say you are going to do. Never say you are going to do “X” without doing “X”. Don’t over commit. If you can’t get by the property for 2 days don’t lie and say you are driving by it tonight. Also please follow up. If you drive a property or get a piece of data tell the agent what you thought even if there is no deal on the specific property. Would you like to be left hanging with no feedback loop? I thought not.
Standard 3) If an agent does work for you on a certain property they are getting paid if I buy that property period. Never – Never change horse. Agents are paid commission and they deserve their piece of the action regardless!!! I don’t care if you suddenly find the perfect agent after a few weeks and you want to throw them a bone. If a different agent did the leg work use the other agent, period end of story.
Standard 4) When I go into escrow I have 100% confidence I will close (I am 39/39 in closings). The only thing I ask for in this market is a walk through and this is the only time I will back out. I haven’t yet but I can see a situation where I see a Major flaw, a city violation or other major obstacle that I did not calculate in my cost structure that could cause me to back out, but to date all my agents have shared this data upfront so I have the best cost structure possible going in so I don’t have these surprises. As mentioned before I deplore the behavior of investors constantly reducing prices while in escrow. They should do their homework early!!!!
Standard 5) This is a people business and if you plan to be in the game more than 5 minutes you should NEVER forget that people make this business work.
Investors need Realtors and Realtors need true investors (Be a Unicorn!!!)
Good Investing
Comments (9)
Nope
Michael Zuber, almost 14 years ago
Anyone know anything about Dallas Albraka?
Mitch Stephen, almost 14 years ago
My name is Dalla Albaraka CEO Ahmad Hamab Algosaibi and Bros. I am an investor who is ready to invest in any lucrative business. If you have any lucrative business that needs funding, kindly send the business plan for my perusals. I await your reply for good business collaboration. Regards. Dalla Albaraka Palasteen str. Dallah tower P.O.Box 430 Jeddah 21411 Saudi Arabia. [email protected]
Dalla Albaraka, almost 14 years ago
Nice find, thanks for sharing
Michael Zuber, almost 14 years ago
One of the contributors to the BiggerPockets Blog made similar arguments last week in <a href="http://www.biggerpockets.com/renewsblog/2011/04/22/why-investors-need-realtors-and-vice-versa/">Why Investors need Realtors and Vice Versa</a>. I thought you might find it worth a look.
Joshua Dorkin, almost 14 years ago
The inestor / Realtor relationship is tricky. I know for sure a few things: #1. not all investors are cognisent of the realtors time. Bad for Investors. #2. Not all RE Agents are up to speed in how Investors think. When I talk to realtors I ask them, "When you come upon a deal YOU SHOULD BUY BUT WON'T please think of me and call me. I make it a point to go look at the prperties they suggest to me WITHOUT them having to go with me...at least a prliminary drive buy. I do my own research (because it's a must) and i try to give them both sides of the commission whenever possible. EXAMPLE: I hae a person at my office that researches the MLS. Then, I deal directly with the listing agent.: HUGE upside. You get waaaaay more attention when the listing agent is gettng potentially a double commission. Never under estimate this dynamic. When I advertise I'm looking for deals, I DO NOT say I'm "looking for deals" ...everyone is looking for deals. Instead I pick problems houses and advertise I'm looking for these problem houses specifically. EXAMPLE: "I Like Them Smokin'" I buy Burn Houses! If a realtor has a house that's been burned...I'm getting a call. EXAMPLE: "I Lik'em Leaning!" I buy houses with foundation problems" If a realtor has a listing with a foundation problem...I get a call. Let's face it, as investors, we get paid to buy problem houses and then FIX the problem. Become an expert at foundation problems and you'll buy houses all year long. Become an expert at burned houses and you'll buy houses for pennies on the dollar all day long. Express that you are not afraid to walk, talk and buy houses on the poor side of town...and you will buy houses all day long. Yes, today I bought a pretty house from a person that inherited it from an estate...there was nothing wrong with it.... and I bought it 40% under the current market...it happens now and then... BUT...that is not how I've made a living most of the time. Most of the time, I buy problem houses and overcome the problem in a very fiscal way. --Mitch Stephen--
Mitch Stephen, almost 14 years ago
I do contact listing agents on my own and I also work on properties that are not listed on the MLS. I put little stock in what a listing agent may say about a property because there main focus is on getting the highest price for the seller.
Account Closed, almost 14 years ago
Fair point. Maybe I should twist the message to be New Investors need Realtors. When I talk to new investors they almost always start by saying this or that about a real estate agent not giving them the time of day. However, I am an active buyer and in my market my best deals get done by making nice with various listing agents. I takes time to build these relationship. I do use a buyers agents when the listing agent is out of town but to date I have had less success with this approach. But each market is different Thanks for the feedback
Michael Zuber, almost 14 years ago
Not sure that I can agree that true investors need Realtors. I happen to use a buyers agent because I found one that makes sense. Many Realtors have no clue how to work with an investor and expect to handle deals similarly to a home owner. This just doesn't work.
Account Closed, almost 14 years ago