All Forum Posts by: Scott Johnson
Scott Johnson has started 49 posts and replied 635 times.
Post: Real Estate Commission Rules in 2024
- Specialist
- Greenville, NC
- Posts 646
- Votes 395
Yeah, I'm a real estate broker in the same area and I'm not getting any red flags with the story. If she signed the listing agreement after July of this year, there were some changes made to our exclusive right to sell agreement, which states that the commission is negotiable.
Even if one notified the real estate commission about this, it is my opinion that nothing would happen. The broker simply has to send their documents including their CMA to the commission to show how he came up with the list price and the contract (which your sister should have read and already know) shows the compensation is negotiable.
Post: Do Real Estate Agents ACTUALLY Help Investors? (Asking as a Broker)
- Specialist
- Greenville, NC
- Posts 646
- Votes 395
Quote from @James Hamling:
Quote from @Scott Johnson:
@James Hamling I just want to make sure we’re talking about the same thing. You are aware that I’m speaking about “hybrid investor-agents” meaning brokers who are also investors themselves (regardless of their client mix), right?
I agree that if someone is specializing as an investment broker, it’s ideal they serve investors only. No argument there. Unless I’m trying to flex 😉
But my question isn’t about generalist vs. specialist business models - that’s a different (valid) conversation fir a different thread.
I’m asking about the actual working relationship between brokers and investor clients. How are deals getting analyzed and shared? What’s the workflow? What should each side be responsible for in the process?
Because even as someone who does this full-time with investors, I’m curious - how do YOU handle deal analysis and collaboration with your clients? Are they running their own numbers and just sending you comps to verify? Are you building analysis for them? Something else entirely?
I'm not sure what your trying to get at or ask here Scott.
Because in some you ask on some differences, but in other ways you go back to a "comingled" view point, which I covered in the before said.
A number of my clients are licensed agents themselves, both agents and brokers.
I have had clients who are team leaders, developers, you name it. They all had the people and licensure to technically do the things themselves. They come to us for the #1 most important reason of KNOWLEDGE, to find or confirm WHAT they should be doing. Why they should be doing it, and how they should be doing it.
If you understand that paradigm, then it's readily obvious common sense that we are always doing 100% of the analysis and dissemination, presenting it to clients.
From there, yes, we highly encourage clients to roll up there sleeves and dive in trying to do there own analysis. It's the scientific process, take what we give and test it, reverse engineer it, try to poke holes in it, seek out flaws. Because the best confirmation is when actively try to prove something wrong and can't.
The fundamental problem with a R.E. Agent who done or has some investment deals of themself thinking their an Investment R.E. Expert is, they only know what they know, and there going to push just what they know.
So say all they have done is to buy distressed property from estates, fix them up and lease LT as a landlord. THAT is what there gonna push as the everything. Because it IS everything for that agent.
That agent does not know the other strategies & tactics.
And that agents handful of experience and tools may not be a right fit for that client.
When an agent goes to there managing broker and says they have this weird 1-off transaction, not sure what to do, and broker says yeah that's different, hey I know a guy..... I'm that guy.
Everyone who's professionally in this space should either be that guy, or have one of those guys.
And as NAR states, if a person is not a proficient expert in that transaction type, they should NOT be doing it and should be advising the client to the agent who is a proficient expert in it.
What I read you saying keeps asking about an agent trying to fake or muddle there way through serving a client they are not proficient in serving. Yes, they should refer them to someone else.
What your asking for how does an agent do the various actions of being an Investment Real Estate Broker, is answered in my before statement of best way to learn is apprentice under an Investment Real Estate Broker.
I could tell you the tools, resources and process but it's not that simple. There is an art to it all. One can't blindly follow the data outputs. There remains a human aspect, a gut feel, and with it the skills to know how to dig into the data to find confirmation. The art of it all is why apprenticeship is so paramount.
For our Investor clients everything starts with the clients individual road map. We get to know them, their specific situations, their desired end destination, time scope, pro's, con's, and we design a viable investment strategy for THEM.
From there, it's simply executing on the next steps in the strategic plan.
Each individual deal presented has full analysis, from us, on why we are designating it viable, and the viability weight vs the other options. And we encourage clients to do their own analysis.
Clients are always free to self designate deal potentials, and yes we will do a full workup on each but there is obviously a charge for such because our time is far from free. And most clients don't really know what to or not to identify and would fee themself to death spamming random potentials that many don't meet the mark. And so, the vast majority sit back and rely on just what we bring to them. We don't encourage this, we do equip clients with full MLS access and ability to self-search and self-designate, but I get it why most don't. They understand they don't know what to look for.
We work on market, off market, network, and direct source. All depends on clients investing action plan.
Direct source is where we go and literally, as says, direct source and buy potential. It's a seller who was not a seller until we created that opportunity. This is a common action in commercial space that for some reason residential isn't savvy to as of yet.
@James Hamling, I appreciate you sharing your process. Here's what I'm taking away:
1) You handle 100% of analysis for clients upfront, then encourage them to verify your work
2) Even licensed brokers/agents come to you specifically for analysis and strategy knowledge
3) Most clients don't self-identify deals because they "don't know what to look for"
4) You charge for custom deal analysis when clients bring their own
This actually confirms part of what I'm seeing - there's clearly a knowledge/expertise gap in deal analysis, even among people who are licensed and investing themselves.
Still curious to hear from others on what this looks like from the investor side and other broker perspectives.
Post: Do Real Estate Agents ACTUALLY Help Investors? (Asking as a Broker)
- Specialist
- Greenville, NC
- Posts 646
- Votes 395
Quote from @Shuff Mauldin:
In my experience your observation is dead on. I'm tempted to say "focus on one", but let's be honest, you're a real estate nerd like the rest of us. You're going to learn both sides of the coin either way because you're curious.
1. i start with BP tools, then use a more complex tool for the asset class (AJ's for storage or various for MHP's), and then come back and double check my BP calculator #'s after DD. I am working on building relationships with brokers deep enough where I can explain why I require a 15% IRR at year 5, and not have them blow it off. I'm getting there.
I'm lame on the calculator side. I totally still use Apple Numbers spreadsheets, but I've built them in such a way that they cover all of the bases for my Wholesales, Wholetails and Rehabs.
When you tell them you require a 15% IRR how do they respond before they blow it off? Or do they just drop you like it's hot? I still review IRR in my copy of Real Estate By The Numbers (the thing is like an investor's Bible 😂) but I haven't put it into practical use. Same with the Time Value of Money, but the concept does pop into my mind when I wholesale a property to get a smaller amount of money faster.
Post: Do Real Estate Agents ACTUALLY Help Investors? (Asking as a Broker)
- Specialist
- Greenville, NC
- Posts 646
- Votes 395
@Drew Sygit nice! I appreciate the insight! Mind if I ask what you charge as a retainer? Interested in giving that a shot.
Post: Do Real Estate Agents ACTUALLY Help Investors? (Asking as a Broker)
- Specialist
- Greenville, NC
- Posts 646
- Votes 395
@Bryan Hartlen sounds good! I'll let you know when I'm heading that way!
Post: Do Real Estate Agents ACTUALLY Help Investors? (Asking as a Broker)
- Specialist
- Greenville, NC
- Posts 646
- Votes 395
you've actually piqued my interest on this, so I'm diverting from the topic a bit because I think this would be a valuable addition if you're willing to elaborate.
i'm one of those people who looks at value where it stands in a transaction. When it comes to a real estate broker, their value is in their transaction experience and their ability to assist the buyer in buying or selling a house and potentially forecasting that it will sell at the ARV after the rehab. Obviously I'm simplifying that but that's the main gist.
When it comes to the actual investment, though, investor value stems from being able to identify the deal (yes a broker can send it but the investors can identify it by virtue of the numbers. This point does lead back to my original query in this string), find the funding, organize the resources and labor to get the rehab done (maybe the broker helps by referring contractors), and understanding the numbers to make sure the deal will work (the usual broker's only involvement in that is really just finding the after repair value).
In your transactions, the broker has “skin in the game” to be able to get some of that profit. Is the skin their forbearance of the commission (buyer and seller side)? Is it their willingness to bring deals to you first because they have a shot at getting more than their commission? Are they doing other tasks outside of brokerage to assist with the transaction?
How do you quantify the percentage of the profit that the brokers deserves based on the value points?
Post: Do Real Estate Agents ACTUALLY Help Investors? (Asking as a Broker)
- Specialist
- Greenville, NC
- Posts 646
- Votes 395
@James Hamling I just want to make sure we’re talking about the same thing. You are aware that I’m speaking about “hybrid investor-agents” meaning brokers who are also investors themselves (regardless of their client mix), right?
I agree that if someone is specializing as an investment broker, it’s ideal they serve investors only. No argument there. Unless I’m trying to flex 😉
But my question isn’t about generalist vs. specialist business models - that’s a different (valid) conversation fir a different thread.
I’m asking about the actual working relationship between brokers and investor clients. How are deals getting analyzed and shared? What’s the workflow? What should each side be responsible for in the process?
Because even as someone who does this full-time with investors, I’m curious - how do YOU handle deal analysis and collaboration with your clients? Are they running their own numbers and just sending you comps to verify? Are you building analysis for them? Something else entirely?
Post: Do Real Estate Agents ACTUALLY Help Investors? (Asking as a Broker)
- Specialist
- Greenville, NC
- Posts 646
- Votes 395
@Jay Hinrichs truth. Unless being a top producer and working with primary home buyers isn't one's goal. But to each their own I reckon 😄 It seems like all of the money is on the primary home buying side anyway.
But I do feel that there are some, albeit few, who put a primary focus on single family investments. And the point of this post is to hone in on how brokers are helping their investor clients, if they are at all. Maybe they're just ARV finders and listing agents. I could be wrong though.
Post: Do Real Estate Agents ACTUALLY Help Investors? (Asking as a Broker)
- Specialist
- Greenville, NC
- Posts 646
- Votes 395
@Jay Hinrichs interesting point. Correct that it's all dependent on the broker's choice and how they want to operate. Maybe the market for single family investor brokers is negligible and investors should just understand that very few brokers will ever know how to truly understand them, get the ARV, rehab it or rent it and move on. 🤷
Post: Do Real Estate Agents ACTUALLY Help Investors? (Asking as a Broker)
- Specialist
- Greenville, NC
- Posts 646
- Votes 395
Quote from @Bryan Hartlen:
@Scott Johnson were OOS investors. We use our realtor partners for deal flow (opportunities), local market dynamics (color on our comp analysis) and as our physical presence during rehab. We partner / equity split with our realtors, so we definitely share analysis but we do the analysis ourselve. Personally analysis is not something that I would delegate.
It sounds like that model has been working well for you guys! So do you guys roll it so that the broker is an equity owner and gets a portion of the profit in lieu of commission? I'm currently JVing a rehab with my buddy who's a contractor. We signed a JV agreement where he put in money to help me buy it, he does all of the work at cost while I take on the loan and manage draws, and when we sell it the buyers agent gets 3% commission and he as I split the profit 50/50.
Also! I should be in Phoenix next year! Coffee/Lunch is on me!