All Forum Posts by: Stan McCune

@Joseph Cacciapaglia for starters, it's hard to only do business with investors in Greenville due to the price point of those properties. What is your average sale price in your area on investment properties? Around here, it tends to be quite low, often below $100,000. That's part of the challenge. I can obviously require a much higher minimum commission, but that will also cause me to lose business. 

I won't work with someone that's not pre-approved, but I've had multiple situations where someone is pre-approved, has the money, and appears hungry to buy, and so I show them a few properties, get them under contract, and then they back out because they get cold feet for one reason or another. It's one thing to have this happen occasionally, but I've had this happen a lot over the past year.

Perhaps I need to do a better job vetting and maybe there are other ways besides making them have skin in the game and sign an exclusive agreement. I'll keep pondering that.

@Abel Curiel those are some great thoughts, and I love the idea of the buyer self-categorizing in an overt way. (Timeline for buying is always something that's part of the discussion, but not something asked quite as directly as you pose it.) I'm definitely going to consider incorporating that, and I'm sure I'll be refining this strategy as I present it to more buyers and get more feedback.

@Ron T. sounds good! Once we are past social distancing, I'd be happy to get together over a coffee or beer.

@Ron T. thanks for those thoughts. I posted this discussion knowing it would likely get some pushback. I think the result has been to clarify some things in my own mind, which has been very helpful.

I think there are two types of investor clients I've had over the years - the ones who place disproportionate value on "deal-finding" from the realtor and those who view "deal-finding" as just one service (and probably not the highest on the list) that the realtor provides. 

Those who view deal-finding as one of the many services a realtor provides recognize that not many realtors can provide the expertise, knowledge, and connections that I can. (Hopefully, that doesn't come across as pretentious. I don't usually compare myself to other realtors in this way.) For instance, I just had 2-hour conversation with a repeat investor client where we were analyzing a few properties on some very specific cash/cost-related criteria, developed a game plan for diversifying their real estate portfolio, and at the end, I was able to provide the data (without having gone into the conversation prepared to provide it) on what the average appreciation of a specific subregion has been the past several years and how that compares to the average for the area. These types of clients find considerable value in me being able to have that type of discussion and bring real knowledge to the table, and they know, by virtue of my knowledge, I will be able to identify deals for them.

On the flipside, in my experience, those who prioritize "deal-finding" tend to want the realtor to be something of a news reporter, where whichever realtor "breaks the news" first (in this case, is the first to present a deal) is the one who gets the transaction. I can set these people up on automatic MLS emails so that they get emailed the moment a property in their search criteria appears on the market, but I've found if I present off-market deals, they will eventually find the source of the off-market deal (often a wholesaler) and just go direct to him/her. Eventually, they build their wholesaler rolodex large enough that it's extremely difficult for me to be the first to bring a deal, unless I am the wholesaler (something I intend to do more of in the future, for this very reason). If they truly do believe that any realtor can represent them and that I don't bring value beyond simply being the first to present a property, then I absolutely understand not being willing to sign an exclusive agreement. I think I need to have a clearer value proposition for them, and that's something I will be working on as part of this.

On a semi-related note, I find that the realtors who tend to be the "breaking news" types present a lot of bad deals to their clients because priority is given to being first over being good. I only present deals to my clients that I can justify, and I will talk my clients out of "bad deals," unlike the majority of the others (who normally can't fully articulate the difference between a good and a bad deal). Again, that may not be valuable to some (maybe even most) of the RE investors out there, but this is how I feel it's best for me to do my business.

@Jason Dillard I'm not intentionally focusing on buyers. They come to me without me even marketing to them. That said, I do need to focus more on the deals that are out there, and that is part of my plan for this year.

@Evan Polaski that's good insight. I definitely bring deals to my clients that others miss, and I could give a ton of examples of that over years, both on and off-market. Inventory levels are a problem with the on-market stuff, but I've developed an eye to be able to identify the breadcrumbs of a good deal that could be easy to miss. One example is a home that was listed as single family but something in the listing description sounded weird for a single family. Turns out, it was a duplex that would've sold for probably 20-30% higher than my client got it under contract for if anyone else had figured it out before I did (which would've resulted in a bidding war).

I've tried to come up with other, non-monetary vetting ideas, but it's not been easy to come up with anything that really works. Some of these people are new to investing and I know that right from the get-go - do I just say no to everyone who wants to buy their first rental/flip property? I have gotten some good clients over the years that started as "new investors," and I don't want to just lose that demographic. Looking at past investment experience isn't fool-proof either. I've had dealings with some who have major RE investment chops but are new to Greenville and want access to my rolodex and local knowledge but then don't take my advice on properties I present to them and go direct to wholesalers for the ones they do purchase. 

I fully understand that my job requires me to offer free services, and I always go above and beyond for my clients in that area. But at what point am I giving away too much to someone who isn't truly a client and is unlikely to ever compensate me in any tangible way?  It's a difficult balance because I really don't like the idea of forcing money up front (I feel a ton of pressure to perform for those clients) but am struggling to find a workable alternative.

@Evan Polaski the primary reason I’ve had so many investors reach out to me over the years is that I’m one of the few realtors in this area that has legitimate experience as a real estate investor, understands the market from an investor lens, has creative financing contacts, contractor contacts, and is able to identify deals others miss because they don’t really care about the cheap, investor market or just don’t understand it. Most realtors don’t like the investment market because you can’t make a lot of money down here in that market, so a lot just aren’t up on it. My team leader comes to *me* for advice on investment properties.

I have a reputation in the Greenville, SC area as a realtor who is an expert in the local the RE investing market. As it is, I backed into becoming a realtor after doing multiple flips, wholesale deals, rental properties, etc., and I love this career and helping people find great investment properties. However, the past year, I've found that it's becoming increasingly difficult to know how seriously to take it when I receive a call from someone looking to invest in Greenville real estate, and so I've implemented some changes to how I work with new "investor" clients in order to make sure that my time is spent working with only those who truly intend to invest. 

I am now requiring a $500 up-front retainer fee along with a year-long signed buyer agency agreement that specifies a minimum commission of $3,500 (with the $500 deducted from that commission or refunded after first commission paid) for any new "investor" buyer clients. This agreement applies to anyone that wants services beyond simple automated MLS emails - services like showings, running comps, doing drive-bys, etc. And because I know many investors like to purchase off-market deals without a realtor, I am also putting a clause in the agreement that any purchases made without a buyer's agent do not apply. (In other words, I'm not asking to be paid for transactions where I don't do any work and in which there is no realtor involved.)

The thinking behind this arrangement is that a $500 deposit that is refunded after the first purchase is a reasonable way to identify who is truly motivated to make an investment-related purchase in the next year. If they can't agree to that, then I have a hard time believing they're truly serious about closing on a deal in the next year, at least one that involves a realtor. And I don't want to take my time away from people who are serious and give it to those who aren't.

I'm curious what you all think about this arrangement and if you've seen anything like it before. 

Here is in very simple terms what I think I undersatnd about the wholesaling process. Please correct me on anything I'm wrong on or missing:

• The criteria for buying a wholesale worthy property, generally speaking, are:
  • 1) It isn't listed on the MLS (or easily accessible to an investor)
  • 2) It is owned by someone who has equity
  • 3) It is owned by someone who is motivated to dump it - potentially due to financial difficulties, inability to find a tenant, damage to property done by a previous tenant, etc.
  • 4) The owner would be willing to sell it to you for the amount remaining on his/her mortgage (or something close to it).
  • 5) The purchase price for the property would ideally be = (70% of after-repair market value) - cost of repairs - whatever cut the wholesaler expects to receive.
• The keys to selling the property/contract (and making money) are:
  • 1) Being connected to local real estate investors who trust you.
  • 2) Correctly appraising the value of the property and the costs of repairs.
  • Getting the property owner on board with the fact that you are going to make a profit off of his property or trying to pull the wool over his eyes (or performing a double closing so that he never finds out).
  • Reassigning the contract you have with your seller to an investor for greater than the amount of the purchase price you've agreed with your seller.

Thanks, guys. I appreciate the input, and I'll do some research accordingly.