So if you’ve been around Mogul for a minute, you’ve heard the term investor-friendly agent thrown around. Does it mean you need to have a nice and friendly Realtor to work with? Well, yes because it’s good to work with nice people – but that’s not really what that term means…
What it really means is that you need to partner with a real estate agent who understands what we investors do. Simple as that. Why? Because when they have an understanding of how we wholesale, flip, fix & flip – we both benefit from having a solid professional relationship.
Cody Sperber here, reminding you that not all agents are the same. When someone studies for, and then acquires their license – that’s great, but they’re not taught how to work with real estate investors – they’ve gained knowledge mostly about just the retail side of the industry and not all the ins and outs of real estate…
What I mean is, they’re not a real estate expert just because they are licensed.
Being licensed means they have training and understanding of the ethical and legal responsibilities required by law for a person to represent buyers and sellers. The expertise happens later… it comes from years and years and even more years of on-the-job training, and course, from their own personal experiences should they choose to invest themselves.
So, what should you look for in an investor-friendly agent?
That’s exactly what I’ll cover in today’s lesson with a very descriptive example.
Look for These Qualities
First, let’s touch on the reasons why you’d want to work with an agent in your investing business…
You need a licensed real estate agent to:
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Help you learn your market
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Find deals
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Comp properties
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Gain access and buy or sell real estate off the MLS
And all of that means, you need an agent who:
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Know about the local real estate market
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Will submit creative low-ball or mass offers on your behalf
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Can comp properties and do market research for you - asap
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Will list properties for you at a discount
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Can provide access to an NAID number, which means they’re able to submit offers on HUD properties
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BONUS: Invests in real estate themselves
A Little Role-Playing Demonstration
While all of those qualities make sense on paper, I want to really illustrate what an investor-friendly agent looks like...
To do that, I want to show you what they should sound like by using an actual conversation I had with a superstar investor-friendly agent. We'll call him Sam. This is really eye-opening... check it out:
Cody: Sam, I want to start the interview by taking you back to that day when you signed up to attend real estate school. You attended classes, you took a test, you got your license, you connected with a broker, and now you’re at your first day of work as a new real estate agent. At this point, do you know much of anything about being a good agent?
Sam: I’m thankful that I passed the test the first time I took it, but I still had no clue what I was doing. I knew enough to keep myself out of jail, to keep myself protected, but outside of that, I didn’t know much.
Cody: I’m a licensed agent as well, so I can relate. All I knew was that I had my license and now had access to the MLS – which, by the way, I didn’t even know how to use at the time.
Sam: That’s right. No one teaches you. You have to go to another extra school for that.
Cody: Our point here is that becoming a good agent is all about on-the-job training and it takes a long time to get that. My next question, Sam, is do you currently invest in real estate yourself? Are you an investor?
Sam: I am an investor. I’ve done a few sell-flips, fix & flips. I also have a couple of rental properties that I own, so I’m definitely involved with the investing side.
Cody: You understand dealing with tenants, you understand dealing with contractors, you understand pretty much everything a real estate investor needs to go through to make a decision to buy a property and then turn it into actual profit at some point.
Sam: Absolutely. That’s what it’s all about. I’m actually doing the same things that I’d be helping an investor do. And I currently help a number of active investors find their deals. This side of the real estate business is fun. I thoroughly enjoy it.
Cody: What’s the difference between working with a real estate investor versus a retail buyer?
Sam: The biggest difference is that a real estate investor has no emotions involved. It’s all numbers to them. A deal has to fit their pro-forma, or fit their business model, and that’s it. The deal has to make sense financially. I enjoy working with investors in that aspect.
Cody: At this time, what’s the ratio of your client-based investors versus retail buyers?
Sam: It’s about 60/40 right now.
Cody: Do you get a lot of investors making cash offers?
Sam: We do.
Cody: Would you say a cash offer versus a conventional offer has more weight?
Sam: No question about it. The seller will bend over backward when a cash offer is made. Many times they just want to get out of that property – to get out of that situation they’re in. They’re much more cooperative when there’s a cash offer.
I’ve seen it to the point where there’s a conventional offer of $120K, or a cash offer for $105K, and they’ll take the cash offer. Because they’d rather have that immediate money in the pocket.
Cody: Now, Sam, we’ve done a ton of business together in the past. Would you name some of the different ways that I’ve actually benefited you over the years?
Sam: The first thing that comes to mind is leads. You’ve given me a lot of leads that I was able to take and turn into income for myself. Then, working with short-sale deals, distressed home owners, homeowners in an upside-down situation – I’m unable to help in these cases. Or in making cash offers. This is where you as an investor come into play in a big way. Many times, I can’t capitalize on a lead or I need help to capitalize on it, so I bring it to you.
Cody: So our relationship works both ways.
Sam: It’s definitely a two-way street. Another way our relationship is beneficial is when you introduce me to others within your circle of influence. That’s powerful.
Cody: Again, it works both ways. Another question, Sam. Let’s talk about commission fees. Traditionally it’s 3% for the buyer’s agent and 3% for the seller’s agent. If an investor asked you to take a discount to list property for them, would you do it?
Sam: I would, and here’s why. When I make a retail sale – selling a home to the family who will occupy the home – they may not need my services again for years. An investor, on the other hand, will need my services repeatedly. And because they’re repeat clients, I want to do right by them. It’s more cost effective for me to give a discount to my known clients than to go out and obtain, say, 5 new clients for 5 different properties.
Cody: On to another subject. What if an investor asked for your MLS access?
Sam: I definitely would not hand over my personal password, but there are ways we’ve structured things in the past where we sat down with the investor and went through listings together. This would be after a strong business relationship had been established. Another possibility is for that investor to come on board as an administrative marketing assistant for my team. In that situation, they would have access to MLS.
Cody: In other words, it has to be mutually beneficial for it to work.
Sam: That’s right.
Cody: Tell me some of the main benefits that a real estate investor would have if they were to work with an agent like yourself?
Sam: Actually, I get this question a lot. What separates me from other agents is that I have in-depth market knowledge. I constantly research market trends. Add to that the fact that I am a great negotiator. Negotiating is my favorite aspect of real estate, and because of that I can get the best deal possible from an investor standpoint. Yet another aspect is the benefit for the investor who’s doing virtual investing, I can be the eyes and ears for that investor. This means that all of a sudden virtual investing becomes a possibility, whereas before, if you didn’t have a power team member on the ground to support you, it could really be tough.
Cody: Any other points you might want to add?
Sam: It’s important to emphasize that I understand how an investor looks at deals. I understand what they might be looking for because I am one myself. I bypass all the emotions and go straight to the financials.
Bringing it Home
There you have it…
Based on this conversation, you should now be able to see that not all agents are equal – investor-friendly agents operate on a different level than typical agents.
Not only does a superstar investor-friendly Realtor understand what we – the investors – bring to the table, he/she sees how our professional working relationship is mutually beneficial. And, they also know we’re not just doing regular ole deals – they know what we’re looking for and what will be the best deals for our business strategy.
Look, I am really passionate about this member of your team - after years of hiring and firing horrible real estate agents who had no clue how to work with an investor, I finally found the one. (No no, not in the romantic mushy sense, people!) And for years now, we’ve been happily doing business together.
Now, use what you’ve learned here to find your own investor-friendly agent.
I’m All Ears
How did you find your investor-friendly agent? Share below.
Know what you want in an investor-friendly agent: knowledgeable about your market; provides comps; helps with MLS props; okay making lower offers; etc.
Ask the right questions when ‘interviewing’ a real estate agent.
Make sure that your business relationship with an investor-friendly agent is mutually beneficial.