That’s the question listing agents ask when you go look at a house. Many investors are not big fans of real estate agents. Agents take a healthy percentage of your profits as a commission. I’m sure if investors could eliminate agents from real estate, they would jump at the chance.
The fact that there are so many Realtors around, means someone is making money as an agent. People are using them.
The truth is there are some very useful agents out there. They will actually make you more than you are losing on their commission – sometimes a lot more…
They can be your bird dogs.
Some of them will feed you pocket listings that nobody else knows about. And when it comes to deals, 50% of a deal is better than 100% of no deal. In other words, it’s far better to have people bring you lots of deals, than you taking time to find a few deals on your own.
Agents can also be very good on the sell side too. Once you have a property rehabbed or you want to move a rental property, agents can often obtain a higher price than you can on your own.
Handing your property over to an agent to sell can also free you up to find and create more deals, or supervise a rehab, or get a new rental property full of tenants.
How to Choose the Right Agent
There is a wide range of abilities between agents. When you’re trying to pick one, you want the best.
How do you choose?
Some ways other people do it include:
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Recommendations from friends
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Your relative happens to be an agent
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Internet searches
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Real estate networking groups
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Chance
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Reviews on sites like Yelp or Zillow
Maybe those aren’t the best ways to find the best Realtor. Wouldn’t it be great to pick a Realtor based on their track record?
A Realtor who:
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Has sold the most homes.
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Is in the neighborhood you want.
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Is in the price range you want.
How do you find this data? Check out HomeLight.com.
According to their website, the folks at HomeLight have analyzed over 18 million transactions, 2 million real estate agents and 200,000 brokerages to determine who is the best agent for your situation.
Our first reaction was – ‘Whoa! There’s a lot of real estate agents out there!’
The people who have done the analysis and created the algorithms to give you the best data come from Harvard and MIT. This is some high-powered stuff.
How HomeLight Works
The rocket scientists behind HomeLight applied statistical data analysis and machine-learning methods (whatever that is) to predict who will be the best Realtor for you in terms of:
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Experience
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Expertise
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Negotiating power
The site will then provide you a list of Realtors based on those criteria. Obviously, in order for HomeLight to match the best Realtor to you, they will need to gather some data from you.
Specifically they prompt you for:
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Location – The site only chooses agents with a focus in your area
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Buy or Sell – Are you looking to purchase a property or sell one?
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Property Type – Are the agents specialists in investment property, for example?
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Price range – Guys who are experts in Beverly Hills movie star mansions are not going to be the best ones to sell your 3/2 ranch flip.
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Agent Type – Do you want an agent to become your best friend, or one who is a tough negotiator? Yeah – we want both too. But you need to specialize a bit.
Once you input the data, the HomeLight ‘Matching Engine’ goes to work to find you a list of agents. There are 2 components to the matching algorithm:
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Relevance Analysis Ranking – They evaluate lots of variables to find agents who have successfully worked with people who fit your profile.
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Real Performance Ranking – They use ‘Bayesian Statistical Models’ (‘Oh yeah – I use those all the time too’J) to predict which agent will do the best job for you.
Sounds pretty ‘woo-woo’ to us. It also sounds pretty scientific and a lot better than choosing a real estate agent because they are your uncle.
The results of this analysis are shown to you as a list of agents. The data is also shown to you about each agent including:
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Agent ranking with different variables and compared to other agents
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Their track record in transactions in your local area – shown with a map of their transactions
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A list of recent transactions the agent has completed
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A brief resumé of the agent with educational data and other relevant information
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Customer reviews of the agent
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The number of transactions the agent has completed each year
You will also receive an email from HomeLight saying one of their reps may reach out to you to help with your search if you need it. They also give you contact information in the email if you want to reach out to them.
It seems like everyone will pick the name at the top of the list. But for some reason you may not get along with that agent. That’s why they give you a list of multiple agents – to find the right one for you.
If you are a real estate agent in addition to being an investor, you might want to look into filling out a HomeLight profile. The more information they have on you, in addition to your superior performance reflected in their data, the more referral leads you will receive.
You won’t pay anything to HomeLight to join as a real estate agent. They do charge a 25% commission fee for any business you close as a result of their referral.
Comments, Questions
We’d love to hear from you in the comments section below if you have experience with HomeLight.
Choose Partners Based on Performance – Don’t get pressured into working with someone just because they are a relative or friend.
Consider Using Agents – Good agents bring a lot of expertise to the table. They will make you a lot more money than they cost.
Use Data + Your Gut – Don’t just rely on the numbers. If something doesn’t feel right to you, it probably isn’t.
JP Moses
is a real estate investor in Memphis, TN, with experience ranging from land lording to note buying, rehabbing, and wholesaling. However, wholesaling is the area that he enjoys most and where he bring the most experience and expertise to his students.