As I mentioned in my last posting, in my experiences you will probably contact between 25 and 50 agents in a given area in order to find from 1 to 3 agents who are really top-rate.
What you are looking for in an agent are the following:
They Must be Comfortable and Capable Dealing With Investors
They must understand and be comfortable with investor mentality. That means they must be comfortable making assertively-priced offers and/or asking for creative terms. Do they regularly work with investors? Are they an investor themselves? Ask them questions to that effect. Ask them pointed questions that would elicit investor-oriented knowledge (such as about owner financing). If they want to send you immediately to a mortgage officer to get you qualified, they just identified themselves as a non-candidate.
They Should be oriented towards buyers and not sellers.
A selling oriented agent will not fully grasp the needs of a complex investor-buyer. Investors seek either concessions on price and/or terms. A typical selling agent is focused on getting top retail dollar...in most cases to the exclusion of everything else. However, every once in a while, you come across an agent that understands what investors need. More important, they are comfortable with it and are willing to present and negotiate creative offers.
They do What They Say They Will Do
Do the agents you interact with do what they say they will do? If you give them criteria for emailed listings, do you get them…that day? Do they check on the deal which you inquired about?
They Scout Deals
A good agent will follow up with potential candidates beyond what is merely automatically filtered through the MLS. In other words, they seek out and scout deals for you. They initiate calls about properties instead of waiting for you to inquire about something.
They Are Customer-Oriented as Opposed to Sales-Oriented
Do they have a customer-serving mentality, or are they trying to sell you on something? If discussion about that agency agreement comes up before anything else, they are either inexperienced, brainwashed into the proscribed procedures, or more interested in themselves.
They Are Patient
Investors need to have the numbers work, either on price, terms, or both. Yes, we make nutty deals, but the right kind of agent will understand that. So, a good agent understands that you may need to filter through 100 deals to find one nugget worth pursuing. If they stop communicating with you after two weeks simply because you haven’t bought anything means they are not the kind of agent you need.
They Are Well Connected
Get a sense of who they know. See if they have contacts with investor-oriented mortgage brokers, title company, contractors and so forth.
They Are Not Legalistic
They shouldn’t be hung up on the letter of the law as far as the industry goes. Many are schooled to the point of no longer being able to think for themselves. I was licensed in two states at one time, and most agents really don’t know or understand their legal obligations. For example, a seller’s agent’s fiduciary responsibility to their client doesn’t mean they shouldn’t answer your candid questions. If they feel you are asking something that could hurt negotiations for their client, they should check with them to see if the client is willing to answer; not reject you question under licensure laws. Some agents seem to feel it’s their responsibility to play para-lawyer and be a roadblock to transactions. By way of another example, a war-zone is a war-zone, and an agent isn’t violating any fair housing laws by pointing that out – as opposed to keeping tight-mouthed and merely referring you to the police department for you to independently digging up that information. Guess what…if the police can disseminate that information it’s public knowledge and not a fair housing violation!
Additional Thoughts
Be wary of agents you find on sites like rehablist.com who appear to have dozens of investor-oriented listings. It may sound ideal, but generally isn’t. These are typically agents who farm the MLS for interesting looking deals – the listings are not theirs, they don’t know the properties, and most don’t want to expend any energy knowing them. They hope for a quick-flip speculator type who will buy without doing their due diligence, sight-unseen as if the house was no different than a stock or bond. Moreover, most, if not all, fail to do what they say they will do. They are all about marketing, and little about action.
Now, you as a potential buyer have some responsibilities.
Don't Be A User
Keep in mind that you don’t want to be a user of people. Agents, like anyone else, need to earn a living, and they do so on commission. While you need to be assertive and choosy as to who you work with, you don’t want to abuse your workings with people. With that in mind, you:
Don't Be a Lookie-Loo
Need to be a buyer. Nobody – not even the best agent – will work with you indefinitely. If you are a lookie-loo, don’t waste agent’s time. Use the Internet instead. You should have a clear criteria in mind that you can supply to the agent – price, number of bedrooms, style, situational indicators like foreclosures if that interests you, etc. Have them help you with locational issues if you don’t yet know the area. What you can’t do is say, “just dig me up anything that I can buy for 40% under value.” That’s the sign of an amateur investor and a red flag you are a waste of their time.
Do what you can on your end
Filter through listings to find what appears to be of value. Don’t ask the agent to drive to 25 properties if you are just curious. Prequalify deals, do your own drive-by’s if you can….in short, you put in as much legwork on your side before you ask an agent to spend time, gas, and energy viewing a property.
Be loyal
When you find a good agent, stick with them and send all your business their way. The more they sense your loyalty, the more they’ll work on your behalf.
Be appreciative – send a $10 Starbucks card every once in a while to that agent who’s spent 25 hours with you. It’s the least you can do! That goes a long way to building two-way loyalty.
Don’t be too quick to establish allegiance
Just because you know them and have had a few phone calls doesn’t mean you owe an agent anything. They have to live up on their end just as you do on yours. Even the process of sending listings is not enough – any agent can do that. They should be regularly contacting you, getting updates, checking to see if there’s anything they can do, etc.
When you find that worth-their-weight-in-gold agent, you use them exclusively. That’s the point when you switch from calling all the listings in town to telling your preferred agent what interests you and having them follow up. All you need is an MLS number and they can find out all you need. Make sure if you do talk to another agent, or a builder that you let them know you have an agent you work with. You don’t want to inadvertently cut your agent out of a deal – and believe me, the industry is such that they will try to cut them out in an instant because it means more money.
There are many rewards for building this kind of loyalty – and this is where it gets exciting.
When you build rapport with an agent they get to know your values – they are your eyes and ears when you are not located there. I’ve literally bought properties, that I didn’t personally visit, with full confidence, by relying on my agent and the tradespeople she/he used.
Real estate agencies often have what are called “pocket listings” that don’t appear on the MLS, and that means reduced competition - and they can send these your way.
They will hand-hold you through the transaction. That may seem like something only a newbie needs, but if you are newly investing in a geographic area, that kind of help can be invaluable in understanding local/state laws, customs and such. That means you can get great council on what vendors – like title companies or inspectors to use, how certain aspects of title work and taxes work, and what to be watchful of that might be unique to the area. Just recently, I had an agent in Arizona introduce me to roof rats and the hazards related to them when fruit trees are too close to a house.
They can hook you up with recommended vendors – title companies, mortgage companies, inspectors, manual tradespeople and so forth. If you are new to that market, getting first-hand testimonial can save you a lot of time, and help you avoid mistakes when selecting vendors. And, if the agency has clout, they can get often get you trade discounts.
That’s a lot to consider – if you have any questions or if you didn’t catch something, email me at
william@thecoasttocoastinvestor.com and I will be happy to clarify anything.
If you know of anyone who is interested in real estate investing, whether beginner or otherwise, please tell them about the blog. In addition, if you or an associate would like to access my audio podcast, just contact me at william@thecoasttocoastinvestor.com so I can include them in my mailing, and let them know of upcoming episodes and the other resources I have available.
I continue to assemble these resources for real estate investors. Not only do I have the weekly audio show, but I've put together an audio discussion board for investors. Recently, I also built two social networking communities which are gaining a lot of attention - for all of you who like Facebook or Myspace, you'll love these!
It will be a fantastic spot for networking, learning, and getting to know other investors. Give me a shout by email or phone if you want details (614-886-8233 or william@thecoasttocoastinvestor.com)
Do you want to learn real estate investing...learn the ropes? How about having someone actually guide you through the process? I am going to open registration for the first session starting in November. It will be a full 12 weeks of hands-on, real world training. There's nothing like it on the market, and the best part is, unlike all the guru's stuff, you can actually afford it! I'll keep you posted, but feel free to call (614-886-8233) or email if you have questions:
william@thecoasttocoastinvestor.com
Finally, many of you are asking about mentoring and coaching, and that is a great way I can serve you. I have limited slots available to do that, so if you are interested, please give me a shout so I can discuss it with you...beginners welcome! This is a great chance to have someone hand-hold you during your investing activities and have access to an expert at your disposal as easily as making a phone call or sending an email. If you'd like to know more, feel free to call (614-886-8233) or email me: william@thecoasttocoastinvestor.com
So, until next week, I’m Bill Flood; this is the Coast to Coast Real Estate Investor…live your real estate dreams!
Tuesday, October 23, 2007
Thursday, October 11, 2007
Finding and Working With Good Agents for Out of State Purchases (Part 1)
In this edition I am going to chat about how to locate and work with real estate agents. I am going to talk candidly about agents from an investor’s vantage…and I recognize that I run the risk of being a bit offensive to agents and brokers because of that. I’m certain to cross the line for many real estate agents, but I am dealing in matters of investor practicality. Investors and agents come from two different worlds, and they don’t necessarily agree with each other.
While I am a big fan of For Sale By Owner deals, there’s no doubt that the vast majority of real estate transactions take place through agents, so the agent angle is one you really must master.
Collectively, agents have made me about $250,000 over my last 4 deals – so, we’re not talking about small change. But, you are not going to access those kinds of deals if you simply try to grab properties & agents at random. If you just walk in the door and ask to speak to an agent you aren't going to succeed at much (except for perhaps getting frustrated!). It takes a certain amount of interpersonal skill, rapport, and instinct to pick an agent well.
Now, let me say that on whole, I really don’t have a lot of good to say about the real estate agent community. I’m not talking about specific agents, or even the industry as it wants to be. I’m talking about what I like to call the “nit whit factor” represented by the bulk of agents. I can say, with all sincerity, that some of the most repugnant and clueless people I’ve ever crossed paths with have been real estate agents. There’s just something in real estate sales that seems to attract a particularly poor crowd of people, and in many cases, people choose real estate for all the wrong reasons. I also think that certain factors within the real estate industry serve to propagate those problems.
Great agents are just that – fantastic professionals who are worth their weight in gold. The problem is, I think only about 1 out of 1,000 typical agents is any good, and only about 1 out of 100 solid agents is any good to an investor. Again, I am not trying to affront good, hardworking agents – it’s all the others that make up the bulk of the industry that I’m at odds with. It's almost comical how many agents just want to list a property, put it in the multiple listing service and wait for everyone else to do all the work...yet collect a commission check from that!
Buyer's Agents and Seller's Agents
Let’s begin by getting all you newcomers up to speed on the difference between a seller’s agent and a buyer’s agent. A seller’s agent works for the seller, and their duties and responsibilities are to the seller’s best interests. A buyer’s agent works for the buyer and their duty is to the buyer’s best interests. The problem is, when you call on a listing, by default you are dealing with a seller’s agent, and that leads to a lot of natural roadblocks and conflicts. Even when you have an agent who appears to be excitedly offering you listings and information, if you don’t have an agreement otherwise, seller’s agency is implied – so they are really still in the seller’s corner.
Unless you are fully comfortable with that arrangement, and representing yourself in negotiations, your best move is to get a buyer’s agent working for you, who can get you information on multiple listed properties, provide information on the comments in the MLS, etc.
But, buyer’s agency can have it’s problems as well. Do you remember what I said a moment ago about the real estate industry propagating certain problems? One of them is the notion of exclusive agency. That is, when you sign an agency agreement – buyer’s or seller’s, that person has an exclusive right to represent you. That works OK if you are a seller, because even though you only have one official agent, they are co-oping your listing to all the other agents through the multiple listing service. So, if your agent isn’t that productive you at least have all the agents seeing your property through the MLS.
With an exclusive buyer’s agent, however, if your agent isn’t productive, you are stuck. And, you’ll find that many agents want you to sign that agency agreement before they ever talk to you or supply leads. I've had agents on more than one occasion wanting me to sign an agency agreement before they ever even got to know me and my objectives!
The problem is, with exclusive agency even if YOU find the property, unless it was spelled out otherwise the agent would be entitled to a commission. So, if the agent doesn’t produce, and you end up scouring the area, they still expect to get a commission on the deal. In most cases, buyer’s agent commissions are paid by the seller and you don’t have to pay it, but if you were to find a for sale by owner (FSBO) deal, the seller might not be at all amenable to paying the commission, meaning you’d be stuck for the bill for a deal that this agent didn’t even find you!
I had this happen on one occasion in which an agent in Florida, who if I said did the most minimal work that would have been a compliment. It was a scenario in which I was doing all the looking, filtering and so forth. This agent wanted to sue me for a commission on a FSBO he didn’t even find! Fortunately, I did not have any kind of agreement in force with him, so there was no leg for him to stand on. But, it still illustrates what I am talking about - he did virtually no work for me in finding the deal, but he expected to get a piece of the pie just the same.
So, how do you avoid this? Sign agency agreements only for a single property at a time – one that you are transacting, and just deal with the realities of the implied seller’s agency until then. That is, until you find an agent you can trust and for whom you’d like to give exclusive business.
So, that leaves us with a strategic challenge. Do you call all over town to individual agents, talking to them about their listings, or do you engage just one agent and give them your exclusive attention? The answer is a bit of both.
Calling individual agents is more expedient in the beginning, and the perfect way to source agents. It takes time to find a good agent to work with, and you just aren’t going to have access to one when you first go into a marketplace. So, you start by calling agents on their particular listings, and as you chat with them about the property, you also take the time to interview them for your affairs. Your “interviewing” can take the form of candid questions, and subtle, stealthy interactions designed to gauge them as potential agents.
Certain agents will immediately disqualify themselves by being abrasive, discourteous (particularly when they hear you are an investor) or apparently inexperienced. A whole host of others will disqualify themselves by not doing what they will say they will do. I can’t tell you the number of times I’ve had lengthy, impressive conversations with agents who then never bother to send listings or call me back. Apparently many agents don't want to do the hard work and prefer to pursue the comfy process of dealing with the buyer who is sitting in their office with a check in their hand.
I even had a situation where, not realizing I had dealt with a particular agent previously, I even went through their "failure to follow-through" process twice….with the same agent! In other words, not only did they peter out the first time, when I mistakenly opened up a transaction with them a second time, they petered out again. You wouldn't have expected it from their conversation though.
A final round will disqualify themselves shortly down the road. Perhaps you’ll get an initial round or two of listings or a couple of phone calls, but then they move on to what they think are bigger fish to fry. We out of state investors look like a tough project, and many investors just choose to work the easy angles with local preapproved buyers waiting to go.
In my experiences you will probably contact between 25 and 50 agents in a given market in order to find from 1 to 3 agents who are really top-rate. So remember those statistics. It's a lot of hard work and communication on your part, but when you find that top-notch agent, they really are worth their weight in gold.
Next time I will discuss a series of criteria to look for when seeking and interviewing an agent.
Until then, keep seeking those investments, and live your real estate dreams!
While I am a big fan of For Sale By Owner deals, there’s no doubt that the vast majority of real estate transactions take place through agents, so the agent angle is one you really must master.
Collectively, agents have made me about $250,000 over my last 4 deals – so, we’re not talking about small change. But, you are not going to access those kinds of deals if you simply try to grab properties & agents at random. If you just walk in the door and ask to speak to an agent you aren't going to succeed at much (except for perhaps getting frustrated!). It takes a certain amount of interpersonal skill, rapport, and instinct to pick an agent well.
Now, let me say that on whole, I really don’t have a lot of good to say about the real estate agent community. I’m not talking about specific agents, or even the industry as it wants to be. I’m talking about what I like to call the “nit whit factor” represented by the bulk of agents. I can say, with all sincerity, that some of the most repugnant and clueless people I’ve ever crossed paths with have been real estate agents. There’s just something in real estate sales that seems to attract a particularly poor crowd of people, and in many cases, people choose real estate for all the wrong reasons. I also think that certain factors within the real estate industry serve to propagate those problems.
Great agents are just that – fantastic professionals who are worth their weight in gold. The problem is, I think only about 1 out of 1,000 typical agents is any good, and only about 1 out of 100 solid agents is any good to an investor. Again, I am not trying to affront good, hardworking agents – it’s all the others that make up the bulk of the industry that I’m at odds with. It's almost comical how many agents just want to list a property, put it in the multiple listing service and wait for everyone else to do all the work...yet collect a commission check from that!
Buyer's Agents and Seller's Agents
Let’s begin by getting all you newcomers up to speed on the difference between a seller’s agent and a buyer’s agent. A seller’s agent works for the seller, and their duties and responsibilities are to the seller’s best interests. A buyer’s agent works for the buyer and their duty is to the buyer’s best interests. The problem is, when you call on a listing, by default you are dealing with a seller’s agent, and that leads to a lot of natural roadblocks and conflicts. Even when you have an agent who appears to be excitedly offering you listings and information, if you don’t have an agreement otherwise, seller’s agency is implied – so they are really still in the seller’s corner.
Unless you are fully comfortable with that arrangement, and representing yourself in negotiations, your best move is to get a buyer’s agent working for you, who can get you information on multiple listed properties, provide information on the comments in the MLS, etc.
But, buyer’s agency can have it’s problems as well. Do you remember what I said a moment ago about the real estate industry propagating certain problems? One of them is the notion of exclusive agency. That is, when you sign an agency agreement – buyer’s or seller’s, that person has an exclusive right to represent you. That works OK if you are a seller, because even though you only have one official agent, they are co-oping your listing to all the other agents through the multiple listing service. So, if your agent isn’t that productive you at least have all the agents seeing your property through the MLS.
With an exclusive buyer’s agent, however, if your agent isn’t productive, you are stuck. And, you’ll find that many agents want you to sign that agency agreement before they ever talk to you or supply leads. I've had agents on more than one occasion wanting me to sign an agency agreement before they ever even got to know me and my objectives!
The problem is, with exclusive agency even if YOU find the property, unless it was spelled out otherwise the agent would be entitled to a commission. So, if the agent doesn’t produce, and you end up scouring the area, they still expect to get a commission on the deal. In most cases, buyer’s agent commissions are paid by the seller and you don’t have to pay it, but if you were to find a for sale by owner (FSBO) deal, the seller might not be at all amenable to paying the commission, meaning you’d be stuck for the bill for a deal that this agent didn’t even find you!
I had this happen on one occasion in which an agent in Florida, who if I said did the most minimal work that would have been a compliment. It was a scenario in which I was doing all the looking, filtering and so forth. This agent wanted to sue me for a commission on a FSBO he didn’t even find! Fortunately, I did not have any kind of agreement in force with him, so there was no leg for him to stand on. But, it still illustrates what I am talking about - he did virtually no work for me in finding the deal, but he expected to get a piece of the pie just the same.
So, how do you avoid this? Sign agency agreements only for a single property at a time – one that you are transacting, and just deal with the realities of the implied seller’s agency until then. That is, until you find an agent you can trust and for whom you’d like to give exclusive business.
So, that leaves us with a strategic challenge. Do you call all over town to individual agents, talking to them about their listings, or do you engage just one agent and give them your exclusive attention? The answer is a bit of both.
Calling individual agents is more expedient in the beginning, and the perfect way to source agents. It takes time to find a good agent to work with, and you just aren’t going to have access to one when you first go into a marketplace. So, you start by calling agents on their particular listings, and as you chat with them about the property, you also take the time to interview them for your affairs. Your “interviewing” can take the form of candid questions, and subtle, stealthy interactions designed to gauge them as potential agents.
Certain agents will immediately disqualify themselves by being abrasive, discourteous (particularly when they hear you are an investor) or apparently inexperienced. A whole host of others will disqualify themselves by not doing what they will say they will do. I can’t tell you the number of times I’ve had lengthy, impressive conversations with agents who then never bother to send listings or call me back. Apparently many agents don't want to do the hard work and prefer to pursue the comfy process of dealing with the buyer who is sitting in their office with a check in their hand.
I even had a situation where, not realizing I had dealt with a particular agent previously, I even went through their "failure to follow-through" process twice….with the same agent! In other words, not only did they peter out the first time, when I mistakenly opened up a transaction with them a second time, they petered out again. You wouldn't have expected it from their conversation though.
A final round will disqualify themselves shortly down the road. Perhaps you’ll get an initial round or two of listings or a couple of phone calls, but then they move on to what they think are bigger fish to fry. We out of state investors look like a tough project, and many investors just choose to work the easy angles with local preapproved buyers waiting to go.
In my experiences you will probably contact between 25 and 50 agents in a given market in order to find from 1 to 3 agents who are really top-rate. So remember those statistics. It's a lot of hard work and communication on your part, but when you find that top-notch agent, they really are worth their weight in gold.
Next time I will discuss a series of criteria to look for when seeking and interviewing an agent.
Until then, keep seeking those investments, and live your real estate dreams!
Sunday, October 7, 2007
Locating Real Estate Investments (part 5) - Private Real Estate Investor Sites
Private Investor Sites
In every community and every city there are real estate investors who are selling properties. Often these are wholesale deals which the investor picked up at a substantial discount, who is marking it up to make a profit, but still leaving a good amount of equity on the table for another investor who wants to fix up the property.
In many cases today, these investors are getting pretty savvy and have websites and mailing lists publicizing their deals. They can be a great resource for you.
Here’s an example of one investor’s site in San Antonio:
http://www.buynowsa.com
I am not making any recommendation to them – I am merely listing them as an example of what’s available.
Here are a couple of other examples:
In Phoenix
http://www.invest-n-homes.com/
In Dallas
http://www.dfwinvestors.net/
Again, I am not making an referrals or recommendations - I am merely using these of examples of what you can find out there.
You can find these types of real estate investor sites by searching in Google for your city of preference and the words “real estate investor” or “we buy houses”
There are even national networks of investors that are either franchises or outfits that supply investors with websites for their businesses. http://www.Homevestors.com is a good franchise resource. InetUSA http://www.inetusa.com/ is one of the web-building companies for investors. Their organization has a national search feature to access all their clients’ listings.
If you are in a position to do so, join any local real estate investor’s associations (REIA’s) in areas where you want to invest – network and get to know investors that have property for sale there. Get on their mailing lists. You can access a list of local REIA's through the National Real Estate Investors Association http://www.nationalreia.com
So, until next week, I’m Bill Flood; this is the Coast to Coast Real Estate Investor…live your real estate dreams!
In every community and every city there are real estate investors who are selling properties. Often these are wholesale deals which the investor picked up at a substantial discount, who is marking it up to make a profit, but still leaving a good amount of equity on the table for another investor who wants to fix up the property.
In many cases today, these investors are getting pretty savvy and have websites and mailing lists publicizing their deals. They can be a great resource for you.
Here’s an example of one investor’s site in San Antonio:
http://www.buynowsa.com
I am not making any recommendation to them – I am merely listing them as an example of what’s available.
Here are a couple of other examples:
In Phoenix
http://www.invest-n-homes.com/
In Dallas
http://www.dfwinvestors.net/
Again, I am not making an referrals or recommendations - I am merely using these of examples of what you can find out there.
You can find these types of real estate investor sites by searching in Google for your city of preference and the words “real estate investor” or “we buy houses”
There are even national networks of investors that are either franchises or outfits that supply investors with websites for their businesses. http://www.Homevestors.com is a good franchise resource. InetUSA http://www.inetusa.com/ is one of the web-building companies for investors. Their organization has a national search feature to access all their clients’ listings.
If you are in a position to do so, join any local real estate investor’s associations (REIA’s) in areas where you want to invest – network and get to know investors that have property for sale there. Get on their mailing lists. You can access a list of local REIA's through the National Real Estate Investors Association http://www.nationalreia.com
So, until next week, I’m Bill Flood; this is the Coast to Coast Real Estate Investor…live your real estate dreams!
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