The most important person on an investor’s team is a great real estate agent. Real estate agents can play a huge role in getting a deal, losing a deal, valuing a property and many other factors that can make you money, or lose you money. It can be difficult to find a real estate agent or Realtor who will return calls and respond quickly enough for an investor. How can an investor find an investor friendly real estate agent? If you are looking for a real estate agent to help you find a personal residence you may need a completely different type of agent. I wrote an article on finding that agent here.
Becoming a real estate agent to help your investing
I am an agent, and I think it is a huge advantage for investors to be real estate agents as well. Here is a great article on why real estate investors should become real estate agents. Here is another article that shows how much money real estate agents can make. If you don’t want to become an agent yourself, it is imperative you find a great agent to help you invest in rental properties.
My complete guide to investing in long-term rentals has a lot of great information on investing in rental properties and the numbers on my rentals. There is a lot of information for any new investor to process when first starting out investing in real estate. A great real estate agent can make the process much less painful and make investing much more enjoyable. Finding a great agent is tricky, but there are many things you can look for in potential agents.
What is the difference between a real estate agent and a Realtor?
The first thing to know about finding a real estate agent is the difference between an agent and a Realtor. In most states, an agent has to complete state licensing requirements and hang their license with a broker or be their own broker. A Realtor has to do those things as well and they are part of the National Association of Realtors (NAR). NAR has specific requirements for a Realtor; they have to belong to local boards and they have to work by a strict code of ethics. Usually, I suggest people looking for an agent, look for a Realtor, because of the code of ethics they work with.
If you are looking for a real estate agent, ask the people you know!
As with almost any professional service, the best way to find someone good is from referrals. The first thing I do when I need help from a professional is ask my friends, family, and co-workers who they recommend. It is usually best to ask as many people as possible until you start seeing the same name pop up over and over. Even if you get a great referral for an agent, you want to make sure the agent knows what they are doing. I have had referrals for agents myself that turned out horribly.
When looking for an investor friendly real estate agent, make sure they respond quickly
There are many, many people who become real estate agents for a variety of reasons. Some want a little extra money, some want free time, some think it is a way to get rich quickly and others want to make a career out of real estate. You want to find the career agent who cares about their job and business, not the agent looking to get rich quick.
The first sign of how good an agent is whether they answer their phone or return a call quickly. The phone call from a potential client is one of the best leads for an agent, yet many agents ignore calls or take days to return calls.
If you call a potential real estate agent, they should either answer their phone or call you back within a couple of hours. The reason getting a call back is so important is investors need speed to get the good deals. If it takes an agent a day to call you back, that could mean the difference between getting an offer accepted and another buyer getting the property.
Sometimes the busiest agents can’t answer their phone every time or return calls right away. Usually, the busiest agents are the best agents, but you have to ask yourself if you want an extremely busy agent working for you. Once again, they may be a great agent, but if they have too many clients to act quickly, then they may not be the right agent for you.
When looking for an investor-friendly agent, make sure they are competent
If you find an agent who answers their phone, you still have a lot of work to do. You have to make sure they know what they are doing and test their knowledge by asking simple questions about the types of homes you’re looking to buy.
1. Have you sold many REO properties?
2. Have you sold HUD homes? Does your office have a NAID number?
3. How do you suggest buyers handle multiple offer situations?
4. How do short sales work?
5. If I were to sell one of my houses how would you market it?
You should already know the answers to most of these questions, but you want to know if your agent knows. How confident are they when answering these questions? If they are newer and don’t know everything that is okay, they should tell you that they don’t know, but they will find out. Real estate is serious business and there are severe consequences for fraud or mistakes. You don’t want your Realtor pretending to know how to do things and get you in trouble.
Is it smart to work with a new real estate agent?
Some people don’t like working with new agents because they are inexperienced. New real estate agents can make up for that inexperience with ambition. Most new agents are motivated and are excited about starting a new career. When I started out, I was very ambitious to work with buyers and sellers and I worked very hard for the few clients I had. As I got more clients and more business, I could not treat each client with as much attention. I will be honest and say I am a horrible agent for investors now. I don’t have time to show houses, write offers or check up on offers. I hand off leads to other agents on my team who do have time. That is another thing a new agent has going for them, they most likely have plenty of time to work for you.
Once you find an investor friendly real estate agent, do your best to keep them working hard!
Many investors are very demanding on their real estate agent. They need to act quickly and may make many offers before getting an offer accepted. If you are an investor who wants to make hundreds of low ball offers, make sure you motivate your agent. They only get paid when they sell a house, they don’t get paid to make offers. If they are thinking it is a waste of time submitting low offer after low offer, they aren’t going to work hard for you. Buy them lunch, buy them dinner and discuss strategies. Show them you care and give them a reason to keep working hard. Even though lunch won’t make up for the hours of time they have spent, it may be enough to keep them going until you get a deal done and make them some real money. Here is an entire article dedicated to how to get a real estate agent to work hard for an investor.
Does your real estate know about rental properties?
If you are planning on buying rental properties, it helps if your Realtor knows the rental market and investment property market. If they can help you determine rents or at least back up your thinking on potential deals, that helps tremendously. It gives you that extra push to move forward on deals, and they may also see potential problems that you do not see. You still need to know your market and be able to make decisions yourself on deals. Do not rely solely on your real estate agent to determine what a good deal is.
Is your real estate agent ethical?
Being ethical is a very important issue for investors or anyone using a real estate agent. Many buyers like an agent who stretches the rules to get them deals. Remember just because your agent was the one who wasn’t ethical, doesn’t mean the buyer or seller is not also liable. If the buyer or seller know the agent is being unethical or breaking laws, then they can be considered just as responsible as the agent. Even if the buyer or seller doesn’t know their agent was being unethical, they can be held responsible.
HUD homes are a great example of how buyers and agents can get in trouble. If an agent helps a buyer bid as an owner occupant, when they are really an investor, both the agent and the buyer can face criminal charges. HUD homes are government property, which means any laws broken involving them are felonies. Buyers can face up to five years in prison and a fine of $250,000 for breaking HUD rules. Agents can lose the ability for their entire office to sell any HUD homes. Here is much more info On HUD homes. The guide I linked to will also give you a ton of information on HUD homes that you can test your agent on. Don’t be too tough on your agent, HUD can be a difficult system to learn, and they shouldn’t be expected to know everything.
Does your real estate agent have a backup when they are not available?
Another very important thing to consider with an agent is if they have a backup. Agents go on vacation, get sick or have accidents just like everyone else. You want to make sure they have someone who can take over their business if they are unavailable. Many agents work on teams and this is a great way to know you will be taken care of if your agent can’t do it themselves. I have mentioned it many times in my blog, but speed can mean the difference between getting a deal and losing a deal. The last thing you want is your agent to be out of town and unavailable to show you a home or make an offer for three days.
It can take a lot of work to find a great agent. If you are an owner occupant who only buys one house every five years, an agent may not be that important. If you are an investor looking to buy multiple houses a year, a great agent can mean the difference in thousands and thousands of dollars. If you choose an agent who you don’t think is doing a great job, don’t be afraid to fire them. I have had to fire agents who were helping me before because I misjudged their abilities, work ethic or character. If you need help finding an agent, I might know a great agent in your area.
For more information on finding awesome rentals or flipping homes. Check out my best-selling books on Amazon: