Working with real estate investors can be a great way for real estate agents to make money. Working with investors can also be a huge waste of time for real estate agents if they work with the wrong investors. There are many things you can do as a real estate agent to work with investors more effectively and to figure out if an investor is worth working with. If you can find the right investors to work with you will close multiple deals and have a great advocate.
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Why are investors a great way for real estate agents to make more money?
I am a real estate investor and real estate agent; I do many deals and save a lot of money on my deals by being an agent. Many investors are not real estate agents and they need an agent to help them buy and sell properties. The great thing about investors is the good investors buy and sell multiple houses, which creates multiple commissions for a real estate agent.
If you can work with investors who buy and sell many houses a year, it can be a very lucrative relationship. The hard part, is finding the investors that do multiple deals a year and convincing them that you are the right agent for them. Many investors use multiple agents, or have a real estate agent they have used for years. There is a way to get in with investors; make them money.
How can a real estate agent make an investor more money?
Investors love to find deals, because that is how they make their money. If they can get a great deal it will increase their cash flow on rental properties or allow them to make more money on a fix and flip. The way to get in good with an investor, is to find them deals that will make them money. The trick with getting them deals is speed.
One reason I am so successful getting deals off the MLS is the speed I can see a house and make offers. I can make an offer in less than two hours after a home hits the MLS system. Many times I get a house under contract before any other investors can get an offer in.
Why do investors want an agent who is fast?
A big frustration for many investors, is finding a real estate agent who will act fast. I will be honest and tell you I don’t act fast with investors as a real estate agent. I have too much going on with my rentals, fix and flips and running a real estate team. Even though I am not a good agent for investors, my team can act very quickly and work great with investors. The faster you can send deals, show houses and write contracts, the more likely an investor will be to use you as their agent. If an investor has to wait two days for their agent to write a contract, they may have already missed out on a great deal.
If you are a new real estate agent you have a huge advantage working with investors. New Agents have the time to search MLS multiple times a day and send potential deals to investors right away. Experienced agents may have too many other clients and meetings to work fast enough for investors.
How do real estate agents find investors to work with?
Most investors are drawn to great deals and care more about the deal than the agent. I list HUD homes and REOs; they are usually great deals and attract investors. It is not easy to list REOs or HUD homes, but that doesn’t mean you can’t find investors looking for great deals. As an agent go to where the deals are and you will find the investors.
- REIA clubs: these clubs and meetups are full of investors.
- Auctions: investors love auctions because they think they can find a great deal.
- Foreclosure/trustee sales: many investors frequent these sales.
- Word of mouth: if you are a real estate agent you should be networking non stop. At some point if you are networking you will meet investors.
- Advertise other agent’s listings. HUD homes can be advertised by an agent and many agents will let you hold open houses on their listings.
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How do you tell if an investor is really going to buy houses?
There are many people who want to be real estate investors. You can make a lot of money as a real estate investor if you know what you are doing and do it. Most people who want to be real estate investors never buy an investment. They can’t find the right deal, get distracted, don’t have the money, won’t out the work in or have another reason for not buying. It can be difficult as an agent figuring out who the real investors are and who are the pretenders.
- Do they own investment property? Do they have rentals or they have they flipped houses? If they have already done it: even just once there is a good chance they will do it again.
- Does the investor know what they are talking about? Do they know what type of house they want, what price they will pay, what repairs to do? The more they know, the more likely thy will buy a house.
- Does the investor have money? Did the investor get prequalified? If they are paying cash do they have a proof of funds letter from their bank?
- Does the investor make reasonable offers? Some investors like to make low offers that are 50 percent of list price or lower. They tend to make a lot of these offers and hope one day a seller will accept one. As an agent it takes work to submit an offer and even if an investor gets one of their low ball offers accepted, was all the work with it? Is it worth getting the reputation of being an agent who submits low ball offers on every listing?
- Does the investor look at hundreds of houses but never make an offer even if they property meets their criteria?
These are all things to consider when working with an investor. Some investors will never buy a house and others may buy hundreds of houses. The investor that buys hundreds of houses may become an agent themselves to save money so don’t be disappointed when that happens.
If you can work hard for an investor and find them deals they will probably be a great source of income. But remember investors are all about the bottom line and when you start sending them deals slower, send them less deals or get too busy for them, they will find a new agent in a heartbeat. Make sure your business is not set up to rely on one investor, because things can change quickly.