An imperative member on your team should be a strong, knowledgeable & reliable real estate agent. Investor Friendly Agents are key in having a good relationship with a good agent who is knowledgeable on Flipping homes. This can be a vital asset for any Real Estate Investor to have on the team. Unfortunately, finding the right agent to work with isn’t as easy as it should be. The industry is flush with inexperienced agent’s due to a very low barrier of entry and identifying the true professionals from the newbies can be tricky. Not to mention, many agents don’t even know how to calculate a cap rate or an ROI.
Visit open houses. This is a great, informal way to get some immediate facetime with an agent. It allows you to see their ability to market a property, which will be helpful to know since you will most likely want the same agent to sell your investment when you are finished. A few things to consider:
How prepared is the agent? An investor-friendly agent is one who isn’t afraid of a little (or a lot!) of hard work. Did the agent put out enough open house signs, come with beautiful marketing flyers, provide refreshments, turn all of the lights on, etc?
Do you get a good vibe? Of course, this is a little judgmental and completely subjective, but you are about to spend many hours working with your agent and must trust them. Go with your gut.
Is this agent the listing agent? Don’t assume the agent holding the open house is the person whose name is on the sign out front. In fact, many brand-new agents are encouraged to host open houses as a way to find their first few clients. Experience level will be covered more below.
Experience. The goal is to find an agent who has done a lot of deals similar to the ones you will be looking for. For rentals, consider someone who also owns a few rentals and won’t miss a beat when you ask about potential rents, vacancy levels, or cap rates. For flips, make sure the agent sells a lot of homes similar to your end product.
Having an experienced agent brings endless benefits to the table. They are in touch with the subtleties of the market that a beginner may not know. An experienced agent has loads of connections within your town and is often privy to information about off-market properties. They may even help you get your offers accepted over others’. Plus, top producing agents aren’t living commission-to-commission and won’t be emotionally or financially attached to any one deal.
Ask the agent to send you some information on a specific house and then schedule a showing with them. This will allow you to see what information they think is valuable and if it is simply the MLS data, that agent may be a bad fit. You want an agent who sends the MLS data plus, if it is a prospective flip, a few comps for the house after the renovation, and a few preferred contractors for quotes. If it’s an income property, look for the agent who sent you some information about what rent you can expect, if the current tenants are staying in the units, and any regulations about renting if it is a part of an HOA. Another Key formula the agent should be aware of with Real Estate Flipping is the 70% Rule. If they have no knowledge of it, it can be simple to learn and or teach to the Agent.
MAINTAIN A Strong Relationship. As any life relationship, it’s always good to maintain a Strong relationship with the person. Investor-agent relationships can be gold for both sides. The agent gains a consistent source of business and the investor gains a partner who proactively invests time in finding investment leads. Once you’ve narrowed down the list and hired the agent you feel confident in, focus on building the relationship.
Take it slow. Just as investors encounter numerous unprofessional real estate agents, agents deal with big-talking amateur investors who give them the run around. Don’t come into the relationship promising 10 deals per year and trying to use those hypothetical deals as incentive for the agent to lower their commissions on house #1. It may scare a great agent away. Take it one deal at a time.
Be loyal. Unless your operation is big enough to need multiple agents, don’t use more than one. Working with investors takes a lot more time and energy than working with normal home buyers. It isn’t fair or ethical to expect agents to be working for you if you don’t plan to use them for your next deal. They aren’t volunteers. Unfortunately, many investors do this so agents have learned not to waste too much time in one client especially if they get the impression they aren’t the only agent. Tell the agent that you aren’t working with anyone else and even consider signing a buyer-broker agreement. It will give them the green light to start spending many hours helping you without fear of no compensation.