Why Work with Realtors?

Realtors have 80-90% of the nice homes listed on the market. It varies from city to city and area to area, but they certainly control most of the market that is for sale. They have the sellers that I need to get to in order to buy those homes.

Working with Realtors will change your investment strategy forever.  Now deals come to me easily.  Honestly, I get more deals than I can go look at.  I don’t chase them anymore.  Once you get the “Realtor System” working for you, you will only need to evaluate which deals you want to pursue. The “Realtor System” will get Realtors bringing you deals.

Many investors think real estate agents don’t have the best deals or that they have been picked over by the time they actually hit the market.  In many cases, this is true.  There are deals that don’t hit the market because they are very good. Realtors have clients that buy the best deals before they ever list them on the MLS (Multiple Listing Service). There are also deals that never get to a Realtor, because the seller doesn’t ever list them with a Realtor– e.g. foreclosures, traditional for sale by owners, the homes investors find by driving by, etc. – but I believe some of the sweetest deals are sitting on the market listed with a Realtor.  It is true that some of the best deals get snatched up before they hit the market, but there are many other deals left behind that no one even sees.  The reason that no one sees them is because they are looking for traditional or wholesale type of investments homes, meaning paying cash or getting a mortgage on the home, and not lease option homes.

When an investor considers traditional financing or paying with cash, they must be able to buy the home for a much better price. However, when they can buy the home on a lease option (terms) then they can pay a higher price, therefore opening up the market to more properties to choose from. When working with Realtors, it is less likely to be able to “lowball” a home and get the deal through.  Realtors don’t typically like investors for that reason.

Since most of my lease option deals come from Realtors, it is important to first understand the perspective of most Realtors.  Most Realtors are trained to sell real estate for a living – traditionally.  They are taught to sell real estate traditionally from beginning to end in these ways:

Steps a Realtor

Most of Realtor deals are done in the above traditional way, but what about the times when their listings don’t sell or they don’t sell quickly enough for the seller to feel comfortable?   Realtors are not taught to bring creative alternatives to the table for their sellers. That’s where I come in.  I teach them about the alternatives I offer and how I can help them help their seller.

How the Market Affects Realtors

In a strong seller’s market, Realtors typically don’t need to consider anything creative, because homes are selling very quickly.  However, even in a seller’s market there are some homes that won’t sell quickly for some reason.  These are the homes that Realtors will need to consider being creative with.

When you are in a buyer’s market it is much easier to work with Realtors as well as sellers on creative ideas, as they will to be more open to ways to sell their listings.  In a buyer’s market the Realtors won’t get any commission if the home doesn’t sell or if the listing expires, and the seller lists the home with another Realtor.  Also, in a buyer’s market, sellers tend to put more pressure on their Realtors to sell their home. This pushes the Realtor to be more open-minded to new ideas and to pursue other alternatives for their sellers. They really do want to sell their customers’ homes. This helps their sellers and their own business.  That’s where I come in.  I teach them about the alternatives I offer and how I can help them help their seller.

Finding the Right Realtor

The Realtor you will need to find for lease options will be a seller’s agent or what is called a listing agent, the one that lists the home for a seller.  A listing agent is the one who works with the seller and has his or her name rider on a sign in someone’s yard.  If you want to buy in a certain neighborhood, you can usually find the strong listing agents by driving through and seeing whose names appear on the real estate signs in the yards.

The buyer’s agent is one that represents and works for the buyer.   A buyer’s agent looks out for the best interests of the buyer whereas a seller’s agent (listing agent) looks out for the best interest of the seller.  A buyer’s agent is whom you would select to look for and purchase your own home.  A listing agent is whom you’d want to work with when buying lease options or lease purchases – with my strategy.

Realtors have a relationship with their seller that is very unique.  Sellers tell their Realtors almost everything about their personal lives.  Realtors therefore know who is motivated and why.  They know who is getting divorced, if they are in trouble financially, if their builder is almost done with their new home, if they have custody issues, if they are getting worried about double house payments, how many grandchildren they have, the name of their dog who died last year, what Uncle Ned did at the last family reunion, and the list goes on.  Sometimes it’s a case of enormous volume they’re telling you and the little bit you actually need to know.  I am sure Realtors want to say, “That’s really more about your personal life than I ever wanted to know.”  But they never say it.  As a Realtor, I am sure they would just stay as interested as possible in order to build rapport.

Because the Realtor is providing a very needed service to the homeowner – that of helping them to sell their house, and because the homeowner so freely tells the agent everything, the homeowner is not shy about calling up and saying the four letter word after the home has been sitting on the market a while.  “Realtor, if you don’t sell my home soon, I am going to have to RENT it!”  R-E-N-T is that dreaded 4-letter word.  When a seller says that to a Realtor, a Realtor will cringe.  It is the worst thing you can say to a Realtor, other than, “Take my home off the market.”  If the home doesn’t sell soon the Realtor won’t get any commission and has lost countless hours in showing the home as well as dollars in advertising and marketing.  That’s a scary thing!  Although, the Realtor can rent it for the seller, and is licensed to rent it, most Realtors don’t know how or don’t want to rent it.  The commission is so small to rent a home, it is generally not worth their time unless they are a property management company and do a large volume of rentals.  Many real estate companies really don’t do rental properties at all because it is such a different type of business and carries one of the biggest liabilities for Realtors.

In my area, when a Realtor hears the “four letter word” RENT, my phone rings.   I have spent years developing rapport with the many real estate offices in my area as well as with individual Realtors. They know what I am looking for, and they know how to pique my interest in ways that might get me to take a drive by the house and see if I’m interested.  Why?  Because when they work with me to give me leads on potential lease options, they know they can get their commission paid – and not only paid but paid much more quickly than on a traditional rental deal. Although I don’t technically pay their commission – the seller always pays that – I am willing to front the commission.  This creates a win/win/win between the Realtor, seller and me – the Realtor sells their listing, the seller sells their home, and I buy another investment home.  We all win!

Networking with Realtors

You only need to work with two to four listing agents per year to make a comfortable living.  You can find listing agents in the real estate section of your newspaper, through personal contacts or your investor groups.  If you have been working with a Realtor in our area, your phone should ring as soon as the Realtor hears the four letter word “rent.”  I have one Realtor in my area who gives me one deal a year, but I make at least $30,000 off her every year.  I stay in touch with her every few months just to keep my name fresh and to keep the relationship moving forward.  It’s key to find Realtors that you can work with.  It only takes a few Realtors to keep you going.

 

Realtors® know lots of other Realtors®.  If you have one contact, you can network through that one to access many others.  Research when they have local functions and go mingle. You can find where these meetings are by calling the local real estate board.  Exchange business cards at the functions.  If you don’t have business cards, have some printed.  It’s more important at this point for you to have their cards than for them to have yours, but having a card to exchange is more professional.  You want them to know who you are and how to get in contact with you.

Take a Realtor® out to lunch.  Rent a conference room and have a wine and cheese party and then give them a presentation about lease options or lease purchases.  Give them a “trigger point” that says “Would you like to sell more listings and make more money this year?  I can teach you for FREE!”  Do something to advertise it that grabs their attention without giving away all the details.  Don’t be alarmed if only 5-6 people show up because those 5-6 are very interested in creative solutions.  You might even put on your invitations:  “Would you like to be more creative than your competition?  Would you like to know things that your competition doesn’t know about yet?  I can teach you some creative ways to sell your listings that your competition hasn’t even thought of.”

If you are not sure who to call, talk to the people in your local investing group since there will be some Realtors® there in your group.  These are not the Realtors® you will be working with, as these are investors themselves and not traditional listing agents, but those Realtors® should be able to tell you who the listing agents are in their offices.  The top listing agents from the companies are also listed in the paper.  It’s worth starting a database or spreadsheet to keep up with who is where and what they do – especially of the people you begin to contact and develop relationships with.  And, of course, keep a backup copy of your information somewhere and back up your data regularly.   It won’t take many good listing agents to make this business lucrative for you.

Your local investors group can also be a great resource from brainstorming on how to get more ideas on drawing people in.  Not only will they be interested in giving you feedback, you may even find a money or managing partner there who is also keen on investing in the lease option strategy.  You can then go in as a team and make a presentation.

Sharing the “Realtor® System” and Targeting Realtors®

Just as you need to build rapport with your sellers, you also need to build rapport and credibility with Realtors®.  Working the Realtor® system is a multi-step process.  Building a relationship with a Realtor® does not happen overnight, just like with any other good relationship. Here are some steps to get the process moving forward:

I use several tools and techniques to target Realtors® to call me about lease options and lease purchases.   I use primarily letters, phone calls and presentations.

Letters:  I have a couple of letters that I use to target Realtors®.  I primarily target homes

listed over 90 days on the market.  One letter is for use during a buyer’s market (lease options) and the other for use during a seller’s market (lease purchase).  They both explain when a Realtor® should consider me, and how lease options and lease purchases can help them and their sellers.  It is VERY important that a Realtor® understands how you will help their seller.  Their first obligation, by contract, is to their seller.  Then they are concerned about themselves.  My letter explains how I will help their seller AND pay them.

 

Phone Calls: I will also call Realtors® and go over something similar to what my letter says.  You might want to catch them after hours so you can get your entire thoughts out on their voice mail and not flub it up, or if your time is limited.  Then they can listen to it over and over and call you back for any questions.  Also, it doesn’t tie you up for a 30-minute call if there is no interest.  However, if you have time when you are first starting out, it might be wise to call during the day.  For me, I am very busy now and don’t have the extra time during the day for those calls, so I would prefer to get out what I want to say and be done with the call.

 

Basically I will say something like this, “Hi Sally, this is Wendy Patton from Keller Williams.  I am calling about your listing on 123 XYZ Street.  I am wondering if it was still available? [Small pause] I noticed it has been on the market for a while and I wonder if your sellers would consider something a little creative?  Something like a lease option?  If your sellers don’t need their cash out now but would like their monthly payment made and you would like to sell their home and get paid your full commission, please give me a call.   Sally, if it won’t work for this seller, but if any of your other sellers have said to you that if their home doesn’t sell soon, they might have to consider renting it, please give me a call.   I buy homes when sellers can consider terms like this.  Don’t lose your commission to sellers that want to rent… please call me. Thanks Sally for considering this.   My number is… again my number is … and my name is Wendy Patton at Majestic Realty.  Thanks Sally.”

Now this might be what I would say in a buyer’s market.  If it was a seller’s market I might change the wording to a lease purchase. I would say it was a guaranteed sell for the seller and the Realtor’s commission is paid upfront. This makes it a much stronger call and necessary in that market.  (See Chapter 9 for the letter in the seller’s market – verbiage that makes it stronger for the Realtor)

Getting your Foot in the Real Estate Office Door

Real estate offices get many requests to have speakers and sales people, so it can become hard to get an appointment.  The best way to start is to first go to a real estate office where they know you and can recommend you.  If you know someone who is a Realtor® or investor, ask them if they can assist you in getting onto a company meeting agenda so that you can do your presentation.  If you don’t have a contact, call the office directly and speak to the office manager, or broker, and use an introductory letter.  Tell them a little about yourself, keep it short and sweet and ask if you can present your ideas to their staff.  They get bombarded daily with mortgage companies, title companies, and many others trying to get their business, so they don’t like a lot of sales people and they like to keep it short and sweet.    However, what you have to keep in mind is that the lease option or lease purchase system offers something unique and different.  The real key is to show them how this system will help them to sell more of their listings.

I like to send a letter to the broker that grabs their attention.  That means I leave out stuff about me, my background and my credentials, because when it comes down to it, I’m trying to sell a concept more than I’m trying to sell me.

 

Your letter should be on letterhead and might sound something like:

 

Dear [Broker], (use their name)                                                                     Date

 

Would you like to assist your agents in learning new ways to sell their listings?  I buy real estate and I have some ideas for your agents on how to sell more of their listings. I buy many homes in this area. I have a professional presentation that I would like to show you and your agents.  I understand you get bombarded with sales people trying to speak to your agents; I am not a salesperson.  What I offer is unique and is something every real estate agent should know about.

 

I have some creative ideas that might help you sell some of your office listings.  I don’t sell anything.  I would love to meet with you to explain some of my ideas. My presentation is 10-15 minutes, so it will not take up much time, but will be very valuable for your agents and your company.

 

We have many references from clients like yours and from other real estate agents, including Agent 1, Agent 2, Agent 3, etc.  Please talk to them to find out how easy it is to sell a home to [Your Company Name].  Please call me to set up a time when I would be able to meet with you and share the information and presentation that I would like to give to your real estate agents.  My phone number is (222)333-2222.

 

Sincerely,

 

Wendy Patton

 

I also have letters that target specific Realtors® and their listings, and I send them out constantly.

“Educating” Realtors®

Realtors® are not trained to do creative selling, and sometimes investors think they are not too sharp because they don’t know how to do unique deals – that’s the biggest problem for investors to work creatively and effectively with Realtors® – investors expect something Realtors® are not trained to do.  As an investor, you will need to work with a Realtor® and teach them what you need them to know if you want them to work effectively with you. This doesn’t mean exactly how to invest, but what key words they should listen for and how it will help their seller and themselves.

When you get a real estate license, you are trained mostly on the law – seller contracts, lead based paint, legal issues, fair housing, things that are required by the state to make a real estate transaction go professionally from start to finish.  However, they don’t teach you about “what if the house doesn’t sell,” or “what if the seller says that 4-letter word?”  It will then be your job to train a Realtor® on what to listen for and how to help you and themselves in these types of deals.  You essentially will need to train them on how to listen for the “four letter word,” not on how to do the mechanics of a lease option.

Most of us know at least one Realtor® or we know someone who knows a RealtorÒ.  You can do a formal or informal presentation on lease options or lease purchases to Realtors®. They can be your first Realtor® to meet with and practice your presentation and ideas on lease options.  While you are in the practice mode, ask them for feedback; for example, “Did I present the lease option concept clearly?”  “Was my presentation too long?  Too short?”  “Is there a better way for me to communicate this idea to Realtors®?” “May I set up an appointment to present this at your local office?”  The last question is especially good if your practice presentation has gone well and you are ready for the next step.

You will then want to go to the RealtorÒ’s office meeting.  Call their broker or have them set you up to come to one of their meetings.

What to Bring to a Meeting

You must have a presentation prepared before going into a meeting.  Don’t ever think that you know enough to just wing it.  Here’s a list of what to bring:

 

  1. When you attend a meeting, it is customary to bring donuts or bagels, so call first and ask the office manager or broker what the agents would like.

 

  1. Have all the material that you need for your presentation organized neatly and accessibly. You don’t want to be fumbling for information and making them wait on you.  Time is money. They will want you to be in and out quickly.

 

  1. Extra business cards (stapled to your handout).

 

  1. Enough handouts of your presentation for everyone who attends the meeting and for the absentee agents. You’ll need to call first and get a head count. Always have more than necessary in case they ask for extra copies.  You won’t need to give them a copy of each slide you present, but you can give them a one page overview of how lease options will help them as a Realtor® and their seller.

 

  1. Make sure all handouts have your name and contact number on them.

 

Begin your presentation

Realtors® are open to the idea of lease options, or lease purchases, if you help them understand how they work and when they are appropriate for their sellers.  Lease options are not the right thing for all sellers.  This will all be about how to educate them on the benefits to themselves and to their sellers. I have a PowerPoint presentation I give, and I go over the program step by step and then open it up to questions and answers afterwards.  Here is an approximation of my presentation.  It takes about ten minutes, and yours should take no longer.

If you don’t have a computer to bring with a PowerPoint presentation, you can make overhead projector slides.

My Presentation to Realtors®

            Your presentation might start off something like this:

“Thank you for allowing me to come to your meeting today (always remember to thank them for their time).  I am here to talk to you about some very exciting concepts that I have discovered that work for Realtors® and their clients.  Specifically, creative options for Realtors® – things that you may not have thought about before or may not have considered for your clients.  Let’s get started.”

  1. Introduction of myself and the name of my company
  2. My agenda: discuss creative and innovative options for Realtors®
  3. Why I’m not a competitor but a help
  4. How to help them sell their listings
  5. Unconventional vs. traditional
  6. What to look for in a seller who might need my services
  7. What to look for in a buyer who they can’t help
  8. The Lease Purchase or Lease Options – when I do it and the guarantee it brings
  9. How it works
  10. How I pay commission
  11. Benefits to the seller
  12. Take over payments
  13. Take over maintenance
  • No rental headaches
  1. Benefits to the listing agent
  2. Quick sale – saves time and money
  3. Commission paid up-front
  4. What types of homes are acceptable to me
  5. What price range I’ll consider
  6. Referral fees
  7. Closing statements
  8. Ask if they have any questions

I don’t stay very long once I’m done.  Usually the questions are brief and I’ll stay as long as they continue to ask for more information.  But Realtors® generally don’t have a lot of free time in the office, so they’re looking to get as much information from me in as short amount of time as possible.  Many times, after my presentation, they realize how I can help their sellers.  Then they start to write down addresses on the back of their business cards for me. I walk out of presentations many times with lots of cards and leads to pursue.

Making the Realtor® Part of Your Team

If you’re new at this business, you might feel like a very little fish in a big pond, but when you have established a relationship with a RealtorÒ, they become a part of your team whether they realize it or not.  Now you’re going to start to work together on finding solutions for the “RENT” problem.  You will also be able to help them during a buyer’s market when things are slow by cherry-picking their motivated seller deals as investments.

Because they are a part of your team, you will want to build that relationship above and beyond just what they can do for you and what you can do for them.  How about sending a thank-you gift every time a deal goes through that they have lead you to?  These little rewards go a long way in keeping the rapport top-notch and ensuring even more leads in the future!

Building Rapport: The Follow Up

Follow up monthly with Realtors® who might be strong listing agents or ones that work with lots of sellers.  Remind them what you are looking for.  Remember, they are busy if they are successful, and they might not always remember you. You might have to remind them of what you do and how you can help them in their business. Personally, I don’t like to call them during the day and interrupt them.  It also can interrupt my day. I prefer to call their offices late at night and leave a voice message.  That way they can listen to it first thing in the morning – it’s like they get to start their day off with me reminding them of a creative way to do business.   It might say something like this:

 

“Hi Kathleen, this is Wendy Patton. I wanted to say ‘hi’ and let you know I was looking for another home that I can purchase on a lease purchase.   Do you have any sellers right now that might be able to consider this type of solution?   If so, please give me a call.  My number is xxx-xxx-xxxx.   Thank you, Kathleen, and I hope to talk to you soon.”

 

If I haven’t done business with them yet but I have been trying to start the relationship with the first deal, I would say something else like,

 

“Hi Kathleen, this is Wendy Patton.  I am still looking for a home and I was wondering if any of your sellers have said that they might consider renting their homes if their home doesn’t sell soon. I know most of your sellers do want to sell their home outright, but if you do ever hear one of your sellers say they might rent it, Kathleen, do call me.  I will make sure you get your commission in full,” and continue with this if you aren’t a licensed real estate agent,

 

“Also, Kathleen, you will get to ‘double-dip’ on the commission and receive the full buyer agent portion too when it closes on the back end.  I don’t have a Realtor® involved.  I will write up the offer, but you can have the entire commission.   If your sellers rent out their home, they might not sell it and neither one of you would really get what you want.   I would love to do a lease with an option and make sure you both get paid in full.   Please keep me in mind if this type of situation comes up. This usually works well for any type of seller that does not need their cash out at closing to move on to their next home. Thanks so much Kathleen. Feel free to call me with any questions.  My number is xxx-xxx-xxxx.   Again that is xxx-xxx-xxxx.”

 

Following up is key with Realtors®, however, don’t be a pest.  I would recommend no more than one time per month to remind them of what you do or to call them, maybe even every other month, especially once you have the relationship established. Each time you call them you don’t want to say the same thing. You might try another version or way to explain how options or creative deals work. Another example might be,

 

Wendy’s AdviceGetting a real estate license might be key for you.  Check out my article on this subject by clicking here.

 

“Hi Kathleen, this is Wendy Patton, just checking in to see if you have any sellers that might not need their cash out of their home at closing or they might be financed near 100%?  If so, my type of solution might work well for them.  Give me a call on any homes like that so I can set up a time to go and see them.  I hope to talk to you soon on one of your listings.   Kathleen, thanks for the opportunity to work with you. My number is xxx-xxx-xxxx.”  

 

Ethics with Realtors®

Honesty and integrity with Realtors® will be the key to successful relationships with Realtors®.  If I’m out there jerking Realtors® around, it’s going to ruin my reputation and ruin the business for everyone else, so ethics in real estate is really important. Real estate is a small world and word gets around if you stiff a seller or walk away from a contract and tell them, “Go ahead and sue me.”  Realtors® find out, and as previously mentioned, they control 80-90% of the homes on the market.  Do you think they’re going to want to work with you? And even if your ethics are good, if Realtors® hear horror stories about deals gone bad because of investors who reneged on their lease options or lease purchases, it just ruins the market for the rest of us.

If you’ve committed to something with a RealtorÒ, get back with them and do it.  There’s nothing worse than going to a group of Realtors® with a presentation, they give you ten leads, and then you never get back with them regarding what happened with those leads.  The Realtors® will wonder what is the point of helping you with leads if you don’t follow up.  It’s the surest way to kill the rapport you have worked to establish.  Did you look at the properties?  What did you think?  Are you interested?  Are you going to pursue?  Follow up and let the Realtors® know!  Even if you don’t have time to look at the properties, or they weren’t what you were wanting, you should just communicate that and keep the lines of communication open so that they will continue to provide you with more leads.  That’s what you want from them – leads!  They won’t give you leads if you are not considerate to follow up with them about the status.  The relationship needs to be a two-way street.  They give, you give.  And the more you give, the more they are willing to give.

There have been times when I have had a Realtor® call me about a “dumpy” property.  I went look at it and knew it was over-priced. Now I’m faced with a dilemma: I don’t want to insult the Realtor, because I want to keep that relationship positive; however, they were the ones who called me about the property.  The best strategy is to be honest with them. I would say something like this,

 

“Sally, I looked at the home on 123 Main Street today.  Boy, with what it needs, and what I think I can sell it for, and my carrying costs, the most I could offer would probably be an insult to the seller.  I certainly don’t want to affect your relationship with the seller.  I think I will have to pass on this one, unless you want me to still write it up.  I will leave this up to you.”

 

See how I leave it up to them?  I explained my reasons in terms that the Realtor® would totally understand without being insulting to her or the property.  Not only that, but I’ve left the lines of communication open in such a way that the Realtor® will call me back one way or another regarding the house.  This is what I want: I want them to continue to call me because they are my first relationship. Forget the house! Many times, they know it is overpriced anyway and just want an offer to show the seller, but at the same time I don’t want to insult them.  If they want me to write up an offer I will.  If you are not licensed, the Realtor® will have to write it up for you and be your agent, too.  Many times what happens with these types of deals is that the seller will eventually reduce the price and the agent can finally sell the home.  I then have helped the Realtor® make the sale.  Sometimes the seller doesn’t think their home is overpriced until they get an offer from me and are shocked into reality.  This might not help you as an investor today, but it probably will help you with the Realtor® for their next listing.  Keep in touch with them and realize that being an investor is a long-term strategy and building relationships is also long term.  For me, that one home is just a home.  I want the relationship, so that they will bring me five more homes down the road.  Rapport building with Realtors® is an essential part of the long-term big picture of investing.   Stick to the program, work it one day at a time, and build your relationships for the long run. Investing is about Future Financial Freedom (FX3).