Some realtors (especially new ones) think hooking an investor is a great path to multiple commissions. The truth is that investors and owner/occupiers are very different animals. An investment property is very different from a residence. Either investors want to flip the property fast or they want a tenant in it providing a reliable income.
The owner/occupier buys the dream of a white picket fence that keeps the children safe and happy. Working with realtors as an investor is all about bringing home the bacon and bread to feed the children. The owner/occupier is almost always a one time deal. Investors will be back for another deal in a few months.
Working With Realtors as an Investor Means Staying On top of the MLS
Realtors working with successful investors will find that investors have ice water in their veins. Working with realtors as an investor means pushing out 30 or 35 potential offers to obtain a single bid. Then, another 10 or 20 bids will be rejected by the seller before one finally goes through to closing. Working with realtors as an investor really is a job. It will bring repeat business and commissions but it means scouring the MLS every day to find the latest and greatest opportunity coming onto the market.
Realtors will do well when they find two or three earnest investors that buy four or five houses each year. What the successful realtor needs to be wary of is the “so called” investor that is nothing more than a tire kicker. The ones that know there are big profits to be made in real estate but never pull the trigger.
Working with realtors as an investor is not for the timid realtor. It means knowing your game and being able to execute deals fast. What investors specialize in is closing the deal tomorrow. It’s about the ex-husband/father that is way behind on his child support payments and is about to go to jail next week. He has an inherited house that he doesn’t want. If the investor can pay for it in three days to keep the guy out of jail, he or she will get a great deal.
Working With Realtors as an Investor Means Speaking a Different Language
Realtors that don’t know what a 1031 Exchange is, are going to have a difficult time working with professional investors. The same goes for those that don’t know how to put a seller financed deal together. In today’s world, a realtor not only needs to be able to put together a seller financing sale, he or she needs to have resources in place to bring in third party financing.
Other terms that realtors working with investors need to know are “hurdle rate”, “cap rate”, “rate of return”, and “income vs. capital gains”. The realtors’ knowledge of real estate math has to be deeper than just a mortgage calculator. Speed is of the essence. Top notch realtors working with investors are able to take an offer and complete it in a couple of days. If you can’t do it yourself, you better have a staff that can.
Working With Realtors as an Investor Means Offering Round Trips
Here is the big bonus when working with realtors as an investor. Investors can offer you a round trip. The realtor can earn both the buying and listing commission on a property. In exchange for the hard work, the realtor should expect to be given both the buy commission and then the sales commission a few months later when the investor sells the property.
Working with realtors as an investor means the realtor needs to be sure the investor has a source of capital. Don’t get caught doing a lot of legwork for nothing.
By Wendy Patton
For more than 30 years, I’ve used the Sandwich Lease Option System to earn myself and my students millions of dollars. From my experience, I know there is plenty of room and opportunity in the real estate investment market for everyone wanting to participate to find profitable deals. It’s because of that fact and my personal success that I share the Sandwich Lease Option System with others.
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