Even though good deals occur everyday, you might have a hard time getting your hands on one if you don’t keep two important points in mind.
First, you must be actively pursuing them at all times.
Second, you must be able to qualify the prospect properties quickly and accurately or your time will be wasted on non-productive deals.
We have found that cultivating a team of agents can be an effective way of leveraging your time to find good real estate deals.
Understanding Real Estate Agents
Since real estate agents control access to the information systems necessary to make good real estate decisions (and a major part of the real estate market), much of your success will come from your ability to understand them and gain their cooperation.
The Two Major Types
Listing Agents
These agents concentrate on obtaining as many listings in their name as they can. These Realtors are basically advertising agents for real estate. They advertise it in the paper and list it on the M.L.S., then sit back and wait for someone to call.
Selling Agents
These agents concentrate on finding buyers. They run ads in the paper listing fictitious homes that sound like great deals. When you call, they explain that the property in question has been sold, then try to sell you something else.
Problems to Watch for with Each Type
Listing Agents
Because of higher commissions, they are usually more interested in selling their own listings. This tends to make them less willing to inform you of all of the options available on the market or to pull comps.
Are closely associated with the seller and have their pride to contend with when bringing them a low offer.
Will write the contract so that it is pro-seller.
Will kill deals if they don’t like you or your offer for some reason.
Selling Agents
Many times don’t have accurate information about the properties or the sellers.
Don’t have as much room to negotiate commissions as listing agents.
Doesn’t have pull with the seller to try and get them to see your side of the negotiation.
Many times they won’t give you the copies of the M.L.S. read outs because they are afraid you will go around them to the listing agent.
A Third Type of Agent (The Buyer’s Agent)
Advantages
They represent you and your interests in every part of the deal.
They will help you locate and negotiate deals even when the seller isn’t paying a commissions.
They will spend as many hours of their time as you want them to locating deals or pulling comp for you.
They are generally better than most agents at negotiating good deals, and using creative financing techniques to solve the seller’s problems.
They are not emotionally tied to the seller.
Disadvantages
If the seller isn’t paying a commission on the deal you must.
Sometime they require payment by the hour for their services.
The Characteristics of a Motivated Real Estate Agent
I consider the relationships I have developed with a few good real estate agents to have been a major contribution to my success. They were willing to not only bring me great deals, but to also take the time to teach me everything they knew. Without the help from these individuals I wouldn’t be here helping you today.
Since even one good agent can make you lots of money, your goal should be to find one and establish a relationship with them. These agents are very valuable and will work hard for you if they feel you are sincere about making a purchase.
When looking for an agent with the WE CAN DO attitude, look for these qualities:
Characteristics
The willingness to show you as many properties as you want to see, as long as you know exactly what you want and are willing to write offers on them when you find them.
The willingness to pull up comps of all types, but only if you buy the subject property from them.
The willingness to submit any number of offers to get you a good deal, as long as the offers are realistic.
The awareness of creative financing, with no opposition to using it.
The willingness to work with new ideas believing that any advantage they can get will help them.
The willingness to inform you of all pertinent information relating to the purchase or sale of a piece of real estate.
The willingness to work hard to put together an offer the seller will accept.
The willingness to defend your credibility.
The willingness to call you when they hear of great deals instead of keeping them for themselves.
The willingness to allow you to be involved in negotiating and writing your own contracts.
Enough professionalism to not intimidate you into buying something you don’t want.
Enough professionalism to not allow you to walk away from something you do want.
Enough professionalism to never treat you like you are ignorant.
Since real estate agents have access to the information systems and personal contact with sellers on a daily basis, it only makes sense to start your search for good deals by contacting them. The secret is to leverage your time by getting as many of them working for you as possible.
Goal: Within 20 days have 20 real estate agent contacts
These agents should know:
1. Who you are
2. What you are looking for
3. That you are credible
4. That they get paid twice as much to sell to you
“You should have 20 agents looking for real estate everyday all day long. They should be looking for property while you are working your job, spending time with the family, or vacationing.”
Property Locating With A Team of Agents
There are many ways to locate property. You can subscribe to foreclosure listing services such as www.foreclosehouston.com , drive through neighborhoods, go to the courthouse to get lists of foreclosures, put yourself on bank lists for real estate they own (REOs) and do mailings to entire neighborhoods like an agent would do.
You can even look up property on the web at places like www.har.com, www.real-estate-byowner.com, www.erealty.com, and many others. Simply type “real estate for sale (your town)” into any search engine and you will find dozens of websites devoted to selling real estate in your area.
However, I have never found a better way to leverage my time than what we are about to cover. All of the above methods require a great deal of your time and effort. Then, when you find a deal and are working on it, no one is looking for deals for you. When you finish your deal you are now back to square one. You are now looking for your next deal. If you have 20 agents finding deals for you all the time then you can focus on the deal you are presently acquiring or flipping and there will be deals waiting for you when you are ready for another one.
Why listing agents vs. selling agents?
The listing agent gets paid twice as much to sell to you as the selling agent.
The listing agent knows the seller
.
The listing agent has seen the property.
The listing agent knows the reason the seller is selling.
The listing agent can get answers to questions faster.
The listing agent can get contracts signed faster
.
Understanding the difference.
Listing Agent
The listing agent is the agent that signs a “listing agreement” with the seller to sell a property. The seller agrees to pay a commission to the agent. This is usually 6% of the sale price. The listing agent usually knows the seller, has actually seen the property and knows why the seller is selling. If the listing agent also finds the buyer, they receive all 6% of the commission.
Selling Agent
The selling agent simply finds a buyer for the listing agents deal by looking for available property on the MLS (Multiple Listing Service) computer and in return receives ½ of the commission, usually 3%. This is important because by only dealing with the listing agent you ensure that they get the highest commission possible.
You do not need more than 2 agents patrolling the Multiple Listing Service for you. Of the 20 you cultivate, allow 2 of your best to patrol and bring you deals that are available through other agents not on your list.
Principles of the first contact:
Don’t be afraid to make mistakes.
You will have to talk to about 200 agents to come up with 20 agents that are willing and qualified to help you. Remain kind and centered on the principles. Say what you think is right. If it doesn’t work, hang up and try again.
Don’t act like you are something you are not.
Be honest. If you have never done a deal before, admit it. However, do not put yourself down. Most of the agents you talk to have been agents for years and still own none of their own real estate. After your 2-day class you will know more about investment real estate than 95% of the agents you talk to.
Look for agents, not deals.
Let the agent know that you are just looking to find out who they are on your first contact. Are they listing agents that go out and find deals or are they agents that just patrol the MLS? Have they ever worked with investors and are they willing to look for deals for you.
Tell The Truth
If you call up and say “I am a big investor with lots of money and I want to buy property today,” you are using greed as a motivator. Do not do that. You want the truth. Do they really work with investors and do they go out and get new listings. By not “bragging” about yourself and letting them know that you will not be looking for property for about a month, they can easily say, “I don’t work with investors” or “I just work with other peoples listings.”
Contacting Agents
Take ½ to 1 full hour each day Monday – Friday and Contact 8-10 agents.
Go to SuperPages.com (formerly BigYellow.com) or Internet yellow pages of your choice and download a list of realtors within 10 miles of your home or main place of business.
Take no more than 2-5 minutes talking with each agent. Tell them what you want and get on to your next contact. Credibility with agents is not built with one long phone call but with many short phone calls.
The first time you call they will probably think you are some “quack” who just bought a set of books and tapes off late night TV. However, with the 2nd and 3rd phone calls your credibility will rise as most agents only hear from people once.
Criteria for Real Estate Agents
Make a RE agent contact sheet for each agent you contact that meets the following criteria:
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They understand what an investor is
They go out and get new listings
They are confident and kind*
*Do not deal with agents that make you feel stupid or are rude to you. There are over 130,000 agents in greater Houston. Don’t be afraid to let one go.
3 Points of Credibility:
Multiple Concise Contacts
These agents are long-term relationships not one night stands.
Stories of deals you or other members have done
Get these stories at the case study nights.
Quick response time
30 minutes for single family, 24 hours for multi-family: See the 2-day FFP for details.
The Script
Start your conversation with a statement and question something like this: (Please remember that the following statement was written by me and is tempered with my personality. You may rewrite this to fit you personality as long as you get the main points across.)
“Hi, my name is ________ and I will be purchasing some additional rental property in the next couple of months or so. My partner and I will be meeting on the weekend of the __________ and we will start writing offers on the following Monday. He has asked me to locate some real estate agents to help us locate profitable properties. We are looking for agents that actually go out and get new listings, not someone who just patrols the MLS computer. Are you a real listing agent and would you like me to call you back in one month to help me start locating some investment property?”
If the agent answers “yes” to this question, what do you do? When an agent does answer yes to this, as professional sales people they will probably try to take control of the conversation from you. They will use questions like “are you pre-qualified?”, “how much money do you have?”, “What size house, what neighborhood?” and so on. Put them off with a statement like this:
“I don’t have the answers to those questions yet; in fact I won’t until about a month from now. I know my mentors do everything from single-family to 200 plus unit apartments. When I call you back next month I will have all of those answers for you. Are you sure it is still OK to call you back in one month?”
Restate that when you call back, you will be looking for their personal listings only.
Once you have accumulated 20 quality agents:
You will want to contact them no less than once a month for the rest of your investing career.
