“It’s impossible to find a good real estate agent. Nobody wants to do any work! They just send me garbage – if they even call me back”
My new client was really frustrated. After making several phone calls and going on one property tour with an agent, she felt strongly that there just wasn’t the right agent out there.
I get it. We’ve worked with a few dozen real estate agents over the last 13 years. Sometimes it feels like agents make a lot of money for doing very little. Other times it feels like all your agent is doing is making your life difficult by not returning your calls or taking forever to set up an appointment.
Many real estate investors become realtors because of the challenges working with some agents.
But, if you have the right agent, they are an important part of your real estate investing team. They will help you understand a market area by providing comps, market information, and insights. They will send you deals you may have missed. And they will save you a lot of time setting up showings, chasing other agents for information and handling paperwork (something few investors enjoy).
If you invest in a town you don’t live in, a great agent is your eyes and your ears on the ground. They are essential.
While I do believe that some agents aren’t very good (just like not all investors are good), I also don’t believe that is the real issue facing most investors looking for this important team member.
There are a few problems that get in the way of a great agent – investor relationship.
The first is that all Real Estate Agents are not the same. Some don’t want to work with investors. They have had a bad experience or heard investors are a pain. It doesn’t matter to them that investors provide far more repeat business than home owners. For some, it’s just not a category of client they want.
Second, as an investor, you are looking at a home differently than someone who wants to live in it. A real estate agent’s training is based on working with home buyers who plan to live in the property, not based on someone that needs to generate revenue from a property.
Many realtors think a property makes a great investment just because it has a secondary suite or because it’s beat up and needs work. It’s usually just a lack of education in the investment business that leads them to believe that. It doesn’t make them a bad agent.
Real estate investors care about the numbers. If it has a big bathtub, it only matters if a big bathtub gets a higher rental rate or will attract tenants easier than a regular one. At the end of the day price matters to an investor, but things like rental income relative to the price, type of tenants, ability to qualify for financing or get other financing options, and timing of the deal are more important than just price.
If this isn’t clearly communicated and understood, the agent AND the investor will get really frustrated with the work they will try to do together.
Third, many investors do a really terrible job of communicating with their agents. They aren’t focused enough to start with which makes the agent’s job next to impossible. Or, worse, they excitedly contact agents to do deals that can’t really be done. Many real estate investing courses geared towards GET RICH QUICK have very tricky and sometimes questionable strategies that agents are right to question! Some of the techniques work on one side of the border but don’t work on the other. Others are just risky and bordering on illegal.
So, what can you do? Here’s my recommendation to find great real estate agents for your real estate investment business:
First, get clear on what you are doing as an investor.
My client who was frustrated with the lack of quality agents out there was the source of the issue, not real estate agents in general. She wasn’t clear on what her investment strategy was. She wasn’t even certain she had found a good market to invest in.
She was calling really great agents that had been referred to her, and was blowing the initial contact because she wasn’t confident, clear or concise about what she wanted.
How could she REALLY expect to get the great real estate agents to work with her when she was going to take up so much of their time just figuring out what she wants to do?
It’s easier to blame the agent than to realize you are the issue.
Before you contact a great agent, get clear on your goals, your plan and your resources.
It’s important to show an agent that you are going to work hard to get what you want, you know what it is you want, and you have already taken steps to collect resources to reach your goal.
If you can’t tell them about your experience because you’re new, you can show them the steps you’ve already taken and the steps you will take. This way, they know they won’t be wasting their time. Because, remember, they only make money when you buy!
Don’t worry if you are short on resources. You shouldn’t pretend to an agent that you have a bucket of cash under your porch waiting to drop it on a deal. Our agents know we don’t buy most of the properties alone (not sure how you’ll fund your deals – check out this article on the 5 Ways to Finance Your Deals).
If they don’t like your plans, you’re better off to find that out now then when you’re knee deep on a deal. But by this point you should already have some idea of where you are going to get money. Make it clear that for the right deal, a deal that meets your criteria – you will be able to get the funds to close on the deal. And commit to yourself that you will do everything it takes to do just that.
Second, start asking around. I believe that the best realtor for an investor isn’t the one who helped your best friend buy their house. It’s the realtor who is already working with other investors. Go to your local real estate investing club meetings. Ask other investors.
Do a search on Realtor.ca or Realtor.com for listings in the area you are looking to invest in. Find properties that are similar to the ones you want to be involved in and see who is actively listing the majority of them (or, even better, drive around and make note of the signs). We would probably lean towards finding someone that only has a few listings, vs the one that has every other listing. But I love to work with someone who is already active in my target neighbourhood as they will likely add a lot of value with information they learn while doing open houses, showings and comparable research.
Stop into local real estate offices. They usually have a lot of listings on the windows and you can poke your head in and ask about the different agents. Maybe you will even meet one that you hit it off with. We found the agent we work with in Whistler this way and she’s awesome.
You can also use the internet to find good agents. We’re not talking about google searches here… you are still trying to get recommendations. Look on forums or review sites.
Who Makes the Cut?
Once you have a few names of potential agents, make appointments to meet them in person (or over the phone if they are far away). You want to get to know each other. It’s not just about you finding a good agent to work with – it’s also about finding a good agent that wants to work with you. As mentioned, not every agent wants to deal with or knows how to deal with the special needs of a real estate investor.
Ask good, well informed questions. Be careful of agents that seem to commit to being able to do anything you want. Remember you’re an area expert and you want to work with agents that also are focused and specific. If you’re buying condos don’t hire a single family luxury home expert.
Here’s a few questions to ask a potential real estate agent:
- What is their experience with real estate investing?
- How do they know a property makes a good real estate investment? What criteria do they use to judge properties for investment purposes?
What you are looking for is someone that understands real estate investing. If they are an investor themselves that can be an asset but it’s not a requirement as long as they understand what makes a good investment.
- How long have they been a real estate agent? Are you full time?
Ideally you get someone that is a full time agent and has been for at least two or three years. A brand new agent will potentially lack the contacts and experience that you likely need. Someone who has been in the business 20 years should have excellent contacts but may lack flexibility. It depends what is most important to you … so you’ll have to think about who is your ideal agent and what you’re looking for. Every person is different – so don’t rule someone out just because of their length of time as an agent – but take it into consideration. My preference, however, is to only work with agents who are full time.
- What is their specialty?
Some agents will specialize in a small market area, but will do everything in that area. Others will focus on condos, or larger single family homes in a wider area. Some agents take anything they can get. And some agents focus on working with real estate investors. Ideally find one that is a specialist in your market area and your home type. The more focused the better but it can be difficult to find someone with a serious focus.
- Have they worked on deals that were financed by the seller?
Some agents get skittish when you mention VTB (Vendor Take Back) financing or second mortgages. There is NOTHING shady or underhanded about VTB’s. There are a lot of advantages to VTB’s, for both the seller and the buyer. The seller’s loan is secured by the property, and you pay them interest. VTB’s just aren’t as common in residential real estate as they are in commercial transactions, so some realtors haven’t done a deal using VTB financing. Often what we aren’t familiar with scares us. Not being familiar also means they could struggle to explain them clearly to other agents they may have to work with.
Once you’ve found a great agent, the communication process really begins.
Be clear and specific about what you expect from them. Let them know your preferred mode of communication and the frequency.
Typically, most agents will work the hardest for you at the start of the relationship, and if you don’t do anything to show you are serious or to maintain that relationship, you will fade slowly onto their automated email list never to be thought of again. And if they don’t think of you, you won’t see the REALLY good deals.
Not all agents are the right ones for you. It will take some work. You probably won’t find the best one for you on the first call, but please know there are excellent agents out there. Many will work really hard for you. Many will really try to understand what you want, and bring it to you. The trick is that you have to know what you want and communicate that clearly. You have to figure out what is most important to you in an agent and a real estate deal.
If you’re finding it impossible to find a good agent, take a look at what you’re doing. It just might be fixed with a simple tweak of your own goals, plans and conversations.