by James Gage
There are two common questions that I get on
a regular basis involving Realtors and investors: Should I
become a Realtor? How can I work with Realtors?
How should you work with
Many investors think that
real estate agents don't have the best deals or they have
all been picked over by the time they actually hit the
market. I believe that some of the sweetest deals are
sitting on the market. We automatically think that Realtors
or their clients will snatch up the best deals before they
hit the market.
It is true that some of the best deals do get snatched up
before they hit the market, but there are many other deals
left behind that no one sees. The reason that no one sees
them is because they are looking for "traditional" or
“retail” homes, not "lease option" homes.
The retail market is about 90% of the inventory available in
any given area. The
option market takes up a portion of the remaining
10% of the market.
I look to work with Realtors
who understand the concept of lease options and can help
their sellers understand lease options. This understanding
can take time. Your job is to assist Realtors to understand
Getting Realtors to
understand what I do is key !
First, I have a letter
that I send to a listing agent explaining the concept;
second, I have a presentation that I do for local real
estate offices; and third I network and continually tell
Realtors what I do.
I hear investors tell
me all the time that Realtors just don't understand or don’t
want to understand what they do. I can only say that
patience and persistence pays off.
Realtors aren't trained in unique selling techniques, they
are trained in the "Retail Sales Marketing" which is 90% of
what is out there. As investors, our job is to continue to
help those around us understand what we do, so they know
when and when not to call us.
The type of home I am
looking for through a Realtor is one that the seller:
Doesn't need their equity out
Doesn't have any equity in their home
When a Realtor hears a
seller say, if my home doesn't sell soon, I might have to
rent it," then the Realtor should think of you
All you need is two to four good listing Realtors. They work
directly with the sellers and know which sellers are in
trouble, which ones can rent, and which homes are vacant.
Once a Realtor knows what you do and has a seller that can
accept your terms - presto! You are the proud new owner of a
Realtors are just like everyone else and need to make a
consistent living. One of the most important things for
anyone is that they get paid for what they do. When I am
taking on an option, I am asking the seller to wait two or
three years to get cashed out. I don't want to make the
Realtor wait that long.
If I do, they won't even tell the seller about what I can
offer. Why should they? It might not do them any good. They
are doing all the work now to get the deal done and want to
get paid for it. So I give them the listing agent portion of
the commission up front.
This is my option fee and is applied to the purchase price
when I get my mortgage or when I sell the home. The agent is
therefore paid on what they do just as if they sold it
conventionally to another buyer. When you sell the home you
will be asking for 2% to 5% down from your tenant/buyer.
Therefore, you are still minimal or zero down/out-of-pocket.
If you aren't a
licensed agent/broker and entitled to half of the
commission, then let the Realtor “Double Dip"; appeal to the
greed factor! Remember, half of something, is better than
They can get the listing
agent portion down up front from you and the selling agent
portion when the home closes in two or three years. They
will wait for the second half if the first half is paid up
front. The second half would just be a bonus that most
agents wouldn't expect anyway.
My recommendation is to get licensed!
Investors tend to be
adamant one way or the other about being a licensed Realtor.
I am on the side of being licensed. Being licensed has been
one of the best tools that I have as an investor. Being
licensed allows you access to your database of "comps" or
comparables via the MLS system. This is the data you need to
buy and sell real estate, not to mention it’s a great
resource for expired listings – which can be a gold mine.
If you have a great Realtor, and you don't want to be
licensed, fine. But I still think it is better to be
licensed than not. Some investors say it gives you more
liability to be licensed. I have two answers to that:
What are you doing to create
Don't you think a judge is
going to know you are an "expert" anyway when they find that
you do real estate investments?
Some investors say that
sellers won't sell to you if you are licensed. I find the
opposite is true. Most sellers are happy that I am licensed
and "know what I am doing." However, you will decide on
each deal which hat you will be wearing : investor, realtor
"You are who you are and where you are because of what you
have put into your mind."
For more information or pricing please do not hesitate to
call or e-mail. I can be reached at (508) 595-9567.