Of all the relationships you make in the investing industry, none is as important as the one with your realtor. Your realtor has a direct pipeline to lenders which may trickle down to you. Even if you aren’t looking specifically for bank owned properties, a good realtor will guide you through the buying process and help you find the best deals for your situation. Many times this means listening to their advice and trusting their judgment. This is not always easy to do, but if you listen more often than not, they will be right.
Realtors work on commission and only get paid when you close a deal. This is both good and bad, depending on how you look at it. You know that your realtor will put some amount of work in to ensure they get paid for their time. There is a misconception amongst new investors that they will attempt to steer you to higher priced properties in order to boost their commission. Here is where the trust factor comes in. You need to trust that your realtor is only showing you properties that fit your budget and your strategy. More often than not, they are only showing you higher priced properties due to a lack of inventory, but if you get the sense they are only trying to up-sell you, it is time to make a change.
Like most everything else in business, communication is key. If you walk into a real estate office and tell them you are an investor, you will probably get a few realtors that will want to work with you. This doesn’t mean that the relationship will be successful. You need to discuss how you plan to buy properties, in what area and in what price range. If you intend to make low-ball offers on numerous houses, it has to be put on the table from the outset. Some realtors may not feel this is worth it for them while others will welcome the opportunity to work with a new investor. The more you can get out in the open from the start of the relationship, the better it will be.
Your realtor is the market expert and should be treated as such. This doesn’t mean that you can’t do your own legwork, but you need to let them do their jobs and listen to their advice. You may have seen that one property sold in the area for $200,000, but that doesn’t mean your rehab will sell for that amount. Your realtor will be able to look at the MLS and see if there were any issues that impacted the sale and any other properties on the market. You and your realtor are on the same team in that you both only make money when deals close. The minute you stop trusting your realtor or think you know more than they do, it is time for a change.
It is not easy to find new deals, even for experienced realtors. They are not miracle workers and can only do what they can do. If you find a good realtor and develop a successful relationship, you can build off it to enhance your business for years to come. It will take a few deals, but you should learn to trust your realtor’s advice and expertise.