Having a bad agent can mean lost money, sitting on your property for a long time, and just an overall terrible experience. Let’s help you pick the right agent for selling your fix and flip property.
One of the biggest factors for your success in real estate investing is whether or not you’ve got the right professionals behind your business. Getting involved with a shoddy plumber or sketchy electrician can set you back thousands of dollars and months of time. Still, you should be able to get back on track when dealing with inadequate services pros or general contractors.
One professional that can either tank or skyrocket your business is your real estate agent. While you can bounce back from a poorly-installed dishwasher, trying to dig your way out of a bad real estate deal to break even can be nearly impossible. That’s why it’s critical that you heavily vet your potential real estate agent and ask the tough questions ahead of time to ensure you’re creating the best partnership possible.
So what are those tough questions? Let’s get into that now.
Wait, Do I Need a Real Estate Agent?
Are real estate agents actually necessary when it comes to real estate investing? It depends.
First, if you’re a new investor, then it helps to have a seasoned agent on your side sourcing deals and giving you insider information on upcoming hot neighborhoods. Agents also make it easier to deal with banks if you’re trying to close on a short sale.
That said, once you’re more experienced, then your agent becomes less of a necessity and more of a “nice to have.” Both my wife and I are licensed agents now, so we’ve cut that commission out of my business entirely, but we knew it was vital enough of a role that was worth investing our own time and effort toward. If, however, becoming licensed isn’t something for you, then it’s your call whether you think the 6% commission is worth the trade-off.
Time is money, and when you’re the business owner, you know the scale has to tip one way or the other. If money is tight, it might be worth spending the extra time being your own agent. If time is tight, then it’s well worth the commission to have someone constantly sourcing inventory while you focus on the more critical factors of your business that no one else can do as well as you.
What Qualities Should I Look for in a Real Estate Agent?
First, the real estate agent who worked with you to get your own house probably isn’t going to cut it. You’ll need an agent who’s experienced in dealing with your line of business, whether it’s fix & flips, wholesaling, rentals, or a combination. Retail real estate is a completely different animal than real estate investing, and you’ll need a professional who understands the difference.
Next, the qualities your ideal agent has will be based on the way you do business and your own personality. Can you handle a tough love, brisk go-getter, or are you better suited to find an agent who’s more soft-spoken and thoughtful?
The Questions to Ask Your Potential Real Estate Agent
Have You Worked with Fix & Flip Investors in the Last Year to Successfully Close Profitable Deals?
What you should expect to see: Your potential agent needs to know the current market trends and fluctuations in the local economy. You should look for an answer that talks about historical data about the town and the types of homes they’ve seen close successfully. If they haven’t worked with flippers recently but still understand the local industry from a business perspective, they could still be a good match.
What a bad answer looks like: No experience and no information about how the market has changed over the past few years. Also, if they claim to have experience but don’t get into details. You’re not looking for precise numbers (although that would be great) and, like, social security numbers, but don’t let them off the hook with vague answers.
Can You Provide Me with Referrals from Investors You’ve Worked With?
What you should expect to see: Word of mouth is the best advertising possible, so good agents will be more than happy to share their list of satisfied clients. Expect to get 3-5 referrals but don’t worry if they only have 1-2. If they’re new to the area or real estate, that’s fine, but they should be able to swap those requested referrals with something else of value like successful business metrics of their own real estate operations, etc.
What a bad answer looks like: An unwillingness to share their past clients. Also, this might be nitpicky, but sharing an overabundance of referrals always strikes me as a little suspicious. Could they really have twenty clients they trust enough to give them a glowing review? Sure. But it can also mean that they’re taking the chance you’re going to be more impressed with the number of referrals than quality and not actually give any of them a call.
Can You Show Me an Example of How You Calculate ROI on a Deal Before Sending it to Investors?
What you should expect to see: This question is going to require a little brashness on your end because you’re essentially asking them to do a math problem for you in order to gain your business. However, good agents know they’re up against stiff competition and understand the importance of showing you they see the investment side of this industry and how it differs from retail.
What a bad answer looks like: Scoffing at this request or giving you a vague answer. You’re not looking for quantum physics here but should get a response with some solid numbers.
Even if you have the world’s best real estate agent in your pocket, you need to adopt the philosophy that it’s your responsibility to know the game. In the end, all the final calls fall on your shoulders, but there are still ways you can ensure that you’re working with the right professionals who can move your business forward. Keep these three questions nearby when looking for a new real estate agent so that you’ll have a benchmark for what a good answer looks like.