Read Time: 2 minutes
The relationship between real estate agents and investors is often adversarial in nature. However, if both parties are willing to overcome their misconceptions about the other, investors and agents can provide immense value to each other. Agents help clients successfully navigate the hurdles of the buying and selling process while investors are savvy at assessing profit potential in homes. When combined, the skill set of real estate agents and investors can create a mutually beneficial—and lucrative—partnership.
If you’re an agent or investor, use these tips to facilitate a successful collaboration.
Tips for Agents
- Understand the type of investor you’re working with
Investors typically fall into two categories: fix and flip or rental-home. Fix and flip investors seek out underpriced homes that can be re-listed above market value after repairs while rental-home investors want properties that will generate a positive cash flow. Understanding your investor’s needs helps you spot potential deals for them and pass along the correct listings. You can even take it one step further and learn your investor’s formula for calculating deals in order to pre-screen potential deals.
- Develop an information flow
Good deals get snatched up quickly and investors value a bargain. If you want to work with investors, set up a process for quickly alerting your investor clients when a new property hits the MLS, a listing price is reduced or a home is sold. Investors are valuable clients because they will act quickly—if the deal is right—but you have to provide them the information before the deal disappears.
- Incorporate technology in your process
Working with investors usually means a high volume of deals and accompanying paperwork. Avoid getting bogged down in paperwork by streamlining your process for creating purchase offers, counteroffers and contracts. Going paperless, document-sharing with clients and using a real estate transaction platform can cut down the delay of waiting for relevant parties to review and sign forms. The quicker you can facilitate transactions, the more deals you and the investor can close.
Tips for Investors
- Provide your agent with information upfront
Agents are trained to evaluate homes differently than you; they think in terms of a home’s aesthetic features, rather than rehab potential or cash flow. In order to help your agent best assist you, provide them with details about how you assess a property and what you look for in an investment home. With the necessary information, it’s easier for your agent to do their job correctly and send you enticing deals.
- Be clear about your agent’s role
After you find an agent you’d like to work with, set clear expectations about their involvement. If you’re buying homes, you may want the agent to weigh in on properties you’re considering or just to submit paperwork on your behalf. Or, in the case of a selling agent, you may want to negotiate a reduced commission up-front and market the property yourself. In some cases, you may even be working with multiple agents simultaneously because they understand different niches or markets. Be direct and upfront with your agent(s) about how you want the relationship to work and make sure they are comfortable with the arrangement.
- Understand your agent needs to make money
Agents earn money through commission on the deals they close. Many buyers’ agents are hesitant to work with investors because investors often submit low offers (in order to drive a bargain) that sellers are likely to reject or yield them very little commission. If your offers never make it to the closing table, your agent is unlikely to keep offering their expertise and services. Be understanding of how this can impact your agent and work with them to submit offers that generate a good outcome for both of you.
The relationship between agents and investors can be quite prosperous under the right conditions. Investors should interview multiple agents until they find a good match and agents need to remain open to the possibility of working with the right investor. But, once the ball is rolling, you may be surprised at how much your business benefits from working with a professional whose skills complement yours and allows you to operate more efficiently.
This article was contributed by the Zillow team, written by Satinder Haer.