There are many ways to find good deals. You can send out letters to potentially motivated sellers, build up an online presence with SEO marketing, scout FSBOs on Craigslist and other sites, network with wholesalers or become a real estate agent yourself and look through the MLS for potential deals.
Or you can find a good buyer’s agent to help you with that process. And while it’s challenging to find deals on the MLS these days, they are still out there. But to find those deals with a real estate agent, you will need the right kind. An agent who specializes in finding “that perfect home” for a new family is not the kind of agent you are looking for. You are looking for an investment-minded agent, which is a particular breed.
What to Look for in a Potential Real Estate Agent
An investment-minded real estate agent differs from a homeowner-minded real estate agent in a few key ways.
The first is that investment-minded real estate agents tend to think in terms of numbers and not aesthetics. What is the ARV (After Repair Value) of this property? What can it rent for? What will the rehab cost?
That last one is particularly important. We have worked for many years with an agent that used to be a contractor. This is rare but is quite helpful. Especially in the early going when I didn’t know rehab expenses very well nor every item to look for nor which things needed to be replaced, having an agent help me with those things was a great benefit.
Even as a more experienced investor, it’s nice to get a second set of eyes on things and compare what I think the rehab expenses will likely to be another person with experience in this area.
Furthermore, you want an agent that is not thinking in terms of the perfect kitchen you would want or something like, but what the end-user (buyer we flip the property to or renter) would want and what is the most cost-effective way to get there. Perhaps a homeowner really wants a finished basement, but those do not tend to add much value to an appraisal or be hugely sought after by renters. So, if you plan to hold the property, that’s probably not the right thing to look for or plan to add.
Moreover, you will need to find an agent that is willing to make a lot of offers, some of which might be the proverbial “low ball.” Agents for homeowners will get frustrated by this kind of thing, but investment-minded agents won’t (assuming you aren’t just jerking their chain and actually do intend to close). Investment-minded agents know it will take a good number of offers and also that you will keep coming around and be a good client for years to come if they serve you right.
And like with any agent, it’s important that an investment-minded agent be organized and good at communication. If you call them, they should answer or call you back promptly. There’s no such thing as a flake who is also a good agent.
Finding an Investment-Minded Real Estate Agent
Contrary to what you may have heard, such investment-minded agents are around and many advertise themselves as such. ActiveRain.com, for example, has a good number of agents advertising their services and you can easily weed out the homeowner-minded ones. You can also find such agents at networking events like your local Real Estate Investor Association or just by Googling around a bit.
When you contact one, explain your strategy and ask them whether they know rehab expenses at all and are willing to make numerous offers before landing one. (You should not describe yourself as a low-baller though, no one wants to work with someone who exclusively shoots off low balls.)
You should interview the potential agent as you would with a new hire.
Then try them out and see how helpful, knowledgeable, organized, and good at communication they are. If they don’t work out, just switch. In that vein, you should never sign an Exclusive agreement with an agent. If they don’t end up working, you don’t want to be obliged to pay a commission.
Good deals on the MLS are hard to come by these days, but they are still out there. And the market will correct eventually, so it’s good to get in the game. That being said, if you do so with an agent, it’s critical to find a quality, investment-minded agent at a top real estate agency who can help you find those diamonds in the rough.