If you're like most realtors, you've worked with dozens of normal people buying and selling their homes. You probably understand them pretty well.
Succeeding with real estate investors requires the same understanding, but you'll have less chances to refine your approach. You need to enter the relationship with a clear understanding of the differences between investors and your normal clients.
It's Business, Not Personal
Where most people choose an agent based on how much they like them, real estate investors look at the relationship from a business perspective. Trust and communication skills are still important but not nearly so important as one variable: profit. Investors want to know how much money you'll make them.
You also earn their loyalty. Until you've proven your ability to consistently make them money, you can forget about exclusive buyer agency agreements or long-term sales contracts. For example, I work with over two dozen realtors in three states. I'm only loyal to one of them, and I consistently push him to deliver results.
My sales contracts are also short -- 3 to 6 months, depending on the type of property. If you can't sell the property by then, I'll find someone else.
It's about Information, Not Interpretation
Investors like to make their own interpretations. When you offer a set of comps for a potential investment, a savvy investor will carefully comb through them and come to their own conclusion on the value of the property.
The same goes for a BPO when trying to get a listing. You'll gain more credibility by supplying all of your comps (even the bad ones) to the investor than simply stating "The value of the house is $140,000."
You also take less risk. Investors have to make precise value judgments every day, and most of the time, they'll be better informed and more accurate than anyone can expect you to be. For example, I typically go through all of the sales in my favorite neighborhoods on a weekly basis and analyze all of the transactions. I know every house, the history of every house, and the market trend for the neighborhood. Most realtors are not as geographically specialized, so it's difficult for them to offer a more accurate opinion.
By offering an opinion anyway, you risk exposing your naïveté. Or, even worse, you might get into an argument with the investor and lose a client. If the investor says the house is worth $120,000 and you know for certain that it's worth $140,000, you're probably better off accepting their estimation, regardless of whether they are right. Proving them wrong will only build resentment.
The best way to avoid all of these problems is to avoid making interpretations, unless the client specifically asks for your opinion. It's a little dehumanizing, but in my experience, an effective approach.
It's about Speed, Not Comfort
I don't have to tell you this, but most buyers and sellers take a long time to make up their mind. If you take a potential buyer to a house, they need to think about it and make sure it's where they want to make their home.
Sometimes, sellers will only sell to a buyer they like, regardless of the offer. When negotiating, they can also take a long time to decide on counteroffers.
Investors are the opposite. When we see a good investment, we're ready to move fast. I typically make an offer on a house within a day or two of hearing about it. Sometimes, I don't even go inside the house. Instead, I negotiate a suitable price and then use my seven-day inspection period to make sure there are no surprises. That way, I'm not wasting my time inspecting houses that are impossible to buy for a good price.
The same goes for sales. No matter who made a full price offer on my house, I would accept it. Similarly, I usually have a counteroffer ready within moments of hearing the buyer's initial offer, as well as my rationale behind the counteroffer. Negotiations go fast, and I don't mind making concessions to sell a house quickly.
Most investors are the same way, and it surprises agents. You don't have to spend time making us comfortable. Instead, quickly gather the information we need to make a decision and give it to us. The keyword is "quickly." We make money by moving fast, and so will you.
It's about Talent, Not Friendship
Work with investors long enough and you'll make lots of friends. But never depend on your friendships to keep you in business. Top investors never have a shortage of friends, but they're constantly looking for talent. If they have to choose between working with a friend or a talented agent, talent will win almost every time.
The rewards of working with investors are huge, but if you want to really enjoy the benefits, you have to prove your value every day. A continual demonstration of talent is the only job security in this business. Other agents will try to take your position, but if your investors know you're the best, you don't have to worry about losing business to them.
Just make sure your investors know you are the best.
