There are two issues that
involve realtors and investors. Should I become a Realtor? (and) How can I
work with Realtors?
Working with
Realtors:
Many investors think that real
estate agents don't have the best deals, or they have all been picked over
by the time they actually hit the market. I believe that some of the
sweetest deals are sitting on the market. We automatically think that
Realtors or their clients will snatch up the best deals before they hit the
market. It is true that some of the best deals do get snatched up before
they hit the market, but ��there are many other deals left behind that no
one sees. The reason that no one sees them is because they are looking for
'traditional' or what I call 'retail' homes, not 'lease option' homes. These
are two very different markets. The retail market is what 90+% of the people
and investors understand. The Lease Option market takes up a portion of the
remaining 10% of the market.
I look to work with Realtors
that understand the concept of lease options and can help their sellers
understand lease options. This understanding can take time. Your job is to
assist Realtors to understand lease options. I do this by using several
techniques. First, I have a letter that I send to a listing agent explaining
the concept, second, I have a presentation that I do for my local real
estate offices, and third I network and continually tell Realtors what I do.
I hear investors tell me all the time that Realtors just don't understand or
want to understand what they do. I can only say that patience and
persistence pays off. Realtors aren't trained in unique selling techniques,
they are trained in the 'Retail Market' which is 90+% of what is out there.
As investors, it is our job to continue to help those around us understand
what we do so they know when to call us.
The type of home I am looking
for through a Realtor is one that the seller:
-
Doesn't need their equity
out
-
Doesn't have any equity in
their home
When a Realtor hears a seller
say, "If my home doesn't sell soon I might have to RENT it!", then the
Realtor should think of you. (assuming you have continued to remind them of
what you do)
All you need is 2-4 good listing
Realtors. They work directly with the sellers and know which sellers are in
trouble, which ones can rent, and which homes are vacant. Once a Realtor
knows what you do and has a seller that can accept your terms � viola! You
are the proud new owner of a lease option.
One of the most important things
for anyone is that they get paid for what they do. Realtors are just like
everyone else in this regard. When I am taking on an option, I am asking the
seller to wait 2-3 years to get cashed out. I don't want to make the Realtor
wait that long. If I do, they won't even tell the seller about what I can
offer. Why should they? It might not do them any good. They are doing all
the work now to get the deal done and want to get paid for it. So I give
them the listing agent portion of the commission up front. This is my option
fee and is applied to the purchase price when I get my mortgage or when I
sell the home. The agent is therefore paid on what they do just as if they
sold it conventionally to another buyer. When you sell the home you will be
asking for 3-5% down from your tenant/buyer, therefore, you are still
minimal or zero down/out-of-pocket. If you aren't a licensed agent/broker
and entitled to � of the commission, then let the Realtor "Double-Dip". They
can get the listing agent portion down upfront from you and the selling
agent portion when the home closes in 2-3 years. They will wait for the
second half if the first half is paid up front. The second half would just
be a bonus that most agents wouldn't expect anyway.
Becoming a
Realtor:
Investors tend to be adamant one
way or the other about being a licensed Realtor. I am on the side of being
licensed. Being licensed has been one of the best tools that I have as an
investor. Being licensed allows you access to your database of 'comps' or
comparables. This is the data you need to buy and sell real estate. If you
have a great Realtor and you don't want to be licensed, fine, but I still
think it is better to be licensed than not.
Some investors say it gives you
more liability to be licensed. I have two answers to that:
-
What are you doing to create
liability?
-
Don't you think a judge is
going to know you are an 'expert' anyway when they find that you do real
estate investments?
Some investors say that sellers
won't sell to you if you are licensed. I find the opposite is true. Most
sellers are happy that I am licensed and 'know what I am doing'.
My recommendation is to
GET LICENSED!!!
Wendy Patton is widely
recognized as one of the most inspiring speakers on "Little or
No Money Down" real estate investing. Her real estate savvy and
great depth of experience and knowledge has helped her in
orchestrating the most complete and easy to follow, Lease/Option
Program in circulation.
Home Study Courses by
Wendy Patton
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