There are two main 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
I prefer the first one as they are a safer seller for me
and they usually have a lower mortgage payment, if at all.
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. Listing Realtors 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—wow! 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 in a seller's
market. 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 the home conventionally to another
buyer. When you sell the home you will be asking for 3–5% down from your
tenant/buyer (in a seller's market), 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 of the first half is paid up front. The second half
would just be a bonus that most agents wouldn't expect anyway.
NOTE: If you are in a buyer's market use
1% down for the agent to start the option. The tenant buyers in a
buyer's market will only have 1–2% down as well. Therefore, in either
market, a buyers or sellers, the amount you are giving to the Realtor
will align with what you are receiving from the tenant buyer. In
either market, however, the amount you are giving to the Realtor will
be credited off of your purchase price when you close on the property.
When you start to work with Realtors and they start to
bring you their listings you will have more deals than you will know
what to do with. Realtors will be "Begging you to Buy Their Listings."
© 2007 by Wendy Patton
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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