So refreshing to see someone explain why it is so important even to investor/flippers to work hand in hand with a Realtor!
Real estate investors often sell their properties off-market, flat-fee list, or negotiate lower than average commission. Investor colleagues at the local REIA often tell me a listing agent is not necessary – save the commission and manage the sale. Given this perception, it’s worth discussing why listing with a real estate agent has benefited me as professional home buyer. From the agent side, it’s worth considering how to pitch modern investors that may be on the fence concerning a listing agent.
In the information age (Redfin, Zillow, other public and paid sources for property information), “neighborhood expertise” is largely unnecessary. If that's the pitch, it's a non-starter for me. My company looks up every recent sale, how long they were on market, walk the neighborhood on Streetview. Colleagues also gladly conference if needed. My pricing strategy is developed and market analysis before I buy the property. I’ve listed 10+ flip projects with realtors the last several years – and they concurred with my analysis every time. Some investors might need a second opinion – but analyzing property and market trends is the heart of my business.
The reasons my company lists with a realtor (at full commission) are different.
Reason #1: Vet & Advise As To Offers
As real estate investors, we specialize in analyzing opportunity, fixing-and-flipping, management, securing long-term cash financing, and networking to acquire property. We don’t have particular expertise in the differences between various forms of mortgage financing. Outside our business model. We do not have time to spend sorting through 100s of offers that flood our beautifully rehabbed homes. Listing agents sort through and analyze the mountain of incoming offers. Frankly, I don’t want to know about every offer. Show me the best with succinct explanation why.
Reason #2: Manage & Schedule Showing
Of course, selling a property requires showing and perhaps open houses often repeatedly for several weeks. It is a time commitment. I’m fully occupied with buying houses with cash that meet my price criteria. We’ve also observed that experienced realtors have skill at properly managing showings and relationships with buyer agents.
Reason #3: Maximize Exposure
MLS is a huge platform. Realtors – due to flat fee listings – are not necessary to list on the MLS. This is common knowledge among real estate professionals and non-professionals. A little research on flat-fee listing shows this is being offered to home sellers on a mass scale. My most recent listing (with one of our go to brokers), went far beyond our listing. It is being marketed on Zillow, Realtor, Pinterest, Facebook, Twitter, Google+, ActiveRain, as well local sites I had never heard of. Exposure of this nature takes time, energy, strategic knowledge – skills not in my tool bag.
Does paying 6% commission “pay off” on every transaction? Commission is important to not only incentivize the listing agent, but draw in buyer’s agents conventional home buyers rely on. Investors can’t simply look at the dollars and cents in a single transaction. If you waste precious hours on reviewing offers, showing property – and do sub-standard work – you can lose time on your business and earn less on the transaction. Cash has a cost. If you’ve borrowed cash, it has interest. If it’s your own cash, there is lost opportunity while financial resources are occupied. Hiring a listing agent to get that cash back in play ASAP is a difference maker.