Investors and agents don't always get along that well. I've seen it from afar for a while now, though my own relationships have been great, and the most successful investors I know have both the best relationships with agents and are often agents or brokers themselves.
Here are some of the reasons I've found best. Whether you're a company that buys houses and flips (like my own), a landlord looking for new rentals, a land buyer, or any other type of investor, I believe it pays to work with a real estate agent or broker as an investor.
Valuation (before and after)
So valuation is important. I know that's not exactly news. However, what I've seen from working with other investors in REIA's and even from my own experience at first is that investors often struggle to find a good valuation. This is because of experience for sure, but also because they don't have access to the right tools. Of course, agents have access to MLS data, can run comps, etc. that provide a solid valuation to base an eventual offer on.
For a long time, I discounted the value of having a real estate agent at all. Eventually, I realized that I was missing out on deals because I was always conservative on the eventual valuation of the home after repairs. This meant my offers were lower and less likely to be accepted, in an already more difficult world to get an accepted offer.
Equally as important was on the backend valuation. After all that work is completed and the house turns out better than expected, or newer comps are available, we've found (especially in recent years) we were able to list for higher than we initially thought. Of course, at this point, we were getting an agent involved anyways. However, it's an important point that you should re-run comps, etc. to determine if the original valuation is still true, or if should adjust up or down accordingly.
Investors are often running around trying the find their own leads. This is normally through direct mail, website or online advertising, and many other forms of marketing that agents themselves are also utilizing. We all know it's a crowded market these days and diversification among your marketing channels will only help bring more leads in eventually. There are also less tangible benefits such as the expansion of your network that will inevitably lead to more deals down the road if those relationships are nurtured.
Cover your butt. Even if an agent is not working with you as an investor on the front end of a transaction they will likely help you ensure the contract is in good form (assuming you are using the standard OTP in the state) and assist with various things related to contingencies, etc. Of course, they aren't lawyers so you should probably also get a lawyer's opinion if you're really not sure about something, but it's a good place to start. Just make sure to reward them with the backend listing for the house (assuming you're planning to sell), or reward them is some other way down the road.
Get some experience on your team. This is kind of variable depending on your overall experience in the real estate world. However, it's my opinion that having more people on your team, even indirectly, is more beneficial than not. I'll plan to keep my esteemed agents on my team helping me out in the future regardless of my experience level, and even if I decide to get a license or brokerage myself.
So there are 4 good reasons to get a helpful real estate agent in your area. It's worked for us in Madison, WI and should be a formula we all use in the investment community. Got any other reasons, or ways to connect with good agents for investors? Leave a comment to help myself and others on the topic. Thanks for reading.
Hey Joan, thanks for the response. We've considered moving out to Denver - sounds like a crazy hot market these days out by you. We'll keep you in mind if we make it out there at some point in the future.