Realtors may work in many areas of real estate, such as with the buyers, the sellers, and REO properties.  However, realtors usually specialize in one specific area and their strength may be focused in that specialty.  If you are in the business of rehab and retail, it is vital for you to cultivate relationships with realtors that specialize in REOs.  This relationship can bring deals to your door which you may have overlooked, offer another expert opinion if you should purchase the property and possibly get a higher after repair value.  Ultimately, a solid, working relationship with an expert REO realtor can make you more money and help you to be a better investor.

REO realtors have special access to listings that come from the banks which the general public does not have access to.  They usually have a direct relationship with banks so that they know what properties will be foreclosed before they are actually processed and which properties have already been foreclosed but the value has not been assessed yet.  This translates into insider information for you.  The realtors not only know what the REO market looks like, but also what it will look like in the near future.  As long as you have a good relationship with these realtors, you can find out this information as well.  This can help you to decide to buy a property or wait if the realtor believes a better one will be on the market soon.  Additionally, you may be able to tie up a property before it hits the market!  It’s all legal, and you don’t have to worry about competitive bidders.   Gaining access to inside information will make it much easier for you to find the best REO homes and feel more confident that there is nothing better that will show up only days after you’ve purchased the property.

REO realtors are more likely to give you access to this information if they have something to gain as well.  You should agree to list the properties with the same realtor after they have been rehabbed, which gives the realtor the opportunity to make commission off the property.  Additionally, if your rehabs are of high quality (and they should be), the realtor will come to trust your product and give potential sellers an assurance of that high quality.  The realtor will be happy that they can sell your renovated property, further incentivizing him/her to continue to give you information about REOs, and you will be happy that you are privy to inside information.

The symbiotic relationship between an REO realtor and a rehab/retail investor is prosperous for both parties.  By working together, both realtor and investor are increasing their profits and improving their reputation.  If you don’t have a trusted REO realtor yet, go out and talk to one today!

Realtors are vital to any thriving real estate investment business, especially if the investors do not have their realtor’s license.  Even if they are licensed, realtors can provide valuable research and preliminary work-ups that investors do not have time to do themselves.  It is important to pick knowledgeable, hard-working realtors, and to get them over to your side.  To win over the best realtors, you need to know how to negotiate with them and make it worth their while to work with you and give you the inside scoop on the newest properties.

Realtors get a commission every time you, as the investor, purchase the property thru them, but that in and of itself is not enough to make them feel part of your team.  You want to be the first person they think of when they are hunting properties, so it’s important to stand out for them.  At first, a simple conversation will suffice.  Maybe you can say something like , “I really have been impressed with the work that you’ve been doing and you’ve been showing me fantastic properties.  I am in need of a good realtor like you, so what do you think about joining my team?” This doesn’t have to be an actual ‘team,’ and there is nothing to sign, but it reassures them that you will use them frequently and they can rely on you as a frequent purchaser.  A conversation like that is the beginning of a long-term relationship, and after you’ve worked on a few deals together you can start worrying about the financial relationship.

In order to align their interests with yours, you want to make sure that they care about the success of your investments or real estate business. You may think that the standard commission, generally around 3%, is enough for them to have your best interests at heart, but you would be mistaken.  The commission is incentive for them to sell your property at the highest price within a certain time period. If an offer comes in on your property that is good enough, the realtor is more likely to accept that offer since they will get the commission sooner, even though there may be a better offer if you hold out.   This is because their commission is small enough that a higher offer does not increase it substantially, and it is more economic for them to take a lesser amount now and work on other properties than it is to wait for a slightly larger commission.  You want their interest to be to maximize profit for you, not to hurry and accept a smaller profit now instead of a slightly larger one later.   One such way to do this is to give them an additional percent, perhaps anywhere from 1% to 5%, of the profits of your company as a bonus. That way, they have the profit of your company at heart and will only accept the deals which maximize your profit.

Realtors make wonderful additions to real estate investment businesses and can provide valuable insight and experience, not to mention the time that they will save you.  However, in order to reap those benefits, you have to make sure that by working for you, the realtors are working for themselves.  It is critical that they see your best interest as their best interest in order to maximize their effectiveness.

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Realtors can be your eyes and ears in the field, and they are especially vital if you do not have your realtor’s license.  They can bring great deals to your attention, give you the inside scoop before properties go on the market, and do the work-up for the properties, leaving you with much more free time to do whatever it is you’d rather be doing than pulling records and crunching numbers. There are several kinds of realtors, and you should have an assortment working with you on your team.  Realtors that deal specifically with sellers, those that deal with buyers, and those that focus on REO properties all have specialized talents, and by utilizing all of these kinds of realtors you are covering your bases.

The beauty of working with a ‘power team’ of realtors is that it enables you to invest in real estate without needing a realtor’s license.  The license allows realtors access to all sorts of listings and databases, but it also requires education, money and time to attain one.  Instead of devoting yourself to attain a realtor’s license, with the standard 3% realtor’s fee and perhaps a little more as a bonus if you want to achieve a good, lasting relationship, you can gain access to all their insights.  Realtors have access to the MLS (multiple listing service) and they can give you specific details on properties that are not available for general public viewers.  Furthermore, realtors can input certain criteria for you so that you are notified of only properties that meet said criteria.  For example, if you are only interested in two-bedroom multi-units, you can receive emails notifying you of new properties that have been added to the MLS, thanks to your realtor.  Keeping an eye on properties and building a database of properties that you are actually interested in, instead of just all properties that are for sale, will allow you to buy faster when you are ready to purchase.  It is much easier narrowing down a database when that database already consists of properties that meet some of your criteria.

Additionally, realtors can also do the preliminary work on a property.  It is up to you to check that work before you go ahead and purchase it, but market research like the average rents, days on market, COMPS or NOI (if it is a multi unit), the after repair value, and any other facts and figures can be researched by the realtor.  This saves you time to hunt down other properties, spend time with your family, or work on your (hopefully) thriving real estate business.  If you really trust your realtors, it may not even be necessary to enter the home!

Realtors can have a huge impact on a real estate investor in many positive ways.  Of course, the caveat is that you’ve found a knowledgeable, comfortable and honest realtor, which is no small feat.  However, once you have, the advantages are significant and eventually it may seem impossible to run your real estate business without them.