When it comes to fixing and flipping renovated homes or building and selling new homes, maximizing your profit requires that you sell the home for top dollar to a retail buyer. And when it comes to selling homes to retail buyers, no one is better for the job than top producing real estate agents.
In this article I’d like to discuss the role of a listing agent in the fix and flip process and how to hire her for a flat fee.
Top-Selling Agent: First of all, not all agents are created equally. You want a top-selling agent in your market as your listing agent. A top-selling agent has a well-known name, image and branding. You want to be associated with that image. Here are a few other benefits to hiring a rock star agent.
- Buyers: The top-selling agent has a large buyer base. Often, the listing agent or someone from her office will sell the home.
- Work Ethic: She became the best-selling agent from working hard. You want an agent who is totally dedicated to selling your property.
- Repeat Business: The top-selling agent is motivated by repeat business. One of the indicators used to measure an agent’s success is total number of homes sold. Unlike a one-time homebuyer or home-seller, as an investor, you represent repeat business, which helps her reach or maintain his/her status.
Paying for a Top-Selling Agent: Instead of paying the traditional 3%, pay a flat fee to the listing agent, regardless of the list price. Unlike what most agents will tell you, commissions are negotiable. You may be wondering, “Why would a top selling agent agree to do a flat-fee listing?” Simple – you are an investor doing repeat business. You’re going to increase her numbers of homes sold, her signs are going to be at more properties, and she’ll have more properties to post on websites and advertising, which gives her more exposure and leads.
As a fix and flip investor, you are much desired by a top-selling real estate agent. People tell me all the time that they cannot find a top-selling agent who will agree to a flat fee. I have flipped hundreds of properties and have always found a top-selling agent to list for a flat fee.
Responsibilities of the Listing Agent: The job requirements for the listing agent are very specific and you must make sure you make the following expectations clear:
Yard Sign – Require a professional (no scratches/dents) yard sign that is very visible from the street.
Brochures – With each property, create a 2-page color brochure explaining the features, neighborhood stats, school/shopping info, updates, etc. It has numerous pictures and showcases all the benefits of the home. The brochures are placed in an information box attached to the yard sign. Brochures must be filled weekly. A stack of brochures is also placed on the kitchen counter inside. This ensures that the serious lookers (set up a showing) who viewed your home can take a brochure with them when they leave. Often, buyers will look at several properties at a time and you want them to remember your home above all others.
MLS Pictures: High-quality pictures are essential. I am amazed at how often I see MLS listings with no pictures, only a few pictures and/or poor-quality pictures. How detrimental to the listing! A buyer often decides if they will even look at the property solely based on the pictures. Upload the maximum number of pictures allowed on the MLS (usually 24). Special attention is given to the lighting, order, quality, angles, etc. of each picture.
Comments: There is a lot of psychology that goes into the comments. Like the pictures, well-crafted comments will draw the buyer in to set up a showing to view the house. The key is to focus on features. Here is an example of a comments write-up for one of my properties:
New cabinetry, granite countertops and stainless steel appliances and spectacular new kitchen, home is completely remodeled, it’s like a new house. Bathroom is so stylish and completely new. Lots of gorgeous refinished hard wood floors, new carpeting, and new travertine-look ceramic tile. Neutral paint and crisp white trim throughout, hurry this won’t last long, acclaimed Lake Orion schools.
Notice some of the key words used – granite, completely remodeled, gorgeous, refinish, neutral paint. I want to create urgency with all my write-ups (hurry this won’t last long). The comments section limits the amount of words so you’ve got to be concise. Make sure you put some real thought into the comments. A top-selling agent should be able to create a top-notch comments section.
Showings: Require email notifications of the scheduled showing as well as a weekly report of how many showings happened during the past week (no phone calls). This can be set up automatically through the MLS. This is important because you want to have a good pulse on how often you’re getting showings.
Feedback: Require personal feedback on each showing. Not an automatic email that says, “Please give us your feedback,” but the listing agent (a real, live person) to call up the buyer’s agent that showed the property and get personal feedback. Here are some of the questions that are asked:
- How well did the property show?
- What is your opinion of the price?
- What did the buyer like most about the house?
- What did the buyer like least about the house?
- In a rating from 1–5, one being bad and five being excellent, how would you rate this property?
Some agents can’t be bothered to give feedback and don’t want to talk to a listing agent about it. The listing agent must be very personable on the phone as well as persistent about getting feedback because it is crucial that you get feedback. I recently spoke to an investor who had a property listed for 60 days and was getting 5–6 showings consistently each week but wasn’t receiving any offers. I asked about the feedback and he wasn’t getting any so he had no idea why buyers weren’t making any offers. Without feedback, there is no way to know what the market thinks about the house. If you’re having showings but not getting offers, there is a reason and the feedback will let you know what this reason is.
Example 1: I had a property for sale for $249,900 and I started to get consistent showings (5–7 per week). I noticed in the feedback that several people had commented about the large bay window. The window was to the office on the first floor. The complaint was that the window was too big. I didn’t think anything of it. However, after seeing this negative comment from several feedbacks, I decided to plant a Japanese maple tree in front of the window and also put an inexpensive curtain on the inside (total cost of $175). The very next showing I received a full-price offer on the house. Had I not gotten that feedback and found out the bay window was really bothering buyers, I would never have known to address the issue.
Example 2: Sometimes with feedback there’s nothing you can do except learn from your mistakes. I had a deal that I did where I should have known better. It was on a semi-busy road (so I thought it was “semi”). According to the feedback, it was busy enough. I had to drop the price significantly to sell it. I learned to be very careful doing a deal on a busy (or semi-busy) road again.
Office Management: Time is money and you must have a high expectation that the listing agent will be very organized at managing everything. Expect quick responses to offers and counters on offers. When you get an offer, require immediate correspondence from the listing agent. Once an offer is accepted, the listing agent should immediately make sure all addendums get signed, the appraisal is ordered, the inspection is ordered and you are in the loop all the time as to what’s going on. You want to know when and where the closing will happen. Most of this can easily be done with weekly email reports.
Don’t let the listing agent assume the buyer’s agent is on top of it. If I have to call up the listing agent and ask them, “What’s going on with this property, it’s been under contract for three weeks, has the appraisal been ordered yet?” then they’re not doing their job correctly. For example, recently I had a high-end property that had a $50,000 EMD (earnest money deposit) written in the offer that I had accepted. I had assumed the listing agent had collected the EMD but in fact hadn’t. Three weeks later when I began pressing my listing agent about the progress on closing, he informed me that he never collected the EMD. Three days later the buyer backed out. That was an unnecessary (and unforgivable) mistake. Needless to say, I got another listing agent.
Keep in mind – the listing agent’s job is not to sell the property. That may sound contrary to everything you’ve ever heard about real estate. Her job is to create the right atmosphere for a buyer’s agent to sell the house and then manage the sales process.
If the listing agent also sells the home as a buyer’s agent (duel agency), then great! But, that is not the listing agent’s role in the selling process.
I hope you found this article insightful. Please share your comments below.