There was a time once when I spent hours going through the classified ads looking for little tiny clues to lead me to properties. I bought many good properties and thought I was doing great. I hired people to help in the calling and in the paperwork. Things seemed to go pretty smoothly. Though I was a realtor, I spent a lot of time apologizing about it to “fizzbos” (properties being sold by the owner). It seemed like one of the very first questions was “are you an agent.” I explained that I was, but that I was not looking for a listing – only to buy.
Gold in the Back Room
In my back office was a computer that was tied in to the Board of Realtors Multiple Listing Service (MLS). I used the valuable information to help in appraisals, market analysis of properties and amortization schedules. It came in handy when one of the properties I was investigating was currently listed or had been listed.
In using the “search” functions of the computer, I learned something exciting. I could search for anything I wanted! The area I searched could include the whole city, the price could be between one and ten million dollars and I didn't have to narrow the size or any other qualifications of the property down. At this point, it would print the whole listing book, if it weren't for the fun ways that I narrowed it down.
Almost a Hundred Prospects
The information I was most interested in was about the seller. On most forms in most areas of the country (some small cities are not on computer) there is a section for “remarks”. Here's some of the choice words that my computer can search for!
Foreclosure, Desperate, Flexible, Transferred, Quick Sale, Must Sell, Anxious, Contract, Low Down, Fast Sale, Trade, Motivated, Exchange, Discount,Reduced, Vacant, Repossess, Below Appraisal
My “clues” are prioritized in an order that to me indicates the biggest “don't wanter”. For example, must sell is very common and doesn't mean a whole lot unless another clue pops up along with it, but desperate or foreclosure means some real good potential to buy a property. In the time it would take me to call one “fizzbo”, I could print hundreds of properties with better potential out on the computer in a prioritized order. Agents were hired and trained and offers went out so quick it was hard to keep track of them.
In fact, once we had two agents present two different offers on the same property, from the same buyer in the same day. I quickly formulated a plan for that to not happen again! Millions in properties were purchased and agents made nice commissions. At training meetings and at other times during the week, I gave the agents more leads than they could handle and they reported back the next week. Agents knew how to write, analyze and structure offers and even had the help of a computer program I had written to analyze properties. What they were looking for was clear and their motivation was high.
A gold mine had been in my back room and I had finally used this valuable resource. The computer can print out more – already screened – properties in a few minutes than there are “fizzbos” in my entire city. Strategy had to change a little to provide for cash commissions for the agents (I've never seen them work too well or too long for notes or discounted commissions), by using bank and investor financing, but the overall properties were better and easier to find.
If You're Not a Realtor
I know most who read this are not agents and members of their local Board of Realtors. Don't despair, it works better that way. Cultivate relations with agents and cooperate with them on finding properties. You may even find a broker willing to build a brokerage around your concept or allow you to hire and train agents with his supervision.
Not being an agent has definite advantages in negotiations, liability and ethics. As a broker, I have to watch and monitor these areas. There are certain types of disclosures I have to make as a broker, that hinders negotiations. Not that it makes any difference as far as ethics, just potential liability. I wouldn't cross the line or write a non win/win offer if I weren't a broker. As an example, if I knew something about the property that could or would make it more valuable, I would have to disclose that. If I had a buyer lined up and was going to re-sell the property for a profit, I would have to tell the seller that.
To work with agents, you should maintain control and ideally have them exclusively working for you – otherwise you just train them to be your competition. I provided office space, the best training they could find, leads, investors and 100% commission splits. Yes, agents can be hard to deal with, but if they are on your side, they are invaluable. Is it possible it might be better to clone yourself and have 5 to 10 agents out beating the bushes while you concentrate on the things only you can do? I think so – and I'll bet you will if you try it.
Special Note – Limited Search Functions
Some areas have systems that do not allow easy search functions or even limit the criteria that can be searched for. Don't give up in despair. It is a simple process to download the database into your computer and search through the data using your word processor. For example, let's say that you are limited on your system as far as searching for remarks like “foreclosure”. You can search all listings in a particular area or within certain parameters and store them on your computer (hard or floppy disks). Load them into your favorite word processor (Word Perfect for example). Most have the ability to load in ASCII text and have search functions that will jump through the document to the text you have specified. I did a quick calculation and determined that the entire database of my local board would fit on a 30 megabyte hard drive or I can look at it piece by piece.