8 questions that will save you time – and help you make more money
I’ve talked before about how to identify ‘scrap’ Realtors in your area. Scrap Realtors are the guys who specialize in the run-down, beat-up properties in low to moderate income parts of town – in other words, exactly the type of Realtor you want.
But once you find a few ‘scrappers’, how do you choose the best one for you? Your Realtor will be working for you – so just like any employee, you’ll want to interview them.
You want someone that you’re comfortable with, that you get a good vibe from, sure. They’ve got to pass the handshake test – you know, that positive (or negative) feeling you get when you shake someone’s hand for the first time. To get a good sense of that, you’ve got to meet in person – use the phone to identify three or four scrappers, and then insist on a face to face meeting.
But you don’t want to choose a Realtor just based on a gut feeling. You also want to get some very specific answers to very specific questions. Here are 8 questions you should ask and what to look for in the answers.
Question #1: Do you depend on real estate to make a living? There are a lot of people who do real estate as a hobby – people with very well-paid spouses or semi-retired people who want something to keep them busy. You don’t want a part-timer – you want someone who relies on real estate to pay his or her bills.
Question #2: Are you willing to put the time in to help me find the right property? When you’re starting out, you’re still working your regular 9-5 job. You need an agent who is willing and able to show you properties in the evening and on weekends. If they’re not, move on. Also, make it clear how much of their time you expect – 10 hours a week is a good starting point.
Question #3: Do you have any banking connections in town? A scrap realtor with a good track record can help you get in the door with bankers who otherwise wouldn’t give you the time of day. This is especially helpful when you’re getting started and don’t have a history of investment success to point to. It’s also good to ask if they can recommend a good closing agent; the point is to learn how connected this person is, and how committed they are to the real estate investor community.
Question #4: How many properties do you currently have listed? Realtors will often brag that they are the top lister in their office – but Realtors don’t make money from listings, they make money from closings. You want a Realtor with no more than 10 active listings at a time. At this level, a Realtor can rattle off the specs on each one from the top of his head – and save you a lot of time in your search. Plus, you want a Realtor you can establish a long term relationship with – and when you’re ready to sell a property, do you want your listing to be one among a hundred others?
Question #5: How many properties did you sell last year? This is a great follow up to question #4 – look at both numbers (listings and sales) and see how they compare. It’ll tell you a lot about how hard this person works, how well they know the market and how aggressive they are in making deals.
Question #6: How many properties do you own in town? In your phone conversation, you should have asked if the person was an investor. But in the face to face interview, get specifics. How many properties? What type (single family, duplex, triplex, quad)? In what part of town? For how long? If they’re willing, ask about the type of financing they used and about their monthly positive cash flow. All this will tell you how well this person understands real estate investing and how serious they are about it.
Question #7: Do you have flexibility with your broker? You want a Realtor who can make a decision on his own and strike while the iron is hot. Real estate investment has a lot to do with circumstances – and sometimes circumstances change quickly. You can’t have someone who has to run to the office and ask permission before making a move – that’s a sure way to miss out on a lot of good opportunities.
Question #8: Do you have satisfied customers I can talk to? Just like you’d do for any new employee, you want to ask for references. But don’t just ask for them – follow up and call them all. Ask if the Realtor returned their calls and emails quickly? Did he show up on time for appointments? Did he help them get financing? Did he refer them to a title company? These may seem like minor points, but they all speak to the person’s professionalism. And when you’ve got only a handful of hours a week to devote to your real estate goals, you can’t afford to waste time on a Realtor who doesn’t return your calls or shows up late.
You may think that Realtors won’t want to waste their time answering all these questions for a beginning investor like you. That may be true – but if it is, they’re not the Realtor for you. If someone isn’t willing to invest an hour to meet you in person and answer some questions, you’re better off crossing them off your list.
Smart Realtors will take your questions for what they are – a sign that you’ve done your homework and you’re taking this investing thing seriously. They’ll see that you have the potential to make a lot of money in real estate – and that if they build a relationship with you, they can make a lot of money, too. And that’s the kind of Realtor you want.