Category: Real Estate Power Team

Seek Legal Advice as Needed

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Seek Legal Advice as Needed

When I was new in this business I knew a lot more than I do now. Yep, thought I knew it all. I admit I tend to “ready, fire, aim.” Many times that’s the only way to get something going. However, there are other situations in which one should exhibit more caution. Legal matters fall into that category, specifically contracts. On my first several lease option arrangements, I ignorantly pulled contracts off the Internet. I shudder to think about it now! Here’s the story:

I put a responsible but struggling family into one of my renovated homes. The husband was receiving disability and the wife was supporting the family with a house cleaning business. They had three kids and a grandchild on the way. My heart went out to them. We met several times to discuss how a lease option works. I have a clear and distinct memory of explaining that the option fee was not refundable, even if they could not exercise their option to purchase the home.

The term of the lease was two years. At the end of the two years, they still were not in a position to qualify for a loan. I extended the agreement an additional six months. At the end of the extension, they were no closer to qualifying. It did not make sound business sense to continue the arrangement. I let them know I would need to sell the house, and unfortunately this meant they had to move. Not surprisingly, they claimed to have no idea the option fee was not refundable and took legal action against me. My attorney did all he could, but my contracts were not worded correctly. What could have been avoided by a couple hundred dollars in legal fees in the beginning ended up costing me thousands.

Don’t be pennywise and dollar foolish like I was. Use contracts for all your transactions and be sure that they are reviewed or created by a real estate attorney in your state.

The Modern Real Estate Agent

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The Modern Real Estate Agent

Real estate investing is a fast-growing industry. Although it’s quite risky because it involves investing a large amount of money without a guarantee of your investment’s return, it still dominates a big percentage of the investment industry. One of the many reasons why this industry has been steadily growing is because it has become easier for agents and investors with the help of technology. Like many others, the use of modern tools has been widespread in the real estate industry. In this article, you’ll find a few of the many useful modern tools you can utilize to become a modern real estate agent.

In this industry, it is necessary to have a wide network of contacts. They may be experienced real estate agents who can be your mentors, investors who can be your clients in commercial real estate, or someone else. The list can go on and on that your phone’s memory might not be enough! This is why you should use a CRM (Customer Relationship Management) System like Zoho or Hubspot. These do more than just store your contact list — they manage it. Hubspot can be connected to your Gmail account. CRMs help track and manage your communication with your current and potential clients.

Another dilemma you might need to find a solution for is the wasted time going back and forth to set a meeting with someone. Use a calendar to store your appointment schedules so you don’t forget your meetings or calls. Google Calendar is a simple but very useful option, though there are a lot to choose from on the Web. You might also want to consider using a scheduler. A good example is YouCanBookMe. It’s an online manager linked to your calendar that allows anyone (with the link) to book an appointment with you. It then automatically shows which dates/times are open and directly syncs in with your calendar. Never miss an appointment again!

And, in case you are part of a small group of agents that wish to share tasks, Trello is a great solution for your task management needs. You can assign tasks, keep track of their progress, and even communicate with your teammates using this tool. There are a lot of tools you can use. You just have to find the best ones that fit your business needs.

POWER TEAM – PART II BRINGING A REALTOR ON BOARD

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Power Team – Part II Bringing a Realtor on Board

Once you get the investor-savvy agent on the phone, you need to verify that they work with investors. “Hi Mike. This is Gena. Angie said you are the rock star agent for working with investors! Is that true?”

You are building rapport and taking the edge off the conversation.   Who doesn’t like to be a rock star? If Mike says that’s him, you are off to the races. If not, ask for someone else, or call another office. Don’t waste your time or Mike’s time.

“So Mike, I’m looking for single-family homes in safe, entry-level neighborhoods. I like three bedroom houses that are 1,000 to 1,500 square feet. I want to renovate these houses, put them back on the market (you can list them for me) and make a nice profit. Can you send me a couple dozen houses that are vacant, need work, and have had a price reduction or have longer than average days on the market?”

Why are these points important? Vacant – someone is paying the bills and no one is living there. Needs work – a traditional homebuyer wants a home ready to live in, not a project. Price Reduction – the seller has started negotiating with himself. He’s getting anxious. Long days on the market – the longer the house sits, the higher the need to sell. In other words, these four characteristics define a Highly Motivated Seller!

This is not your all-inclusive conversation, but it will get you started. If Mike asks you questions you can’t answer, (which neighborhoods? what price range?) you can rely on his expertise and have him tell you what his other investors prefer. How Mike performs will let you know if he’s your guy. Sometimes you have to kiss a lot of frogs to find your prince, so pucker up!

Your real estate agent is your door to nearly everyone else you will need on your team. An agent who works with investors will know contractors, property managers, mortgage brokers, hard money lenders — everything you need! Referrals are always the best way to go.

Why Landlords Make Great Buyers and Sellers

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Why Landlords Make Great Buyers and Sellers

We often deal with landlords when we are looking for investors that are buying rental properties. Calling landlords is always a great way to add to and diversify your buyers list. I want to look at landlords as being a source of motivated sellers as well.

There are usually two conditions that will cause a landlord to become a tired landlord or motivated seller. The first is when they are dealing with really bad renters. The renters have torn up the property or they have been constantly late on the monthly rent payment. Whatever the case, the landlords are tired of dealing with renters. The second type of tired landlord is one that is older and has been dealing with rentals for many years. Sometimes these landlords just need a little push to get them to sell their properties. Here are some questions you can ask when you start reaching out to landlords to give them that little push.

  • I see you have a property for rent; I was wondering if you have ever thought about selling that property?
  • Do you have other properties that you would be interested in selling?
    1. Especially with the older, tired landlords, they my have many properties they are looking to get rid of, so make sure you ask.
  • Do have any friends or business associates that may be interested in selling properties?
    1. Make sure you are always networking for more properties that may have a motivated seller.
  • Are you still picking up properties currently?
    1. This question if very important, especially if the answers to all the other questions are no.

When you call landlords make sure you go through all these questions with them. This is a great way to find motivated sellers and continue building your buyers list.

How to Hire a Contractor

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How to Hire a Contractor

Home renovations can be time-consuming, expensive and stressful! Finding the right contractor can ensure that your home renovation doesn’t take over your life and your wallet. But how do you know a contractor is the “right” one for you? Learn more about how to find, then hire the right contractor for your home renovation.

Finding Contractors

Ranging from Real Estate Clubs to Lowe’s and Home Depot to Angie’s List of ads in the local paper, there should be plenty of places to find contractors. So, how do you pick the right one for your project? Step one is to ask for personal recommendations. If someone is willing to vouch for their contractor, that is something you should take into account. If you aren’t able to get any personal recommendations, the Internet is your next best bet. Use YELP, Google+ and sites like Angie’s List to read reviews of contractors. While it is also a good idea to look at their websites because they showcase their best work there, you need to know about ALL their past work as well.

Once you’ve gathered a list of contractors, make sure to run a quick search with the Better Business Bureau. Even with personal recommendations, you want to ensure that there are no pending litigations or major complaints filed. Once you find your list of contractors, it’s time to start the hiring process.

Hiring the Right Contractor

Once you have a list of at least three contractors, it’s time to hire the right one! Before you interview each contractor make sure you can clearly communicate your expectations. Questions you should ask each contractor are:

  • What vetting process do you use for your employees or any subcontractors who will work on this project?
  • Will you be handling all the necessary permits?
  • Can you supply a detailed list of services and expected completion dates?
  • What deposit is required and what is the estimated cost?

Once you have these questions answered by all three of your contractors, compare them. It shouldn’t always be about price. If the lowest priced contractor has no vetting process for their employees, you probably won’t be happy with their quality of work. Find a contractor that offers a balance of value and quality. This will help ensure that the work is done to your specifications. Hiring a contractor is the first (and most important) step of any home renovation. A good contractor should be your partner throughout your entire renovation. They should ensure all work is done to code and finishes are in the best quality, all while sticking to your budget. Don’t forget to take into account what contractor you felt most comfortable with. Not only are they going to be in your home every day, you need to be comfortable discussing tense subjects and financial matters with them. A good contractor can make or break a renovation, so take the time to find and hire the right one for your project.

­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­[1] https://www.upwork.com/blog/2017/11/want-job-filled-faster-5-tips-hire-right-talent

[1] http://smallbusiness.chron.com/manage-subcontractor-67687.html

Finding and Talking to Realtors

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Finding and Talking to Realtors

Finding a good, investor-friendly realtor can be harder than you might hope. The way investors do real estate goes against most realtors’ training. Even realtors who have been in the industry for many years are conditioned to only do one deal with you and put in only 3, maybe 4 offers at the most. They are paid strictly on commission, so it is understandable that they would want a deal to close for as much as possible.

Most realtors are not use to putting in the hefty amount of work that often comes when working with an investor. What they often don’t realize is that an investor is looking to do multiple deals. Even though an investor makes offers that are more aggressive and for less money, there is much more money to be made for a realtor who works with investors.

The best way to increase your odds of finding an investor-friendly realtor is to find a property on a website like realtor.com that needs a lot of work and that only an investor would buy. You then contact the actual listing agent of that property. A realtor who lists a property that only an investor would buy is more likely to understand how to work with investors.

When you call the listing agent, you can explain that you are interested in the property they have listed and others like it. You can ask them to send more information on it and others like it. It is also helpful to tell them that you are looking to do multiple cash deals that you can rehab and resale.

You might get lucky and find some good investor-friendly realtors with just a few phone calls. Sometimes it takes many calls to find the right ones. It is important to not let yourself get frustrated if you don’t find good ones right off the bat. Keep at it and you will find good investor-friendly realtors.

Building Your Cash Buyers List – Part 1

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Building Your Cash Buyers List – Part 1

Many first-time real estate investors start off wholesaling in order to gain the experience and get the exposure they need to become a fix and flipper or a buy and holder. If this is the case, then these first-time investors’ first step is to find cash buying investors or cash buyers to wholesale their properties to.

In this article, we will go over many ways to find cash buyers and discuss how to screen and qualify them.

Before we move forward, keep in mind that cash buyers can be either groups or companies, such as trusts, holding corps or LLCs, as well as individuals.

When wholesaling properties to cash buyers, you need to look at properties from two different perspectives:

  • Fix & Flips – These are properties that you are trying to get at the highest discount you can. For most investors this could be between 25-35% below market or even as low as 40-50%. It’s key to find out from your cash buyer what their rehab budget is, as well as the level of profit they are looking for. This is critical in coming up with your offer amount on the property. A fix and flipper is looking for a specific profit after they buy the property, do the rehab and resale it.
  • Buy & Hold (Rental Property Owners) – This is where you try to get the best discount you can. Usually if you can get an offer accepted at upwards to 20% below market then you have a good deal. You need to understand your cash buyer’s specific criteria on what types of rental properties they are looking for and in which market, the amount of cash flow they are looking for, and the capitalization rates they wish to get. Often, you can find the answers to these questions from the following sources:
    • Real Estate Brokerages
    • Property Management Companies
    • Other investors and those you network with by attending Real Estate Investor Clubs

This will help with your preparation prior to reaching out to cash buyers, and it will help you get specific and detailed knowledge of the following:

  • What type of properties are selling the most and the speed at which they are selling
  • The median price of property sales, as well as the average price per square foot that they are selling for

In Part 2 we will go over some simple steps to consider.

Let’s Start Our Power Team – Part 1

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Let’s Start Our Power Team – Part 1

Ah, the mysterious POWER TEAM! Why on earth are we so attached to this idea? Believing you must have a power team is something that can hold you back. Since you don’t have a clue what a power team is, who should be on it, or how to draft your team members, you may be perplexed and stuck. Maybe you will stall and do nothing because, after all, your power team isn’t yet assembled. Well, just stop it now before you get started down this path.

Your power team, like your business plan, and even your goals, is something that is going to naturally evolve over time. It is not something you have to fully create before you begin.

You should start at the very beginning, a very good place to start. When we read, we begin with A, B, C. When we invest, we begin with a real estate agent. Finding the right agent might take some doing, but that individual is the key to your success.

Real estate agents do not receive training in investing. They essentially learn how to use the Multiple Listing Service (MLS) contract and how to not get sued. It is your job to find the rare gem of an agent who understands and likes working with investors. Oftentimes, a good place to start is with Keller Williams or REMAX. Those particular offices usually provide at least a little investment training to their agents. However, I have often found a great agent at an office with only one location. This search is part of your great scavenger hunt! Here’s what I want you to do.

Find a real estate office in the general area where you want to invest. Though any agent can show you any property, agents tend to know the neighborhoods surrounding their office the best. The phone will likely be answered by an administrator.

The conversation is going to go something like this: “Hello, It’s a wonderful day here at Keller Williams. This is Angie. How can I help you?” (Yes, they say something like that.)

“Hello Angie (use her name). This is Gena. I’m a real estate investor. I’d like to speak to one of your agents who works with investors.” This will stop Angie from sending you to the agent covering the floor that day or to the next one on her list. You are already in control. You know who you need to speak to, and you have said so. Sometimes Angie knows just what to do, other times she doesn’t have a clue. In the latter case, ask to speak to the managing broker.

With simple guided conversations, you can find a great realtor for your business.

Information on Exclusivity Agreements and Why (or why not) to Sign Them

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Information on Exclusivity Agreements and Why (or why not) to Sign Them

An exclusivity agreement is an agreement that limits a buyer from dealing with other sellers. The seller involved on an exclusivity agreement should be the sole provider of the goods that the buyer demands. It is a partnership that gives the seller exclusive rights to supply certain goods or services to the buyer. The underlying significant question here is: Why should a buyer sign up for an exclusivity agreement?

In every decision we make, there will be always be pros and cons. The advantage of an exclusivity agreement is always more apparent for the agent. It could offer a higher selling price for the agent. After relatively securing the time and money involved, agents can control the negotiation time and can easily turn down any offer. It can offer advertising opportunities for the agent. It can save time for the agent because the agreement allows no last minute switching of the buyer to other agents. No paperwork will be wasted at all.

So how does the agreement benefit the buyer?

Signing the exclusivity agreement guarantees better information for the buyer. The agent is automatically committed to providing details and information that will guide the buyer. The negotiations are done faster, saving time for both parties.

It is the buyer’s call to make the agreement happen. As a buyer, who will potentially invest a great amount of money, it is prudent that you weigh your pros and cons before signing an agreement with a specific agent. You can base your decision on how the agent presents the whole agreement. You can actually have the option to put the agreement within a specified amount of time to give you the power to terminate it when you decide it is no longer giving you a good advantage. The agent should also be able to present your benefits when you sign the exclusivity agreement.

Do your research, ask the experts and, if you must, hire a legal consultant when you are having dilemmas on whether or not to sign an exclusivity agreement. You will be investing the money you’ve worked hard for; the lack of knowledge is the last thing you need.

The MLS: How Important Is It?

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The MLS: How Important Is It?

We’ve all heard it before, “Don’t bring me deals off the MLS.” Why do so many investors tell us this? Well, maybe they feel they can get those deals themselves, and as a wholesaler, they expect you to bring them off-market deals. I say rubbish. Go after deals on the MLS. Believe me, if you get something under contract at the price your investor wants, they will take the deal from you. They just want control of the deal at the right price. We all know realtors can help find and sell deals. According to a recent article by the Housing News Report, on average, 20% of all deals done last year were off-market, meaning not through the MLS and realtors. That also means that 80% of deals that were done were through the MLS. With a number that big, it is in your best interest to work with investor-friendly realtors and use the MLS.

The number of off-market deals is growing because of companies like OfferPad, iBuyer, Network Realty, Zillow and others. As a savvy investor, we need to keep our fingers on it all. Don’t give up on the MLS just because someone tells you it’s too competitive. Instead, use strategies to get offers out quicker than others. One technique I use is the blind offer strategy. Basically, when my agents spot properties I would like, I train them to immediately make an offer at 10% below list price with all my terms staying the same. Now, all I must do is sign the offer and they submit it. This strategy speeds up the offer and evaluation process, which is the most time consuming part of a deal. Once my offer gets accepted, I will do a proper evaluation before I purchase the property. Stay consistent with your methods to find deals, but make the MLS a core search engine for your deals.

How to Motivate Your Realtor

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How to Motivate Your Realtor

When you put your home on the market, it’s no secret you want it to sell as quickly as possible. So how do you motivate your real estate agent to sell your property fast? Real estate agents can have dozens and dozens of listings, so how do you make sure your home gets the attention it deserves? Take advantage of any of these three tips to motivate your real estate agent to sell your home quickly.

Offer Additional Commission

Money talks! Offer a commission incentive to get your home at the top of every agent’s list. You can offer a bonus to your listing agent if they close within the first 3 months. Another option is to offer an incentive to the buyer’s agent. Buyers’ agents recommend properties to their clients. If you are offering extra commission, you may get more showings. More showings mean a greater chance that you will find a qualified buyer!

Offer to Pay for Additional Marketing

One of the most important parts of a real estate agent’s job is marketing your property. If you offer to pay for additional marketing you are making their job easier; also, you are not only getting additional exposure for your home, you are getting additional exposure for your agent. Everyone wins when you offer to pay for additional marketing, and your agent will thank you for it!

Ensure Your Home is in Top Condition

Ensuring your home is in top condition before you list it will instantly make you your real estate agent’s favorite client! Homes that don’t need repairs sell faster than those that do. Spend the money to stage and make minor repairs to your home before you put it on the market.

All three of these tips do involve spending extra money but could mean getting your home sold quickly. The sooner you sell the sooner you can be on your way to your new home and new life.

How to Build a Social Media Following

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How to Build a Social Media Following

Social media isn’t just for looking at cute videos of puppies and kittens or seeing what your old high school acquaintances are up to. Social media can be a powerful tool for growing your real estate investing business. Successful real estate investors use social media to: host content, make connections and advertise properties.

Use Social Media to Host + Promote Content

While you might have your personal social media account set to private, you can and should set it to public if you want to promote your business. When you set your business account to public, any interested individual can view your curated content. You can use your social media profile to promote your originally written blogs or share articles from your go-to sources.   Quality content will both engage and grow your audience.

Connect with Potential Investors, Client, and Co-Workers

Social media is called “social” for a reason! Instagram, Facebook, and Twitter all allow people to connect over business and ideas. However, LinkedIn is one of the most powerful platforms for making business connections. LinkedIn is a business-centric network focused on those looking to grow their business and careers. Use your LinkedIn page to share content that will engage these potential business connections. Pro Tip: LinkedIn isn’t meant to be a platform for shameless self-promotion. Don’t use your account to promote yourself, rather use it to make long-term connections.

Advertise Your Investment Properties

No matter what real estate investment strategy you choose, you will need the power of advertising eventually.

  • If you are a buy and hold investor, use Facebook’s marketplace to advertise your vacant properties to potential tenants.
  • If you are a fix and flip investor, use Instagram to showcase your spectacular before and after photos, attracting potential buyers to the finished project.

You can even boost posts to reach an even broader group beyond your personal network. One of the great things about social media is the low cost of advertising on it. A modest $10 budget can reach of 1,000 people.

Use Social Media to Leverage Your Business

Social media is a great way to grow your real estate business for a reasonable cost. Use the power of social connections to close more deals and watch your business grow!

Networking at Local Events or Festivals

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Networking at Local Events or Festivals

“You should always be networking and marketing your business,” said my mentors to me when I first got started in the business over a decade ago. At first, I was a little embarrassed to do so. I felt like I was being pushy and needy, but I did it anyway. It turned out to be one of the best pieces of advice I have ever gotten. I tell you this because you must realize you are the catalyst to your business. There is no boss spending money on marketing, networking or advertising for you to bring in business. You are the boss and this is your business. You control your success. Networking is a very easy thing to do. Just let people know what you do or what you want.

Summer is upon us, so that means more people we be out and about. I encourage you to get out to the masses, attend all local events or festivals that will are taking place. Be a walking billboard for your business. I usually wear black or yellow pants with a yellow polo (golf shirt) with a collar. I have written in black lettering on the front, “I want to buy your home” and on the back, “Ask me how I can give you a THOUSAND DOLLARS.” This outfit is a conversation starter. Whenever someone approaches me I tell them who I am and what I am looking for. For instance, “I am a real estate investor looking for deals. If you bring me a property and I close on the deal, at closing I will pay you $1,000 cash” or I will tell them, “I am a real estate investor and am looking to buy distressed properties in any condition, and I will pay you cash and close quickly.” Either way I have somebody’s attention and they might sell me their home or bring me a possible deal. Regardless, you will be getting your name out into the community and getting noticed. Also, bring a stack of business cards with you to give out to people.

Networking, marketing and advertising are closely related. In the opportunity above, you get to do all three at once. This does not have to cost you a ton of money in order to be effective. Get creative with how you get noticed and make it happen. Don’t be afraid to talk to anyone about yourself and your business. You will be amazed of how many people love real estate. You never know where the next deal will be coming from.

How to Find a High-Quality Real Estate Agent

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How to Find a High-Quality Real Estate Agent

Want to find a good property for a good cost? Find yourself a good real estate agent for an effortless real estate transaction. Where can you exactly find one? Agents advertise themselves through yard signs, direct mail postcards, paper listings, social media or online ads. How do you know if it is the right agent for you?

First, identify your criteria. When is an agent a high-quality real estate agent? What are the qualities that they should possess? The best agents won’t necessarily be found in giant brokerage firms; it depends on their work ethics and how passionate they are to help you find the best property for you. Second, ask for referrals from friends or acquaintances in the area you desire to invest in. Agents are good agents if their top priority is to guarantee the satisfaction of their clients. Pick the agent people would recommend because they go above and beyond their responsibilities. If possible, ask for recommendations from professionals, people who have knowledge about real estate.

Select the agent with relevant and correct credentials. There are different specializations that an agent can take. There’s an Accredited Buyer’s Representative (ABR) – this kind of agents represent the buyers in transactions. If the property you need an agent for is for residential purposes, you might need to look for a Certified Residential Specialist (CRS) – this agent has completed additional education in dealing with residential estate. There are other specializations, credentials and memberships like NAR (National Association of Realtors) that you can check. Realtors who are members of NAR are members who swore to stand by the association’s code of ethics. A realtor is different from a real estate agent. But, you may choose to hire either of the two, whoever you think fits your needs and standards. Then, conduct interviews to get to know your agent. Ask relevant questions, like character and professional references, recent sales, how long they’ve been working as a real estate agent, and the like.

These are only some of the tips on how to find the agent to match your needs. Whatever you choose to do in order to get one, make sure you got an agent that is top-of-the-line and also fits your budget.

How to Surround Yourself with Positive People

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How to Surround Yourself with Positive People

We are overwhelmed with life’s challenges every single day. When you are down, do not let negativity personify you. Think positively and surround yourself with people who can help you do that. There are already a lot of exhausting things life has to offer, so don’t allow negative people to weigh you down. But, how exactly do you do that?

First, be yourself and be positive. Optimism is a basic ingredient to your career and life’s success. To attract the right people into your life, you have to be yourself and let your personality shine. Make people see the real you; the real ones will be drawn to you. When you find them, find common ground between you two. Find the good in them that you want to absorb. It may be their attitude when things go wrong, their work ethic, their amazing time-management skills, their humor, or anything at all that makes them positive people. Make them influence you positively.

Then think. What really makes them positive people? Is it their outlook on life? Attitude? How they deal with people? Here are some of the traits that a positive person must possess to be considered good company.

  • People who give their best in everything they do because they treasure every opportunity as if it’s a one-shot chance
  • People who have big dreams and the drive to follow and achieve them
  • People who treat everyone they meet fairly, regardless of economic status, gender, age and the like
  • People who does not only listen but understand and give relevant advice; those who have empathy and compassion
  • People who can cope with frustration, anger, sadness and other emotions and life situations
  • People who can make time for work/school, spiritual life, family, and social life
  • People who value themselves like they value others, and vice versa

The list above is only a guide; it may differ, depending on your perspective. It is hard to draw people like this into your life because it requires you to attract positivity in your own life, and that does not happen overnight. It will require you to make an effort to change your mindset and find people who treat positivity as a vital ingredient of success. Whoever surrounds you, you must remember that positivity comes from within. Be positive, attract positive people in your life, and live a happier and more optimistic life.

Successfully Working with Realtors

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Successfully Working with Realtors

Since over 80% of real estate is sold through realtors, it is important to learn how to work successfully with realtors.

First, let’s look at what an agent can do for us:

  1. Promptly provide complete and accurate comps.
  2. Literally unlock the door to potential deals so we can see the property at our convenience.
  3. Submit all our offers immediately as requested with our amount and our terms.
  4. Promote our low offers to the seller and other agents, improving our chance of acceptance.
  5. Help us get the seller to finance the deals.

Realtors can help you find properties using the MLS (multiple listing service).  Not only can realtors help you find properties to make offers on, they can also help you obtain information on similar or comparable sales, also known as comps, using the MLS.  Comparable sales can give you an idea of what investment houses will sell for.  Realtors provide the most up to date and accurate comparable sales.  These comparable sales are one of the most important items to know when calculating offers.

Anyone serious about wholesaling or rehabbing properties needs to look at properties that are vacant and in need of work/repairs. Realtors can help you here. Realtors are the only legitimate way to see listed properties that meet the criteria of needing work and being vacant. Here is where a realtor can help promote your low offers to the seller and dramatically increase your chance of getting your offer accepted. Your offer is much stronger if you include as an addendum captioned pictures up close and ugly showing what is wrong with the property. This can make an amazing difference in getting your offers accepted.

While it may seem that all realtors will be happy to work with you, such is often not the case. Eighty Percent (80%) of new agents are out of business within the first year.  Worse, some realtors don’t even want to submit offers or give the third degree about your credit worthiness. They do this because they fear doing a lot of work and not getting a sale. You need to train them to work with you your way. Does it make sense to invest in learning how to buy at wholesale and then let a realtor teach you how to buy at retail and they make a big commission while you lose money?

A new investor will often come across to the agent community with what is referred to as “rookie-breath.” The agents think the newbie investor doesn’t know what he or she is doing and will attempt to get rid of them. This is a sign to them that they must do a lot of work with no commission money in return. Further, they see your low offers as an embarrassment in front of the seller who was expecting them to get them “all the money.” Hence, they refuse to submit those offers, don’t return your phone calls, or insist you do things that are difficult, costly or even impossible, such as making a huge deposit and proving you have cash ready to complete the transaction.

Finding good agents, and training them is the first, best, and easiest way to become successful in investing, especially wholesaling. The good news is that even if they don’t want to submit your low offers, they have a fiduciary responsibility to do so. It is not their job to decide the acceptability of offers. They are merely there to submit the offer presented to them and let the seller decide.

You can remind them of their responsibility. You can present the problem to their broker or/and the local real estate association. Do this and see how quickly they decide to submit your offer.

Don’t let realtors get away with submitting your offer verbally over the phone.  Remember that verbal offers will never work. Your offer must be submitted in writing to have a chance. Further, you will want to resubmit your offers ever two weeks or so. As high as 75% of the investment deals that are done are either on resubmitted offers or offers submitted as a back-up to a deal that is under contract. Hence, you will want your agent to resubmit your offers.

Finding agents who are also investors can be a great strategy. They see and understand what you are doing. They may even be willing to partner with you on deals. Hence, they will be quick to recognize the value of getting seller financing. Typical Realtors see seller financing as negatively delaying their commission collection.

To find investing realtors just ask receptionists if they have any realtors that are also investors. Then ask to visit with them. Not only are you more likely to get your offers submitted, these realtors can often show you where the bones are buried. Just a little selectivity and training of realtors can dramatically increase your success in real estate investing.

Understanding the Investor’s Mindset as a Realtor

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Understanding the Investor’s Mindset as a Realtor

Most of your traditional buyer clients are probably very similar in what they’re looking for in a property.  They want a property that is within their budget (or below their budget), that has as many bells and whistles as possible, and that is in a prime location.  Most of your buyers want as much as they can get for a price they can afford.

When you work with buyers like this, who are looking for a residential property, you will likely discuss various finishes, square footage, and building features.  Many of these buyers will purchase based on whether or not a property feels like home to them.  Little research or thought may be put into figuring out whether their dream home is a good investment, even though their home purchase is often one of the largest investments that they will make.

Many homebuyers are accidental investors.  They’re looking for a home that appeals to their “American Dream” ideal, and they end up making one of their biggest investment decisions in the process.  Although the real estate investor is looking at the same market as Sue and Joe first-time homebuyers, the investor is looking at the market through a very different lens.  By understanding the differing mindset of the investor, you will be able to serve your investor clients more effectively.  While Sue and Joe first-time homebuyers want to know about school districts, landscaping, and kitchen layouts, your investor client is less emotional about the transaction and more focused on these particular questions in his/her decision:

  • What is the potential value in a property?
  • How much will it cost financially and in terms of resources to receive the property’s potential value?
  • What are the risks associated with this acquisition?

Typical buyers (accidental investors) may end up making profitable decisions and coming out ahead simply because their goal of finding an appealing property means that they acquired a hot property that will most likely appreciate at a steady pace.  This is the mindset of many buyers.

The strategy of real estate investors, however, is very different from this “ideal property” mindset that most of your buyer clients possess.  Investors are looking for deals.  They are looking for properties that will return more than the initial investment.  If investors lose sight of their wealth-building goal and purchase a property on a whim or because of its “bells and whistles,” they may end up making a dangerous, costly investment error that will take them a long way from their wealth-building goal.

5 Ways to Get Past the Gatekeeper

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5 Ways to Get Past the Gatekeeper

Who is the gatekeeper? The individual who perceives that it is her/his job is to control the flow of information or limit what information is shared. A person or “technology” that blocks or withholds information needed to complete a job.

Gatekeepers are just doing their job, trying to be efficient and protect those in their office from distractions. So, how does one get around the gatekeeper who is doing a great job?

Below are five suggestions to help you navigate around the gatekeeper. These ideas are not in any particular order, however, the first two are ALWAYS critical.

  1. Treat the gatekeeper as a person. Call them by name and treat them with respect. Don’t be awkward or demining. Actively engage with them. Don’t get too personal, don’t pry, but you can gently probe. When they sense you are a professional and respect their position, your ability to accomplish your job increases. Treat Gatekeepers Like Gold.
  1. BE HONEST because integrity counts. They are honest, and they leave nothing for the listener to disagree about in evaluating if they will send you along (to the person or a voicemail). Be direct but truthful about the purpose of your visit and why you hope to connect with them (remember, you are there to help THEM make money).
  1. Practice good communication skills; learn to listen more than you speak, and be prepared with a simple, rehearsed script of why you are calling/visiting. Let the gatekeeper take the opening position. Listen carefully to their thoughts and concerns. Great negotiators learn to flip the discussion around politely and quickly – then ask.
  1. Relax! If you are nervous, stressed or tense, you will show those emotions and it might transfer to your voice, your behavior and your choice of words. If you are stumbling for words or for control of yourself, this will have an impact on how the gatekeeper perceives you and how they receive your request for access or information. Take some deep, slow, quiet breaths to put yourself at ease. When the Gatekeeper answers or greets you, smile and confidently tell them with energy and ease why you are calling (or visiting the office).
  1. Keep it short and sweet: no long speech for the gatekeeper. They have great deal of important information about the potential cash buyer or real estate agent. The gatekeeper has positional power and influence. One of them has the power to connect you with the right person. However, they do not hold any authority. When the gatekeeper asks, “may I tell him/her what it’s regarding,” it is not the time to fill in the gatekeeper. It will waste your time and it might irritate them because they still cannot make the decision. Using a relaxed and calm voice, speak slowly and articulately and don’t divulge more than necessary.

Three Common Obstacles for New Investors

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Three Common Obstacles for New Investors

The career of a real estate investor is riddled with obstacles. The very job of an investor is to find and fix problems and overcome obstacles. However, there are difficulties that can blindside new investors and stop them before they even start. This article will illustrate three common obstacles investors will face upon entering the business.

  1. First and foremost, new investors will be hit with the realization that real estate investing is not a get rich quick program. This job can be equated to running a marathon rather than a sprint. Although a person can make sizable sums of money rather quickly, a person will not get rich overnight. In order to make it long term, a person must be persistent and consistent. There must be discipline to complete the necessary tasks to be successful. Therefore, the first obstacle is to overcome the idea that you will be able to retire with little effort.
  2. The second obstacle is gathering the right people for your power team. A successful investor will need other industry professionals to help with their business. The right person for your power team is someone that will support you in what you are trying to accomplish. We need to surround ourselves with like-minded individuals and limit our interaction with negative people. There are many industry professionals that have a limiting mindset and will only serve to bring you down; therefore, these connections should be avoided at all costs. Work to bring positive and supportive people onto your power team.
  3. When a new investor jumps into the game they are usually anxious to gobble up all the information they can get. There are countless “experts” in the field that have a special way of making the business work. You can jump from video to video and article to article outlining all the “best” ways to make money in the real estate industry. This information overload should be avoided at all costs. A new investor should find one strategy and focus on it until they are comfortable enough to move forward without new information throwing them off track. It is easy to hear so much information that it places you in a state of inaction. Beware of this trap.

All new investors will encounter obstacles that are unknown until they pop up. All new investors should prepare themselves to overcome the three difficulties outlined in this article. Remember, stay focused and be consistent to meet with success.

What is a Real Estate Power Team and Who Should be on Your Power Team?

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What is a Real Estate Power Team and Who Should be on Your Power Team?

Investors who have been in the real estate business for quite some time are familiar with power teams and often belong to one. A real estate power team is the assembly of a group of people who sell products or services to the same customer without taking business from each other. This group of individuals agreed to form a team that will work together and committed to bring referrals to each other. They are important when building a business empire because they are allies that protect each other from financial harm, quickly generate finances, and assist each other in achieving business goals.

It may take a while for you to put together a successful power team, and one good way to find possible team members is through referrals. Another way to find team members is by contacting your local REIA where you will be able to meet other investors who might want to be part of your team.

There is a long list of possible people with complementary professions that would be great for your power team, and if you are just starting in the real estate industry, these people are the most important to establish a working relationship with.

Mentors 

Generally, people would be honoured if you asked them for advice, and looking for someone who has successful experiences in the local business is a smart way to become successful yourself. One thing to remember when you find someone is to offer financial compensation for his or her valuable time and never expect someone to help you for free. Time is money in the real estate industry. In fact, time is money in any businesses whether it is in real estate or not. Also, be aware that mentors are not there to do the things that you cannot do. They are there to share their experiences.

Realtors

A licensed and established realtor on your team can help you find the right properties in your local market worth investing in. They are a fountain of knowledge about the housing market conditions and the neighbourhood. Having a reputable real estate agent on your team will ensure that you will be given accurate information about the property — its condition, price and value.

Accountants

A real estate business will require a good business accountant.  They should be chosen carefully and should be able to calculate if your business is making a profit through the inflow and outflow of cash. They should also be able to minimize expenses, save on taxes and create an accounting system that you can easily use when tracking your expenditures and incomes.

Lawyers

Purchasing and selling properties is a legal process and having an attorney who is specialized in real estate law on your power team is very important. A good lawyer will be able to protect your company from litigations and assist you with any legal particularity related to your business organization.

Contractors

Finding a good contractor is tough because they are always in demand. However, if you already have one on your team then you are in possession of a great asset. Contractors can give you useful information about the building processes, like how much work a property needs and how long it would take to get that work done. They need to be really handy with repairs and remodelling of a property. They could also point you to useful and reputable sub-contractors like electrician, plumbers and landscapers that they have worked with before.

By now I hope you have a good idea about the people to look for when starting your real estate power team. As you grow in your real estate business, there will be more people that you will need on your team to help your business empire run smoothly.

Top 5 Reasons for Working with a Real Estate Power Team

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Top 5 Reasons for Working with a Real Estate Power Team

In order to successfully manage a successful real estate business, a smart investor needs a good power team for help and support.  A power team is group of people with complementary professions working together with the same clients without taking business away from each other. One of the biggest mistakes rookie investors make is thinking that they have to do things themselves at the beginning of their career and build a power team later when they are successful. Working hard is not enough. It’s time to work smart!

There are plenty of reasons why good teamwork is vital to a business. Not only does it get work done on time, it also gets the job done well. Here are the top 5 reasons why investors should consider being part of a great power team.

Your power team can help you find deals.

In real estate investing, it is important that you find deals — most of which you will get from referrals. Referrals can easily come your way if you’ve made a strong working relationship with people in the same business industry. Sending referrals to your other team members can help you establish a good working connection with them and will make them want to help you in return by referring you to clients who might be in need of your services. Take for example, an events coordinator referring a client to a good florist and caterer on her power team. Of course, the florist or the caterer will also recommend the events coordinator to clients in need of one.

Your power team can help you set up business.

According to experts, when setting up a business you might want to consider employing the help of people who can advise and help you set up and run your real estate business. These are people who are professionals in their own fields like accountants, lawyers, and computer consultants who could do a better job that you would. To illustrate, if you are a lawyer then you can write all the legal documents of your business yourself; however, you would still need the services of an accountant to help you manage the financial aspect of your business, especially when tax season comes.

Your power team can help you market your business.

In order for you to thrive in this real estate investment business, you will need a good marketing manager. A marketing consultant in your team should be well versed with marketing strategies like online and offline advertising, including speaking engagements, direct mails and promotional pieces, to help you market your business and increase your sales.

Your power team can help you when repairing your properties.

Real estate properties will need on-going maintenance, remodelling, and repairs in order to stay on top of the game. Working regularly with a good and reliable contractor can get the job done faster and at a lower cost. Also, having a trusted contractor on your team will provide practical advice, like where to find supplies and materials at a cheaper cost.

Your power team can help you with financial planning and solving business-related problem.

Let’s face it; there are projects that are just too big for one person to handle. Sometimes it takes a collaborative effort of people who specialize in different areas of the real estate business to find the best solution to a problem. It also matters a lot if the people on your team are experienced and successful in their particular industry. For example, an insurance agent can best help you understand the ins and outs of real estate investing by educating you of your liabilities as an investor and what must be done to protect your investments.

Assembling a power team does not happen overnight. If you want to be part of a real estate power team, join a local REIC to get an idea of what services can be useful in your business.

3 Common Mistakes New Investors Make When Working with An Agent

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3 Common Mistakes New Investors Make When Working with An Agent

Like any other business, real estate investing needs to be carefully planned and seriously scrutinized. In an industry where competition is rampant, it is crucial to avoid making mistakes as much as possible. While there are many new investors starting out with the best intention of making a career out in real estate, only a few succeed.

Ideally, a working relationship between an investor and a real estate agent is a win-win alliance. However, there are a lot of misconceptions about these two characters in the real estate world. These problems usually start when an inexperienced investor chooses the wrong kind of real estate agent, thinking he or she is the one best suited for the job.

Here are the 3 most common mistakes new investors make when working with an agent:

Hiring an agent with the cheapest commission.

Newbies in the real estate business tend to think that they will be saving a lot of money if they choose an agent with the lowest commission, without thinking about how marketing and advertising their property can be expensive. To equate the situation, reduced commissions often means reduced marketing resources in promoting to get your property sold. So, don’t go with the cheapest but go with the best.

Not being honest with your real estate agent.

Agents are professionals trained to appraise properties in a manner that can be different from yours. In order to get your agent to best help you, provide him with the necessary details about your plans and expectations about the property. Lying or keeping things from your real estate agent can be toxic for your working relationship, especially if they find out about your deception and decide not to work with you anymore. Bottom line here is, without the necessary information, your real estate agent won’t be able to do their work for you correctly.

Thinking all real estate agents know the same thing.

One of the most common myths about agents is that they are all the same; therefore, they know the same things. Wrong. Real estate agents have different experience levels, different skills and different specialties that they have acquired after years of being in the business. Think of it this way, a real estate agent who deals with buyers may not have as much skills to sell a property than an agent who spent years selling them. Also, choosing the wrong real estate agent can affect your financial situation for years. You wouldn’t want to be financially burdened for the next 2-5 years just because you chose the wrong real estate agent.

Networking by Attending Foreclosure Auctions

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Networking by Attending Foreclosure Auctions

To most people, being a real estate investor is all about making a lot of money through buying and selling properties. Although that idea of real estate investing is not far from the truth, there’s more to it than that. To make it to the top, real estate investors need a lot of help from other people inside the real estate industry. That’s where networking comes in. Networking is the inexpensive method of establishing friendly and professional relationships with other people in order to increase their number of business contacts and future prospects.

One of the many networking events an investor must not miss is a foreclosure auction. Attending foreclosure auctions does not mean you have to join in the bidding. Instead, just get to know people. Because foreclosure auctions are a great way to acquire properties below market value, they attract a large numbers of local and non-local investors. You’ll meet serious buyers that are fast deal closers and pay with cash. These are the people you’ll want to network with and put on your growing lists of buyers. If you know someone attending a foreclosure auction, ask him or her to show you around and introduce you to different people.

For beginners or even seasoned real estate investors, having a database of people from the same business is very important in building a career. As like many other industries, the more people you interact with, the more business prospects you will get. It’s practically impossible to run a real estate business without the right contacts.

Referrals

Establishing strong business connections with the right people can be beneficial when starting in the real estate world. Accumulating a large network of real estate agents means getting many business referrals.

Mentorship

Business networking can offer a variety of opportunities such as being educated and mentored by people who have already made a successful career for themselves. Learning from these people with varying talents and techniques can help you and guide you in becoming a success investor.

Potential Business Partnerships

Networking is also a great way to meet other investors that could become potential business partners. Investors work, help, and makes deals with their fellow investors, so keep in contact with each other.
Meeting Service Providers

Reliable contractors can easily be found if you just ask around. Since most properties in foreclosure auctions are not in good shape, a skilled and trusted contractor is someone you want to have on your networking team.

The Benefits of Using a Real Estate Attorney as Part of Your Power Team

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The Benefits of Using a Real Estate Attorney as Part of Your Power Team

For most people, the purchase and/or sale of their home will likely be the largest financial transaction they will make. Likewise, as a real estate investor, you will be involved with numerous and large financial transactions. The amount and risk of such transactions merits the use of a real estate professional. Additionally, several states require the use of a real estate attorney in the sales transaction.

From the time you make your decision to buy a home or investment property, there are a number of important decisions that must be made and which have legal consequences. There are several aspects of the sale and different ways your attorney will assist you in evaluating, assessing and closing the real estate transaction.

Prior to closing, instructions from the lender are sent to the real estate agent and/or attorney. The attorney is responsible for evaluating the details of the sale, preparing necessary closing documents, assisting in scheduling the closing, explaining the necessary closing documents and then ensuring the title company has properly executed and recorded all the documents.

A real estate lawyer’s primary focus is to ensure that the real estate transactions are executed according to all local (state) laws and the process of document preparation and review follows correct procedures. This includes the review of sales documents, the negotiation, assessment of the terms and conditions, and finally, the transfer of titles.

Real estate attorneys may also be consulted to ensure that real estate laws and regulations are followed when buying or selling real estate. When a breach of contract or a real estate fraud occurs, real estate lawyers assist to correct the problem and represent their clients to resolve any actions or issues.

Overall, real estate lawyers serve two major primary functions in the real estate world. They either act as litigators and oversee the legal aspects of real estate transactions or they defend the rights of their clients as they try to protect their interest. Real estate attorneys focus on real property and mediate real estate transactions that have legal issues.

If you are investigating a property and have questions concerning the legal meaning of any portion of the real estate purchase contract, you should consult your attorney before engaging in the legal transaction and signing the contract. This contract is a legal document and is binding for both the seller and the buyer.

Various real estate lawyers are skilled at consulting a specific aspect of real estate law. Some attorneys focus on litigating fraud cases and others might specialize in mortgage fraud, while some concentrate on land use (including zoning laws). Their expertise can also be focused on residential or commercial real estate.

Thus, an attorney’s role in real estate is broad, but they ensure that real estate transactions are done according to the law. This work is done in coordination with the buyers, sellers, realtors (agents), and/or lenders. The attorney’s main purpose is to assure that this complex procedure is legal and assists all involved in fulling their wishes to buy and sell the property. Therefore, choosing to work with an experienced real estate attorney is essential to safely handling purchases and closing real estate transactions.

Marketing to Cash Buyers

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Marketing to Cash Buyers

When you begin marketing to cash buyers, there are several ways you may want to go about doing it. You could set up a direct mail campaign or even send a postcard with some jazzy marketing hoopla. Of course, there’s also the option of using bandit signs, which our students have found to be wildly successful. As you can see, there are a number of ways that you can market to cash buyers, but before you begin your marketing campaign, whichever way you choose to structure it, it is important to know the mindset of a cash buyer. Over the years I have had the pleasure of working closely with several cash buyers on projects, and I’m going to share a unique look into the day and life of a cash buyer so you can have a better understanding of just who they are. When you know who your client is, you will better understand how to solve their “problem,” and marketing is all about letting your client know that YOU are the solution to their problem.

First of all, cash buyers are busy! They are on a timeline and they are moving as quickly as they can to get from point “A” to point “B,” and they do NOT like to waste time when they are working. A cash buyer usually has a time frame in which he needs to complete his “fix and flip” project, and he sets his days, weeks and months to be as efficient as possible. You won’t find a cash buyer lollygagging on social media or strolling through the mall. Cash buyers are precise and focused in their daily routine. They have their job planned from start to finish, and they know the specifics of how long each task should take to accomplish in order to move on to the next task. When you create a marketing piece or if you are simply calling a cash buyer, keep this in mind: Let them know that you are aware of how busy they are and that you respect their focus. If you can tell they are too busy to talk to you, don’t be offended. Instead, offer to call them back at a more convenient time for them.  **Hint Hint…this is an excellent way to illustrate to a cash buyer just how valuable you are to them. Also, let them know you will be finding them properties so they can stay focused on what they do best, flipping properties! Can you see how you can show them that you are the “SOLUTION” to their problem…? Even if they didn’t know it was a problem…? Yep, that’s called marketing!**

Next, remember that a cash buyer is all about his bottom line. He is good at what he does because he knows how to walk through a property, put together a budget for the property, and stick to it so that he can make a profit. A cash buyer has a box that he must stay in with each project. It’s not emotional; it’s all business. If the numbers don’t work, the answer is “no.” There is no need to take anything personal; it’s just the way he runs his numbers. The better you know how he runs his numbers, the more valuable you will become to him. A cash buyer also knows that there will always be little things that pop up that weren’t accounted for in the budget. However, a cash buyer will usually have given himself enough room on his profit to have a little cushion. When he is negotiating a deal, he is firm but flexible. He knows that getting a deal is better than not getting a deal. He also knows that he has competition, and he’s always on top of his game to put together an aggressive offer.

A cash buyer is also a master of project management. He knows where his time is best spent and what projects to leave to his experts. As he dives into a project, he is able to see where he can save a little time and money and then invests that time and money into something else that may have not been in his original plans. Any little details you can suggest might make you an invaluable part of his process. When developing rapport with a cash buyer, make sure you let them know you understand how important HIS bottom line is to you and that you will be negotiating aggressively to find him a smokin’ hot deal.

Responsibilities of a Real Estate Agent

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Responsibilities of a Real Estate Agent

A real estate agent is someone who holds a state license and represents a buyer or a seller in a real estate transaction. Real estate agents are the people you deal with face to face when buying or selling a property. Agents execute many functions, such as showing homes to perspective buyers and negotiating transactions on behalf of their clients. Agents work on a 100 percent commission basis, which means their pay depends on their ability to find properties suitable for their clients and to close transactions. The purpose of this article is to discuss the responsibilities of a real estate agent.

The First Step is to Guide: Prior to touring a home, an agent will need to understand their client’s budget, preferences and wants/needs, as well as their motivation. They will then narrow the search and identify each priority.

The Second Step is to Educate: A real estate agent should offer information on homes in the local market and comparable sales. This process can be complicated and a good agent will advise and counsel the client every step of the way.

The Third Step is Networking: A real estate agent must be familiar with the target neighborhood and know the homes for sale before they are formally listed. Experienced agents should know and have a good working relationship with other agents in the area. Additionally an agent should be capable of referring a client to trusted professionals such as lenders, contractors and home inspectors.

The Fourth Responsibility is to be an Advocate: Buyers should work with an agent who can fully represent them. Your agent should be an expert who is looking out for your best financial interests and is contractually bound to do everything in their power to protect you.

The Fifth Responsibility is to Negotiate: A Real Estate agent handles all the negotiation details such as preparing all offers and counter offer forms. After the home inspection is complete, an agent can be beneficial in making sure the repairs are done in a timely fashion.

The Sixth Step is Managing Minutia: A good real estate agent understands the deadlines and details of all the paperwork involved in a deal and can help navigate this complex process. They will make sure all the boxes are checked, all initials are in the right places and all the paperwork is complete before submission.

The Seventh and Final Step: The final role of a real estate agent is to “look out” for you. Any form of errors can damage a deal before its closing. These errors can include a lender failing to meet financial timelines, unclear house titles or a seller failing to disclose a problem with the property. Any small error can kill a deal. A great real estate agent knows to watch for trouble and can skillfully deal with challenges as they arise.

In conclusion, the road to home ownership can be bumpy and can be filled with unexpected turns and detours, but having a real estate agent’s assistance can help guide the way. They are crucial in the real estate business.

How Do Real Estate Agents Get Paid?

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How Do Real Estate Agents Get Paid?

Real estate agents are individuals who are licensed to assist clients when buying, selling, or renting real estate property. Unlike other professionals who get paid by the hours they spend on the job; real estate agents will only get paid once a transaction has successfully closed. The agent is then paid by receiving a commission for their services. The commission is calculated based on a percentage of the selling price from the sold property.

A typical real estate agent fee can be as much as 6%. However, the agent will not receive 100% of this fee. To better understand how real estate agents are paid, it would help to first know about the relationship between a broker and an agent.

The broker runs the real estate office. In the real estate industry, the broker has acquired more skills and experience having underwent more education and intensive training. A broker is legally responsible for all real estate transactions he has done himself and/or by his sales agents. He can work independently or with another broker as an associate broker. A broker can also act as an agent in a real estate transaction. All real estate commissions must be paid directly to the broker. It is the brokers responsibility to split the commission as stated in the Broker/Agent contract and with any other agent involved in the transaction. Usually, the broker and the agent split the commission 50/50 or depending on what was agreed in the Broker/Agent contract.

A sales agent works for and under the broker. An agent cannot work independently and is prohibited to accept payments directly from clients. The agent is the person the clients will personally work with throughout their transaction.
Generally, there will be 2 parties involved in a transaction – the listing agent with the listing brokerage and the buyer’s agent with the buyer’s brokerage. Sometimes, the real estate agent can be both the listing and the buyer’s agent depending on the deal.
How much do real estate agents really get paid? The example below will better illustrate the process.

Mr. Client wants to sell his property, for $280,000.00. He meets a real estate agent named Bob, who works for the WiseBuy Realtor. Mr. Client agrees to pay a 6% commission, of the selling price. Bob and Mr Client sign a listing agreement. Bob lists the property on the MLS and puts a “For Sale” sign up in front of the property. Bob is contacted by Agent Sue who has a client that is looking for a house. Agent Sue takes Mrs. Buyer to Mr. Client’s property and shows her the house. Agent Sue submits an offer, on behalf of Mrs. Buyer, for $275,000.00 that was accepted by Mr. Client.

The agreed 6% commission paid by Mr. Client was split 50/50 between the selling agent’s brokerage and the buying agent’s brokerage. Agent Bob’s brokerage received $8,250.00 and Agent Sue’s brokerage received $8,250.00. Since Bob is on a 50/50 commission split with his brokerage WiseBuy Realtor, his total commission is $4,125.00.

The breakdown of commissions earned by Bob and his broker.

  • Total commission paid by the seller $16,500.00 (Typically, the seller pays the realtor fee unless otherwise negotiated)
  • Total commission paid by the buyer $0.00
  • Bob’s commission $4,1250.00
  • WiseBuy Realtor brokerage commission $4,1250.00

Why Hire a Property Manager

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Why Hire a Property Manager

Having a competent property manager on your power team can add substantial value to your investment. I would recommend investors who are planning on doing a buy and hold strategy to get a good property manager to work with them. They can save you time, money and legal issues from tenants. I will outline eight reasons you should hire a property manager.

Screening Tenants: PM’s (Property Managers) have a lot of experience in screening for the right tenants for you. They know how to quickly analyze a good tenant from a bad one, saving you hassle in the long run.

Tenant Retention: It will be important for you to have long term tenants and one way to insure the tenants are happy is to have a good PM taking care of the tenants needs. A good PM will have general business practices that will ensure good tenant retention, so be sure to ask them what programs they have in place.

Rent Collection: Too often when investors try to manage properties themselves they let tenants walk all over them. A good PM will be your barrier between yourself and your tenants. PM’s are doing a job and will follow the terms of the lease and tenants know they don’t make the final decision, you do, and they don’t have access to you. Therefore, this process keeps you out of the light and lets the PM do their job.

Maintenance Cost: Knowing who to call to fix problems with your property is huge. Most PM’s know experienced contractors who have already been vetted by them, who can also give you price discounts on repairs. Keeping the properties in good condition will save you on costly repairs and keeps your tenants happy.

Vacancy: Shorter vacancy time is better for your revenue. A good PM can help improve and prepare the property for rent to maximize profits. They can determine proper rental rates to maximize the units. Lastly they can effectively market your properties to potential renters via many advertising mediums.

Legal Problems: Seasoned investors can tell you that a troublesome tenant can cause enormous legal problems. That’s why a good property manager is important to have because they will have knowledge of the most current landlord-tenant laws and can save you from any potential law suits.

Taxes: Most PM’s can help you understand what tax advantage you can claim. They can also help organize all your paperwork to give to your accountants.

Owners Benefits: A good PM will keep your stress level low because they will handle all the day to day activities on your properties. They have a network of people they will utilize so you don’t have to go searching around. They can free up your time so you can focus on other aspects of your business.

It will take time to find the ideal PM, so use this outline to find the right one for you. They can help protect your assets and keep your cash flow coming in. Make sure to interview several to get an idea on whom to go with.

What is a Home Inspection Report?

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What is a Home Inspection Report?

A home inspection report is a useful tool in the real estate market for both buyers and sellers. A home inspection is an examination of the conditions in a house. These conditions are those that affect the property values and include such items as structure and mechanicals. “The home inspection takes the uncertainty and emotional barriers out of buying a home.” (Gonzalez)

A home inspection is not an appraisal. An appraisal is a method of determining property value and takes into consideration items such as square footage and property value. The home inspection will take these factors into consideration but also accounts for the inside prospective of the home.

The home inspection report is unique to residential properties and is used to determine and diagnose the property characteristics.

We will explore the expectations of a buyer or seller when entering into a home inspection. During the home inspection, the condition and structure of the home will be documented by an inspector after taking a simple visual assessment of the property.

After the exterior is visually inspected, the heating, ventilation and air conditioning systems are examined and their performance recorded. The inspector will not disassemble the equipment but turn it off and on to see if it is in working condition. The inspection will report any observed material defects.

Plumbing is an important component of a home and the inspector will visually examine the operation of the plumbing system. The water flow is expected to be free of any obstruction so clear, clean flow of water should occur. The inspector is making sure that sewage and waste return is separate from the fresh water supply. Additionally, the inspector will visually check the water heater.

The electrical system is also visually inspected and lights and outlets randomly checked. The notation of the type of electrical box as to whether the service is fuse or switch triggered will be documented in your inspection.

In conjunction with the electrical and heating review some inspectors will offer a thermal imaging inspection using an infrared camera to give the information on heat loss and any electrical problems that are not visible to the causal observance.

Choosing a home inspector can be a difficult process in some areas because of the large amount of inspectors available and their different levels of education and competency. When considering a home inspector, there are several approved education institutions, and although not national, they can be found on the individual state sites such as nachi.org or npiweb.com. These national home inspection schools add credibility to the training given to the inspector. These sites will also give a list of the inspectors in your area by zip code.

The average fee for this service is between $350 and $500 and varies according to location, size and type of inspection needed. The home inspector will ask several questions before quoting a price so it is best to call and discuss prices with a few inspectors in your home area. It is prudent when buying or selling a home to get a home inspection. This will save money on expenses later on after the purchase and in some cases help to firmly set the selling price.

 

 

References

Gonzalez, Britttany. “American Society of Home Inspectors.” 2012. Financial Firsts:. [online]. 18 January 2016. Accessed January 2106.

Bates, Ronals. NPI. 2015. http://npiweb.com/. [online] Accessed January, 2016.

NACHI (National Association Certified Home Inspectors) – http://nachi.org

What is a Home Inspection Report?

Posted on

What is a Home Inspection Report?

A home inspection report is a useful tool in the real estate market for both buyers and sellers. A home inspection is an examination of the conditions in a house. These conditions are those that affect the property values and include such items as structure and mechanicals. “The home inspection takes the uncertainty and emotional barriers out of buying a home.” (Gonzalez)

A home inspection is not an appraisal. An appraisal is a method of determining property value and takes into consideration items such as square footage and property value. The home inspection will take these factors into consideration but also accounts for the inside prospective of the home.

The home inspection report is unique to residential properties and is used to determine and diagnose the property characteristics.

We will explore the expectations of a buyer or seller when entering into a home inspection. During the home inspection, the condition and structure of the home will be documented by an inspector after taking a simple visual assessment of the property.

After the exterior is visually inspected, the heating, ventilation and air conditioning systems are examined and their performance recorded. The inspector will not disassemble the equipment but turn it off and on to see if it is in working condition. The inspection will report any observed material defects.

Plumbing is an important component of a home and the inspector will visually examine the operation of the plumbing system. The water flow is expected to be free of any obstruction so clear, clean flow of water should occur. The inspector is making sure that sewage and waste return is separate from the fresh water supply. Additionally, the inspector will visually check the water heater.

The electrical system is also visually inspected and lights and outlets randomly checked. The notation of the type of electrical box as to whether the service is fuse or switch triggered will be documented in your inspection. In conjunction with the electrical and heating review some inspectors will offer a thermal imaging inspection using an infrared camera to give the information on heat loss and any electrical problems that are not visible to the causal observance.

Choosing a home inspector can be a difficult process in some areas because of the large amount of inspectors available and their different levels of education and competency. When considering a home inspector, there are several approved education institutions, and although not national, they can be found on the individual state sites such as nachi.org or npiweb.com. These national home inspection schools add credibility to the training given to the inspector. These sites will also give a list of the inspectors in your area by zip code.

The average fee for this service is between $350 and $500 and varies according to location, size and type of inspection needed. The home inspector will ask several questions before quoting a price so it is best to call and discuss prices with a few inspectors in your home area. It is prudent when buying or selling a home to get a home inspection. This will save money on expenses later on after the purchase and in some cases help to firmly set the selling price.

Here are 3 Reasons Why you Need a Property Manager

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Here are 3 Reasons Why you Need a Property Manager

As you invest in real estate, there may be times where you find it difficult to manage your property. Hiring a property manager can help you better manage your time. Here are 3 reasons why you need to consider hiring one.

-Experience Matters

You need to keep in mind that as a landlord you will need a distinct set of skills to aid your cause. It is entirely possible that you may not have the skills or the experience to deal with most matters. Things like repair and maintenance, marketing and even book keeping are complicated and require your utmost attention at all times. However, if all of this is new to you, it is high time you consider hiring a property manager immediately. Property managers have the necessary skills and experience to overcome any obstacle they may face primarily because they have been dealing with these tasks on a daily basis.

-They Are Willing To Deal with Stress

Regardless of what you may have heard, dealing with tenants can be an excruciating endeavor. It takes a special kind of person to deal with the needs and requirements of the tenants, all the while being patient and understanding at the same time. Even though you might see yourself as a calm and tolerant individual, you need to be rational and ask yourself whether you could deal with scenarios where you have to deal with a tenant damaging your property.

-They Can Effectively Manage Different Properties At The Same Time

If you own more than one real estate, you are in for the ride of your life. The larger the number of real estate properties, the more difficult it is going to be for you to manage all of them. But if you are not willing enough to spend the required time managing your real estate investments, then there is no harm in hiring a property manager to do it for you.

Now that you know the importance of a property manager, you will come to realize that they are worth the price. Not only will they be able to deal with all of your problems effectively, but they have the necessary experience required to ensure your real estate investment actually pays off for you in the long term.