I’m a newbee in the investing field. I’m in the process of building my team of investors, contractors, real estate lawyers and realtors. my question is what spefic questions should i ask the real estate lawyers and realtors. I’m hoping to dabble in REO, HUD, forecolusers and preforeclousers and short sales. I’m really confused on what i should be looking for in them?
jarci
Jarci - one of the best ways to build your team is through referrals. One of the best way to get referrals is to attend a local REIA meeting and network with other investors.
Chris
As far as the realtors go… FORGET them. A realtor is a car salesmen with better clothes. YOU need to find your own deals, realtors don’t find you deals.
I have had MUCH better success selling my properties MYSELF than I ever had with realtors. NO ONE knows that house better than me, and I KNOW what questions to ask potential buyers so I don’t waste my time.
I used a flat rate service to get the home on the MLS and offer a 2 1/2% commission to the buyers realtor. I have also sold a LOT of my homes on Craigslist. The key to that is relisting the home every Saturday and Sunday morning, every week.
Lawyers…HOW MUCH for a closing? and… I need a blanket P&S agreement that I can fill in the blanks on, will you email me one? Make sure they know your willing to pay for it, but forget them if they think their going to charge you for every P&S they write. There’s no need, you can legally write a P&S on a napkin if you want.
The one person you forgot is THE most important member of this team.
Your MORTGAGE BROKER!!!
I AM NOT a mortgage broker, nor have I ever been one. I am speaking from 20+ years experience. Here’s why they are THE most important part of you group…
With the lending climate in this country now, you will need a mortgage broker who can GET PEOPLE FINANCED!!! Your realtor is NOT going to know ANYTHING about these potential buyers except that they may have a USELESS pre-approval in hand. If you have a smart mortgage broker HE can pre-qualify potential buyer for YOU BEFORE a P&S agreement is ever signed and HE KNOWS what to look for. If he’s good, he’ll get all the info so that loan sails right through. THEN you sign a P&S with the buyer, and ONLY then.
The problem I’m seeing more and more in this market is qualified buyers are hard to find. The LAST THING you want to do is to sign a P&S with some dope who has a generic pre-approval and THEN find out underwriting kicks out his loan. By having YOUR mortgage guy look these people over HE can tell you if they REALLY are qualified. It might not seem like a big deal but you have to remember there is a TON of inventory out there. if you miss a qualified buyer because your waiting on a nit wit, they (the REAL buyers) could very easily be GONE by the time you find out the dopes can’t get a mortgage.
I think that having a team in place is a good idea. Join a local REI or landlord assoc. and get some referrals from the veterans. Each profession will have their own issues that need to be addressed. They should be able to educate you on what they do and why. They have to be able to explain it to you so you can understand. That’s how they show you they’re knowledgable and care enough to educate you. That being said, the more education you can obtain on your own, you can deal more intelligently with these people. You don’t want to blindly follow advice.
Realesinvest,
Let me start out by saying that I am a Realtor and have been one since 1986. Having said that, let me also say that Fdjake is right on, especially if you’re new.
There are several problems with using Realtors. The main one is turnover. It’s been said that 80% of the work is done by 20% of the Realtors. That being said, what are the odds that you’ll get a good one? Very small unless you know how to interview an agent.
Stop and think about the 80% rule above. A busy agent probably doesn’t need or want your business…WHAT? An investor is looking for a deal. That means that of the homes that you look at you may only purchase 1 out of 25 or even 1 out of 50. Do you think an agent can make a living if they’re only getting paid 4% of the time??? No way! Besides, most agents are trained to not deal with someone who isn’t ready to purchase today and at market value.
You’d come out a lot better if you have access to the MLS without going through a Realtor. But if you need one, ask the following qestions:
I could go on with questions to ask, but those are the two most important ones.
I would disagree with Fdjake on one account. Offer the buyer’s agent at last 3% and don’t be afraid to offer a bonus. The reason is simple. The top agents, when scanning for a property, may scan the commission as well. I do. If I’m not getting paid at least 3% commission, I’m not getting in my car. And a top agent is without a doubt the best salesperson.
Granted, I’ve only been investing for just over a year, which is the main reason I’m looking at sites like this, I’m learning a lot, but I offer either 4% commission to other agents for their buyer, or maybe $1,000 bonus. I just sold a home by offering a new wide screen TV with the purchase. These little things are attention grabbers. It doesn’t matter if you’re grabbing the attention of a Realtor or a buyer.
One othe thing that I do, is offer to pay 3% of the buyer’s closing costs. Yes, some of these things get expensive, but so does holding a property. So far, out of 8 homes, I’ve never held one more than 3 months working this way.
I hope this helps, but remember, this is only my opinion. Others may work differently and have success doing it their way.
No matter what you do, come back to a site like this often. As I stated when I started, I’ve been an agent since 1986 and I’m still learning, especially here.
Good Luck,
Ken Tate (a.k.a. Mr. Real Estate)
There is a lot of misconception about this “dream team” stuff that gets spewed everywhere in real estate.
Dream teams are things you build over the years, not something you go out and put together when you are starting out.
When you are starting out, focus 100% of your time finding deals. Nothing matters until you find deals.
Hey Ken Tate
How can you be in the business for 22 years and be such a humble kind of guy on the forums???
Every single agent I’ve met in real life so far with 20 odd years in real estate are all know it alls.
It’s rare to find one in the business for so long and still open to learning new things.
I hope I can have such a mindset when I’m 20+ years into the business :biggrin
Tien,
We ll re driven by something. Last year my wife and I decided to get into inesting. After all, we’ve heard that is where the money is. We did 8 deals with 6 haing closed. Bt we’re still learning…
Earlier this year, my wife was diagnosed with MS. We don’t have insurance, so this is going to be costly…My wife is a true research specalists. She has access to the MLS and is constanly finding deals, but few with enough spread to make it worth our time and trouble.
Anyway, I’m much older than her (15 years). I am sure that I will die long before her and I need to leave her smething that she can do to make money.
I thought the best way would be to trade some information here and maybe I could learn something in the meantime…
Thanks for asking…and by the way, those that live in the Dallas area are going to have a treat in a couple of weeks from me for FREE. Sorry I can’t do it for everyone…
Good Luck to all,
Ken Tate (a.k.a. Mr. Real Estate)
Sorry for the typing errors. My keyboard is not happy right now…
Ken,
EXCELLENT advice. I agree with you on ALL your points. Even the commission. I have paid MORE than 6% in the past as an incentive to move a property. The reason I use 2 1/2% lately directly ties into your first point. 80% of the realtors who call on my homes are just going through the motions. They’re HAPPY with 2 1/2% IF you have a house that SELLS. You are right, the really good realtors may not bother with a low commission. But…I have to tell you, in my depressed market, even 2 1/2% on a home that is a super easy show, and is in perfect condition will get ANY realtor to show that home. NO ONE is walking away in this market for a 1/2% commission. 2 1/2% on a $200,000 home THAT IS ATTRACTIVE TO BUYERS, is better than a 3% commission on a DUMP they can’t sell.
What is important is the finished product. My homes get all new flooring, new/rehabbed kitchens, new hardwood floors, paint and some extra’s like built in bookshelves/entertainment centers. I have a set interior color I paint EVERY house. It’s a color TOLL BROS. probably spent ton’s of money on having a “designer” choose. I use Bright white trim, new light fixtures, in other words a complete package.
Good luck with your investing. I like reading your comments. If I can offer you any advice, at any time, don’t hesitate to ask. I have NOTHING to sell, no programs, no seminars, no boot camps.
fdjake,
We are all in this for the same reason…Our favorite color is green. You have good points as well. As I said before, there’s no right or wrong way, it’s a matter of preference…Your way will work well.
I do agree with how you rehab. Carpet and paint are usually needed, but then it’s the small touches like lighting, maybe an extra long faucet in the kitchen sink…Small touches makes it easy to sell.
Also, 2.5 isn’t bad…Most foreclosures have gone t somewhere between 1.9 and 3% commission. Stats show which homes sell quicker…The ones with the higher commission. Just one of the lucky things about being a realtor. I can get those numbers…And a quick sale…well, less holding time…One might get a home sold for 2.5, but if it takes just one month to do that, well, one probably broke even, longer and one probably lost money.
Still, this business is a bit of a gamble and it still a matter of preference for the investor…
Your posts and replies are greatly appreciated…
Good Luck,
Ken Tate (a.k.a. Mr. Real Estate)
I was reading your posst thinking "What the hey…most of his “a’s” are missing…that explains it. Was coffee somehow involved in this incident?
Keith
kdhastedt,
You may find this hard to believe, but I have not had a cup of coffee since sometime in 1992. Quit drinking, smoking and coffee, all at the same time…
I just put in a new keyboard…that didn’t help either…put in a new KVM switch…that didn’t help…
Thinking about a match and some gasoline…Hey, it’s wrth (see, it missed the o) a try…
Sorry for any bad typing until I can get this fixed…
Good Luck,
Ken Tate (a.k.a. Mr. Real Estate)
thank you everyone for your advice and input. i do realize that the “dream team” will not happen over night. i know that i will have to shfit and sort through everyone to see who’s availbe and great at what they do. thankx once again
Jarci
I agree with this. Too many new people try to build a team when you don’t even know which niche or direction you’re going in. I just did a pre-interview with new investors yesterday and am deciding to not accept ANY. I think new investors have too much to learn and it wastes my time a bit to teach them. Someone mentioned earlier that real estate agents have a high turnover rate. Well, so does new investors.
Out of the new investors I meet, less than 10% will really make the job full-time and be a good addition. My job is to network, bring them deals, evaluate deals, and make everyone money. If a new investor thinks I’m “working for them”, they’re wrong. I run my own business and we’re all a part of a team that will grow together.
Newbies or even experienced investors who don’t value a good investor agent is a waste of time for those of us who are serious.
Newbies or even experienced investors who don’t value a good investor agent is a waste of time for those of us who are serious.
Dee, I believe that you’ve just hit the nail on the head. Most investors, new and experienced alike, don’t understand WHAT the function of the agent is supposed to be in their team or how to effectively use them to full advantage. Hence, the “worthless” comments above as well as the “I need one NOW” comments from newbies.
Of course, your type of investing will determine their benefits, as well as your knowledge and experience, but used properly, an agent is an invaluable addition to your team.
As to finding an experienced agent, UNLESS you are experienced AND can buy at least 5-10 properties a year, I’d say that it’s bad advice. Better to find a new, but driven, agent and train them yourself. Again, not going to work for a complete newbie, but someone that has prepared themselves for this career (as an investor) should still be able to train an agent to do what they need.
Raj
Ask them how long have they been in the business, do they sell REO properties, how many properties did they sell last year, see if they will take 2% or 2.5 precent commission, and most important of all make sure on the listing agreement that you have the right to fire them at anytime for any reason. If it is not on there the make them sign an addendum or draft up your own listing agreement that superceeds theirs. If they realtor is not working for you then fire them ASAP
I work in an IT Department and most issues like this involve a liquid, most usually, coffee!
Keith
Okay, so what color are you using for the interior? 
Non-descript off-white or beige. People want to be able to visualize their belongings in space. Light colors make the room look bigger and go with 'most everything.
Keith