2 Different Types of Real Estate Agents: Cash Buyers Should Choose the Right One

2 Different Types of Real Estate Agents: Cash Buyers Should Choose the Right One

Over the last 13 years, I have found that a lot of real estate investors settle for a Real Estate Agent that is okay.  Many of these real estate investors do not understand the different types of Real Estate Agents available in residential real estate.  Here are a few categories of real estate agent that you will find in any residential real estate market:

  1. Retail –  The majority of the real estate agents in any real estate market are these.  They focus on helping owner occupants find homes that meet their needs as consumers and they plan on living in for a few years.  They will usually work with people who are buying based on emotion.  Consumers will pay retail or market value for a move in ready home.  Real estate agents who work with these clients are use to making full price offers on properties with little to no repairs needed and qualify for traditional financing.
  2. Investor – The smallest group of real estate agents are investor friendly real estate agents.  They focus on working with a select few real estate investors, who are buying properties on a regular basis with them.  They like the steady income and the consistency of having a few select investors that have the same investment criteria month after month.  They appreciate that their cash buyers are paying cash and can close quickly on each property.  In cases where they are working with Rehabbers, they are re selling the same house just rehabbed to retail buyers.  So they are essentially making two commissions within a very short period of time on the same property.  If they are working with Landlords, they are helping them buy a property and then they might help them manage the property for many years after the purchase and then help them resell the same rental property.  As you can see, it is a good way for these agents to have a more consistent income.

You need to ask any real estate agent you are considering working with if they work with real estate investors.  If they state they do, you will want to follow that up with whether they work with Rehabbers or Landlords.  Why is this a necessary question to ask?  Well, it is crucial to make sure that your investment approach and criteria is matched with the right real estate agent.

If they work with Rehabbers, they are use to making aggressive offers considerably below the current market value.  Additionally, they are use to going after properties that need considerable amounts of repairs and have definite condition issues.  Also, they are use to making many offers at a time to get one accepted.  They will know the fast moving areas and the areas where the best profit spreads are and where retail buyers are looking to live.

If they work with Landlords, they are use to making offers closer to market value and they are use to minimal repairs needed on these properties.  They know where the best rents are and the expenses associated with holding onto a property.  They can answer questions about Section 8 and other questions associated with holding onto a property for a few years.  They usually do property management themselves or they have a business associate who is offering that service.

As you can see, if you are looking for properties to flip, you need a real estate agent who works with Rehabbers, so you have someone who is on board with your approach to business and making offers.  Likewise, if you are buying and holding properties, you will need a real estate agent who specialize in rental properties.  They will be willing to make the offers that meet your criteria and who can provide the information you need to make effective offers on future rental properties to add to your portfolio.  You do not want a bunch of resistance to your investment approach, thus you need to match your approach up with the best investor friendly real estate agent.

January 20, 2015 / by / in , , ,

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