The first rule in a real estate brokerage business is to GET LISTINGS! As many other speakers before me have said, “List to last!” However you remember job one, it is important to understand that you can control more listing sides than you can control buyer sides. It is faster and less expensive to obtain a commission from a listing than it is from a buyer. This comes from the fact that buyers just take more personal hand holding than listings do. Obtaining a listing is the least expensive and most effective way to find a buyer. Listings promoted geographically by signs, word of mouth, and worldwide through the internet put you in front of more buyers.
When I take on a new real estate agent coaching client, I immediately build his or her brokerage business cash flow by implementing new seller lead generation systems. The majority of the world’s top agents spend a majority of their time planning, implementing, and monitoring their seller lead generation programs. The most successful real estate agents in the country time-block their schedules to make certain that nothing interferes with their seller lead generation systems. It is simple – the top agents list and make a lot of money doing it.
Since it is clear that you will be paid to list, you have now discovered how wonderful it is to be a real estate agent and real estate investor at the same time. You get paid to prospect for investment inventory. As you are generating leads to find sellers, you are also viewing those pieces of inventory. As you meet those sellers, you can evaluate whether or not these properties fit your investment profile as it is designed by this system. If they do not fit (which they usually do not), you obviously get paid to successfully list and sell the property. On the off chance that the property does meet your parameters, it gives you the opportunity to develop a win/win situation. Many times win/win situations gave me my most satisfying real estate experiences.
As I generated leads from hot seller demographics, such as expireds, FSBOs, long-time owners, absentee owners, multiple property owners, mature owners in larger properties, and other demographics — I found many people who needed to “act now.” Real estate is a fairly non-liquid investment. It requires an evaluation of the property, marketing program, and a sales period in which to become liquid. Since you, as a real estate agent, could be the buyer, the marketing period would be eliminated. The sales period would be accelerated because of the connections you have with your team members, such as escrow, title, and mortgage companies. You can close this property faster and more effectively than an outside buyer; you have already evaluated it as you prepared the listing presentation! This sometimes is a real asset to a seller. Someone who has a very compelling reason to immediately become liquid might be a good prospect, if the property met your investment criteria. There are many instances in which people need to sell quickly. The following are some with which I have had personal experiences:
- A Life-Changing Event – I have had sellers who needed to relocate immediately — usually because one of the “D” words. It has been mused that the “D” words have been a staple for higher real estate agent incomes for many years. These “D” words include death, divorce, disillusion, and debt. There are many things that can happen in one’s life to necessitate a quick sale. A real estate agent who is equipped as a real estate investor can sometimes be the fastest to the closing table. If the real estate agent fully discloses the value of the property and provides a win/win situation for all parties involved, it is one of the advantages of selling real estate and being an investor at the same time.
- Burn Out – Many times, the seller is absolutely nauseated from dealing with the tenants or management companies. I have seen sellers who have been driven to bankruptcy by really bad tenants! Sometimes there is an end to the amount of abuse that a seller can receive from a tenant or a management company; however, the proper management of real estate is a systemized process. When something does not work correctly, it is usually the fault of the owner not knowing the golden rules of management. This book will go a long way in showing you how you will be able to manage your own investments while still selling and becoming profitable in real estate brokerage. People who are burnt out in real estate investments have created a large part of my seller inventory. Many of these sellers were willing to negotiate with me for the purchase of their property rather than spending one more moment trying to collect rents.
- Another Deal – This is an outstanding method of not only helping the seller but also increasing your investment inventory. I have met many sellers who need the proceeds to purchase another property. Sometimes they have found a better deal. Sometimes they are involved in an exchange, and this transaction falls through. Sometimes they want to increase their depreciation write off or cash flow. Whatever the reason – the new transaction will not wait, and they must become liquid on their current ownership. Once again, being an “inside” agent with the know-how to be an investor offers advantages to both parties.
- I.R.C. Tax-deferred Exchange – There are times when you might be dealing with an investor who is in the middle of a 1031 tax-deferred exchange and must adhere to strict time considerations. This happens when the investor is selling multiple properties and trying to obtain a new one. Since the current laws in tax-deferred exchanges say that you must identify the new property within 45 days of the sale of the old property and close within six months of the sale of the old property, strict time considerations require that the down-leg properties be sold. If I have sold some of the down leg properties for the person involved with the exchange and other properties still remain to be sold to complete the exchange, the investor can see the wisdom in selling one of unsold properties to me to complete the exchange.
- The Informal Domino Theory – This situation, as stated before, starts with a house being sold subject to another house being sold. If that property is then sold subject to another property being sold and on down the line, it soon becomes necessary for the first property to be sold before all the other “Dominos” to fall. If there is no buyer for the first property, sometimes between commissions and motivated clients, you can receive numerous stipends to motivate yourself to buy the first “Domino,” if it meets our investment parameters.
- Financial Conditions – Many times, a seller may have to raise a lot of cash for personal reasons, and the quicker, the better. Once again, the real estate agent with the ability to be an investor is in the right place at the right time, therefore helping the seller receive what they need. I have even helped “innocent until proven guilty” clients who needed to have their property sold to obtain funds for their legal defense!
- Retirement – Many times the seller takes this time to sell his properties and ride off into the sunset. If he is willing to take a tax hit of a sale without an exchange, sometimes the lure of marlin fishing off of Cabo calls for a fast and efficient sale that I can certainly offer.
These situations and more appear as you work day in and day out obtaining listing leads. It is one of the perks of being an “insider” investor. You will find that being in this business introduces you to potential sellers that you never would have met otherwise. Talking with people at open houses and going on a listing presentation to find out that other property is owned are potential sources of investment property for you. It is important that you always stay alert to opportunities where you can find a property that meets your investment needs and solve your “do not wanters” situation. Every property you encounter in the course of your real estate brokerage business could be your next investment. Buyers are great “ins” also.
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