As a real estate agent, you’re probably very familiar with the standard homebuyer. You know what they’re looking for, how to interact with them, and how to market to them. However, once you start working with residential real estate investors, you’ll realize that they’re entirely different which might make it a bit challenging.
Nonetheless, this doesn’t mean real estate agents should completely refrain from working with investors. As a matter of fact, investors are very valuable clients and if agents remain open-minded about working with them, they can capitalize on their long-term worth! Here are the main reasons why you too should work with real estate investors.
#1 Repeat Business
The National Association of Realtors® put out its Home Buyer and Seller Generational Trends Report 2018 that showed homeowners expect to live in their homes for a median of 15 years. According to the same report, 18% of homeowners say that they are never moving.
Now, real estate agents look to build relationships with clients to encourage repeat business. If a typical homebuyer only buys every 15 years, a real estate agent hoping for repeat business needs to have a huge network of clients and prospects. In addition, agents will need to invest a significant amount of time and money to maintain this network and stay on top of their previous clients’ minds to achieve repeat business. We can only imagine how challenging this can be, especially in times of uncertainty.
On the other hand, investors buy a lot of properties. While a new real estate investor might start out with one or two properties per year, experienced investors buy dozens! They depend on a steady flow of deals and need the help of an agent more often than standard homebuyers. Rather than working with a large number of clients who don’t buy frequently, building relationships with a handful of investors can quickly earn you consistent business and a steady stream of income to boost your career. As a result, real estate agents seeking repeat business from the same client should work with investors.
#2 Fast Deals
For most homebuyers, a home is an emotional attachment. It is where they’ll live and raise their family for years. For this reason, traditional homebuyers take a long time to shop around until they find the perfect home – unless there’s a motivating factor like a sudden move or personal urgency. As most real estate agents know, it requires time, money, and energy for marketing and showing them various potential properties.
Unlike the standard homebuyer, real estate investors don’t have time on their side. That’s because the success of a real estate business depends on speed – especially flippers. They know what they want, they move quickly to beat out competitors and sell quickly to minimize holding costs. The faster the better. Instead of taking the time to casually shop around in the housing market like many homeowners, they are ready to buy. Thus, real estate agents working with investor clients have a better return on their time and money. They can expect 5-6 deals per month, reap the benefits of fast deals and earn quick commissions on each one!
To increase your visibility to real estate investors (and homebuyers), claim your free agent profile at Mashvisor.
#3 Double Commissions
Some argue that it’s best for real estate agents to work with homebuyers because traditional home sales generate larger commissions than an investment property sale. This is a valid argument seeing that real estate investors usually buy homes at lower price points. However, the cycle between buying and selling can take years for a typical homebuyer, meaning commissions are earned less frequently. In addition, a homeowner is typically looking to either buy or sell – but not both at the same time.
Real estate investors, on the other hand, typically perform both roles with an investment. As a real estate investment agent, you can first work with an investor in the market searching for properties to buy. If you provide great services to the investor on the buying end, he/she will trust you to handle the sales as well! In this case, you are entitled to two separate commissions – a buyer’s agent commission and a seller’s agent commission. As a result, real estate agents have the ability to make more money when working with investors.
Investing in real estate is a people business. As a result, you can expect investors to be heavily involved in the local real estate market and, thus, have a network of other people who may also be looking for an investment agent. This makes them a great source of referrals! Real estate agents receive referrals from investor clients who have recommended them or bragged about them and their services. Yet another benefit of working with investors.
Furthermore, if you suggest an investment property and it doesn’t meet your client’s need, it could still work for another investor. Real estate investors know this and will often recommend properties that they can’t buy to others in hopes that they’ll return the favor in the future. Consequently, as an investor passes on a property to someone else, the investment agent in charge of the property will earn a new client in the process!
#5 Smoother Transactions
According to NAR’s Home Buyer and Seller Generational Trends Report 2018, 75% of homebuyers at the age of 37 and younger need real estate agents to help them understand the purchase process. In addition, typical homebuyers make their purchasing decisions based on emotions and what feels right, making it difficult for an agent to suggest the right properties.
In contrast, experienced real estate investors understand the game and make their decisions based on numbers. Their criteria is specific and if they don’t find what they’re looking for, they’re quick to move on. As you can imagine, working with clients who know what they want makes it much easier for real estate agents to do their job. If you understand the investor’s target numbers, you can suggest properties more efficiently. There is less back and forth passing on properties as both of you are on the same page.
Moreover, they understand how transactions work, different market trends, zoning laws, etc. Thus, real estate investors don’t need much help throughout the process. Therefore, real estate agents will spend less time explaining paperwork and showing the wrong properties and spend more time productively building their business.
You can make the transactions even smoother for your investor clients with Mashvisor. We help agents find the best properties for investors. With our tools, you can find a property and its expected returns if an investor were to rent it out (traditionally or on Airbnb). By showing properties alongside this data, investment agents can offer their clients something extra and help them make the best decisions! To learn more about our product, click here.
#6 Free Investing Advice
Maybe you’re thinking of making a transition from a real estate agent to a real estate investor and building your own portfolio of investment properties in the future. In order to do so, you first need to have sufficient knowledge about real estate investing, and who’s better to teach you than a real-life investor! Learning from investors saves real estate agents thousands of dollars on programs and courses and gives them an inside look at the housing market every day.
Thus, by working with investors, an agent has the ability to learn and get paid to do so. You’ll understand how they think, what numbers they’re looking at when making decisions, how they analyze investment properties, how they identify the best places to invest in, and more. Plus, having this knowledge is one characteristic that attracts even more investor clients and makes deals go more smoothly.
The Bottom Line
Often times, real estate agents and investors are led to believe they are competitors. Thus, they fail to recognize the benefits of working with one another. However, savvy players on both sides who work together find mutual benefits and long-term financial rewards. Simply understand what investors are looking for and you can turn them into the best clients and source of referrals.
Wondering how you can start generating real estate leads who are investors? We’ve got you covered! Mashvisor’s lead generation program finds investors that are actively looking for agents, qualifies the leads, and passes their information onto you! Book a demo to learn more about our program.