Alex Pardo emphasizes how adding value for others can greatly improve your relationships with some of the top agents who work with REO. Letting them know what you can do for them and listening to their story can be a powerful tool.
Access MLS to find out who the top agents are who work with cash buyers in your area and don’t be afraid to meet with them and build a relationship with them.
Mike: Welcome back to the FlipNerd.com REI Classroom where experts from across the real estate investment industry teach quick lessons to take your business to the next level. And now, let’s meet today’s expert host.
Alex: Hey, guys, this Alex Pardo. I’m your host of the REI Classroom. Hopefully, you caught my lesson last month. I’m really excited to bring today’s information because this is an area that, over the course of the last four, five years, I’ve really built a strong business just based on this one topic. Specifically, we’re going to be talking about REOs and how to connect with the right agents in no matter what kind of market you are in.
Mike: This REI Classroom real estate lesson is sponsored by VirtualStaffNow.com.
Alex: There are a couple of things that you need to keep in mind when it comes to REOs and connecting with the right agents. If you caught my last lesson, part of what I talked about was this was a relationship business. You need to be focused on building relationships with the key players in your market or whatever market you are operating in. The truth to the matter is that when you go to build a relationship, it’s all about how can you add value to the person that you are working with?
One of the mistakes I see investors make often is that if you don’t have a relationship with someone, they’ll always approach with what’s in it for them. They always kind of have their hand up asking, “Hey can you do this for me? Can you do that”? What they don’t realize is that that person doesn’t know you and you haven’t taken the time to build the relationship. Before I specifically get into REOs and how to connect with the right agents, just know that whenever you reach out to people, whether it be an agent or cash fire or another wholesaler, make sure you always ask them, “How can I add value to your business?”
Find out more about them and what they are looking to accomplish and I guarantee you . . . I think Zig Ziegler had that famous quote that basically says, “If you help people get what they want, whatever you want is going to come”. Something along those lines. I don’t think I got the right quote, but I think you get the idea. Make sure when you are building your relationships, always approach the situation with, “How can I add value to you and to your business?”
When it comes to REOs, the one thing you need to understand is that you need to connect with the right agents. In 2012 and 2013, we probably wholesaled close to 100 REOs between those two years. Most of those deals came from about seven or eight agents that constantly fed us deals. Not only deals but pocket listings. And a pocket listing is nothing more than a property that hasn’t yet hit the open market. The agent has not listed the property on the Multiple Listing Service and they’re basically giving you a heads up first.
So what you want to do is, if you have access to the MLS, pull the criteria and find out who are the top selling agents that have sold properties to cash buyers or what were the cash sales in the last six months to 12 months. Look at who those agents are, export them on an Excel spreadsheet. And if you’re using a CRM like Podio, you can easily import that into Podio. But, if not, on a simple Excel spreadsheet, you’ll have the selling agent’s name, phone number and email.
Pick up the phone, start calling these people. I would even challenge you to go and meet them in person. And again, going back to adding value, build a relationship with those people. Find out how you can help them. Let them know that you are a cash buyer and you’re looking to buy REO properties. Let them know specifically what you’re looking for. I think the greatest thing is to make sure you train them. If you don’t train them in terms of what you think is a good deal, they are just going to send you retail leads.
The last thing I want you doing is spinning your wheels, analyzing a bunch of retail leads. Obviously, we’re looking to buy properties at a discount. That’s how you’re going to make money by flipping and wholesaling these REOs. So let them know exactly what you are looking for, what your criteria is. I think the biggest thing is that, ultimately, when you get a shot to do a deal, you have to perform. The last thing you want to do develop a reputation for someone that’s going to lock up a property, get it under contract and then not be able to close.
If you decide to move forward on a property, make sure that you have an end buyer in place or make sure you at least have a network of wholesalers and investors in your area that can wholesale the deal and market the property on your behalf if you’re just getting started and you haven’t had a chance to build up a cash buyers list.
Again, the takeaways are, if you have access to the MLS, find out who the top selling agents are. By the way, if you don’t have access to the MLS, seek and ye shall find is kind of the approach, I would say. There are enough starving realtors in your market where if you figure out a way to add value to them, whether it be paying their MLS fees for the year, offering to cut them in on the deal . . . get creative. But I’m sure that if you ask enough people, you will be able to get access to the MLS.
The worst-case scenario, you can always connect to an agent and have them pull a list of the top-selling agents within the last . . . I would suggest six months to a year. Then start picking up the phone, calling those agents, meeting with them, building a relationship. Just know that this is something that might take a couple of months, but if you’re aggressive and you approach a situation adding value to them, you will be surprised how quickly you can build these relationships with agents.
When they send you deals, make sure you get back to them and let them know why something works or doesn’t work for you. Those are just some of the ways I would suggest approaching REO niche and how you could connect the top agents in your market.
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