So, you are thinking of hiring an agent to assist you with your investments. In theory it’s a good idea – unless you choose a bad real estate agent. Ideally, working with an agent should be an efficient way to find deals and get them under contract quickly. When things run smoothly, you can focus more of your time and energy on other aspects of your business.
The trouble is, not all real estate agents will help you with your business. Some may even hurt it – and because some agents know how to work with investors, you are not their traditional client.
Looking for a Real Estate Agent? check out BigPockets Agent Match,
All traditional home buyers and sellers need a quality agent. However, if you want an agent to help you with an acquisition, you need more than that. You need an “investor-focused” real estate agent, which some very good homeowner-focused agents simply aren’t a good fit for. It’s a “round peg, square hole” deal. You should be extra alert for red flags, as choosing the wrong agent is a waste of time and money. (It’s also super frustrating.)
Luckily, bad agent red flags are easy to spot. Look for these seven characteristics of a bad agent and save yourself some pain.
While a real estate license is not required by all investors, some consider it an essential part of their investment strategy. But getting your license can be a lengthy process, involving coursework, exams and background checks — and of course, you’ll need to find a broker. Learn more about what separates the average agent from the great one and get all the details on how to get your license with our in-depth guide: How to Become a Real Estate Agent – An Investor’s Guide.
Signs of a Bad Real Estate Agent
Protect yourself, your time and your money. Don’t work with a bad real estate agent! Beware of these seven red flags. They will help you quickly identify agents to avoid.
1. Doesn’t ask about your goals or plans
Anyone can file paperwork and collect signatures. A good agent makes sure they are a good fit for the potential buyer’s investment strategies and knows how to help you meet your goals. It’s not about bad communication – bad agents are just looking for someone’s pulse.
If your agent isn’t asking questions about what you want to accomplish, don’t worry about taking a deeper look.
2. Not concerned with lifelong relationship
A great real estate agent knows that businesses are built on lifetime referrals. Acting as a buyer’s agent entails acting as a seller’s agent – this goes double if you’re an investor. If the agent you’re talking to isn’t interested in forming any kind of lasting alliance, they’re probably looking at you for nothing more than a potential paycheck.
Your agent shouldn’t make a marriage proposal, but if they aren’t trying to get a feel for your personality and character, don’t spend any more time.
3. Doesn’t do much business
Yes, it matters. The best agents get the most referrals and business.
Don’t feel sorry for the agent who isn’t producing and give them your business. It doesn’t help. It’s just stupid. To be honest, several Licensed agents shouldn’t be working—especially not with investors. Giving business to someone out of kindness keeps them from ultimately realizing they are in the wrong industry. Don’t let pity make your decision.
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4. Doesn’t speak the language of real estate
If your agent doesn’t understand how loans, escrow or offers work, they clearly don’t care much about their profession. Even the stupidest person can make a deal. Trust Me. but can they close a deal and make sure it’s Best deal? Not so much. If your agent isn’t learning along the way, it means he or she is disinterested. Avoid them.
Connected: 5 Simple Questions Every Realtor Should Be Able To Answer
5. Offers the cheapest commission
Sorry guys: It’s sad but true. If your agent’s biggest value is their cheap commission, then that’s a problem.
Choosing a buyer’s agent because they make back their commission is akin to intentionally shopping at a flea market to save money. It’s okay to do—but know what you’re agreeing to. The items you purchased may not work properly. And with an agent, you probably aren’t getting the best deal.
This also goes for agents who want to sell your property. If an agent can’t negotiate their own commission, why on earth would you trust them to negotiate your money – which they care even less about?
6. Asks what you’d like to do – but never makes suggestions
You hire your agent because they are more experienced than you. If your agent is constantly asking you for advice, it’s not a good sign. It’s fine to ask for your feedback for confirmation, but if your agent is letting you make all the decisions, that’s a red flag.
Beyond that, you want an agent who does more than just walk you through the motions. You want an agent who hustles. Do they hire a professional photographer, or shoot the listing themselves? Do they have relationships with staggers?
If they have a listing and it’s not selling, you should be hearing more than “we should lower the price”. What Kinds of Niche Marketing Ideas Can You Employ? What minor upgrades can you make to make the property more marketable? Do you need to hold another open house?
No suggestions? Run away—because they don’t know what they’re doing.
7. Other agents with a bad mouth
Pay attention to this blazing red flag. If the only thing of value your agent provides is gossip or negative information about their competition, it shows that they are insecure and not likely to be very good. If the agent says a lot of negative things about other agents, avoid them.
8. Lies… or manipulates the truth
This may go without saying, but you absolutely do not want to deal with an unethical or unscrupulous real estate agent. If you catch them lying, walk away before they sign the listing. (Or if you already have them, get out, if possible—or never use them again.)
If the agent lies about the disclosures you recommend, advertises false claims, or exhibits any other type of dishonest or unethical behavior, this is not someone you want to do business with. .
9. Acts Unprofessional
An unprofessional agent may cost you the deal—or simply cost you time and energy—by turning off potential sellers. Unprofessional behavior can include rude email, vulgar jokes or profanity, or showing up late.
Professional agents always respond promptly to any email, text or call. If they don’t get back to you quickly and don’t do what needs to be done, there’s no reason to work with them.
10. Will not cooperate
It’s important to take your agent’s advice – but you’re also a real estate professional. If an agent is stubborn or thinks he knows best about everything, there’s no reason to be upset. You’ll be banging heads constantly, and the hassle will be more than worth it.
11. Can’t figure out what your property is worth
Determining property value is one of the most important pieces of the real estate puzzle. Wrong The real estate agent simply draws a two-mile radius around the subject property and charges an average dollar per square foot. This is a poor way to run comps and set a price – it could potentially undervalue the home, leave money on the table, or overvalue it, leading to longer days on the market.
A good agent should run a proper comparable market analysis, assessing which homes best mimic the property you’re buying and selling. Only then can you get a fair list price.
Should Your Agent Be Investor-Friendly?
Investors are not looking for the same things that first time homebuyers might be. Generally, you will want to look for agents that are “investor-friendly”. how can you tell? First: does he have any investment deals? Do your investor friends and acquaintances recommend them?
Here are three signs that an agent is not investor friendly.
1. Lack of investor mindset
A Good Investor Agent Thinks What A Homeowner Wants To Understand What An Investor Is Requirements, For example, a skylight can make a good selling point for a homeowner. But they are notorious for leaking. Many buy-and-hold investors avoid these all together. Swimming pools are also often great for homeowners, but they are far more trouble than they are worth for investors.
Some homeowner-focused agents struggle to imagine what a terrible-size home might become after a rehab. But as an investor, you need an agent who knows what the end user—whether it’s a future tenant or a home buyer—wants to flip. They must also understand what is cost-effective for rehab and maintenance, as well as what is most beneficial to the bottom line.
In short, you need an agent who thinks in terms of cost/benefit and profit/loss.
2. Doesn’t understand construction
It is not necessary for an agent to have an in-depth understanding of construction costs, which is a huge advantage. An agent should, at the very least, have a good understanding of what is needed to rehab a property. Real estate investors typically deal with properties that need work. Homeowner-focused agents focus primarily on turnkey or modest fixer-upper properties.
For fixies and flippers, it’s a huge advantage to have someone on your side who knows what they’re talking about. Agents unfamiliar with rehab may feel overwhelmed, or even try to talk to you regardless of the numbers.
Connected: How to Find an Investor-Friendly Real Estate Agent
3. talks you into deals
This is an important red flag for all real estate agents, but investors should pay special attention. Typical home buyers may not know a good deal when they see one, so there are times when an agent should try to persuade them to at least strongly consider a property.
Investors want an agent who understands that no deal can make or break their bank account. They only give advice without trying to explain. Preferably, you also want an agent willing to actively talk you out of a deal if they don’t believe it makes sense. This indicates that an agent is both a quality agent and a quality investor-minded agent.
It is in your best interest to have a good real estate agent on your investment team. Don’t write to all agents just because it’s “trendy”.
That being said, if you do decide to go the agent route, make sure you look for a quality agent with an investor-minded focus.
Have you had a bad experience working with a real estate agent? Were there warning signs?
Share your thoughts in the comments below.
Note by BiggerPockets: These are the views expressed by the author and do not necessarily represent the views of BigPockets.
