The $1000 Solution – Working with Realtors
The following is an excerpt from our latest E-Book; The Help-U-Buy Way.
Even if we were not Realtors, we would work with Realtors to sell our homes as opposed to taking the “for sale by owner” route. Some investors believe that having a Realtor involved in a transaction will scare clients away because they want to avoid a hard sell. Other investors cannot abide the fact that real estate firms sometimes make more money than they do on a given sale. More often than not, we think the reason some investors are averse to working with Realtors is that they have never worked with
a really good one.
Realtors are not miracle workers. They cannot sell a house for more than the market will bear. They cannot make buyers buy something they don’t want to buy. They can, however, provide you with detailed information about the market you cannot easily obtain anywhere else. They have the network, the connections, and the technology to effectively price and sell real estate. In today’s market, there is no substitute for the marketing exposure and professional advice that only a good Realtor can provide.
Realtor Economics
We choose to offer a 3.5% cooperating commission to buyer agents to set ourselves apart from the competition who generally offer 3% or less. This combined with our Help-U-Buy™ brand has caused agents to look to us when they have clients who cannot obtain traditional financing.
The $1,000 Solution
We want to motivate agents to find us land contract buyers. Many times these days, there is not enough down payment at closing to cover an agent’s commission and other seller
expenses such as deed preparation, property tax credits or conveyance fees, the agent has to wait until the client obtains permanent financing to get paid. We make it clear in the MLS and in marketing e-mails to the agent community that they can count on a minimum of $1,000 at a land contract or lease option closing, regardless of the amount of down payment we receive. The agent collects the rest of his or her commission when the buyer obtains permanent bank financing at the end of the option or land contract term.
Is $1,000 a lot of money? Yes, but if it gets a tenant / buyer into the house 30 to 60 days faster than not, it is worth every penny. Secondly, mass mailings and private marketing is also expensive and hit or miss at best given the glut of inventory on the market.
Remember, $1,000 employs every agent in your market area, not just your listing agent. An MLS listing also gets your house on every real estate related web site that matters. In addition, the selling agent wants the rest of their commission. They along with you, your listing agent, your lending partner, have a vested interest in seeing that their client cashes you out. We have also found that buyers that come to us through this method are more likely to understand their commitment, work on their credit, and pay on time.
Can you do it without a Realtor?
Is it possible to do this effectively without a Realtor involved? For some it is. We are confident, however, that correctly deploying a Realtor and their services as a key member of the team will result in greater success.
Simply turning over a listing to a Realtor to “do their thing” will probably result in disappointment. On the other hand, choosing a Realtor as a strategic partner and merging what they bring to the table with what you have learned in this chapter will bring superior results.
