Some benefits of working with real estate investors as a real estate agent include not having to deal with emotional client outbursts and being able to make multiple sales to the same clients annually. Also, market dips are not as big of a concern because investors often increase spending when the market is down.
This sounds like it would be a real estate agent’s dream, but is anything ever that easy?
It can be difficult to reach investors and build a strong client base. In addition, real estate agents need a high level of education to be successful.
If you’re interested in being known as an agent who focuses on investors and making your real estate business more available to this group, there are some things you should keep in mind. Here’s how you can become an investor-friendly real estate agent.
Why Work With Real Estate Investors?
When you are considering committing to a real estate niche, the first step is to understand why you want to do this. Keep in mind why the unique challenges along the way are worth it, especially during tough times.
Deals Close Fast
With investment properties, deals are typically made quickly and sometimes without even meeting with your client. This is because investors often have access to financing options that most home buyers or sellers don’t have access to. For example, options such as partnerships, crowdfunding, and private money lenders are typically only available to investors and not to the average home buyer or seller.
Investors are Not Emotionally Attached
Real estate investors are looking for properties that will give them a high return on their investment. They are not concerned with properties that feel “homey” or have perfect neighbors. Their goal is to find a property that is below their budget and will give them their expected return.
Investors Buy Multiple Properties
The average homeowner only purchases a new property every 15 years, while most successful real estate investors purchase a new investment property every 2-3 years. This is because investors are always on the lookout for new opportunities, and are therefore more likely to close deals when they arise. However, it’s important to note that these investment properties, while still significant, are not likely to be where your clients will raise their kids or have their most significant memories.
Market Drops Positively Affect Investors
The text discusses how real estate agents that have connections with investors are able to get deals signed during a market decline, which can help save their business from a financial decline.
What are Real Estate Investors Looking for in an Agent?
If you want to be a good real estate agent for investors, you need to know what they are looking for. With this knowledge, you can then create marketing strategies that will give your clients what they need and attract potential buyers who are ready to purchase.
Know Your Hyperlocal Market
An agent with hyperlocal knowledge can be incredibly valuable to investors looking to get the most out of their property purchase. They can help advise on things like which renovations will add the most value in that specific location, based on their intimate knowledge of the area including building and zoning regulations, commuter trends, and any upcoming construction projects.
Don’t be Afraid to Lowball
As an agent representing a client who is mainly focused on ROI, you need to get comfortable with submitting offers that are notably low. Every investor follows an investment strategy and you should see yourself as a tool in the process of executing that strategy.
Get an Education
Real estate investors’ needs are different from the average home-buying client. They need to think about renovation costs, taxes, rental income, capital expenditure, and so on. Do you feel confident that you understand these ideas?
You should also be aware of the four methods of real estate ownership: fee simple, leasehold, lease option, and lease purchase. You should get a formal certification before investing in real estate so that you understand how it works. It is not necessary for investors to spend their time explaining terms like “cap rate” or “ARV” to their own agent. There are three types of real estate investing: buy and hold, fix and flip, and speculation. There are also four methods of real estate ownership: fee simple, leasehold, lease option, and lease purchase.
The Certified Investor Agent Specialist (CIAS) Designation is a certification available to North American real estate agents. CIAS agents receive training on investment strategies, ROI calculation, and more.
The CCIM membership program covers topics such as market analysis and investment analysis for commercial investment, and members finish with a portfolio demonstrating their complete commercial real estate knowledge.
Build Community Connections
Agents who have established relationships with contractors, private lenders, legal representatives, wholesalers, and others in the industry can be invaluable to their clients. They can save their clients time and money, and may have access to unlisted properties.
If you are just starting out as a real estate agent, you should focus on educating yourself and networking until you have built up trust and recognition in your local market.
Personal experience with real estate investing is not necessary, but can be helpful. Those who have invested in real estate before will know the ups, downs, and surprises that come with it and can act accordingly to avoid obstacles and mistakes.
How to Deal with Know-It-All Real Estate Clients
1. Practice Active Listening
will give you a chance to connect with them. In order to connect with your client, set aside a minute (or 60) to sit down with them. Although this time may feel lengthy, it will be worth it in the end.
Show some empathy towards the individual as they are likely going through a tough time due to a major life event. Put yourself in their shoes and try to understand things from their perspective.
You will not only make them feel heard and cared for, but you will also get a better idea of the kind of home they need. You will come across as a real person, not just someone trying to make a commission.
2. Educate Clients Upfront and Along the Way
If you want your clients to have the best home-searching experience possible, share your blog, area guides, and other real estate resources with them.
If your client is a first-time buyer, you may want to explain each step of the buying or selling process in more detail.
If your client is feeling anxious or insecure, it may help to provide them with a detailed explanation of what to expect. You can also refer them to other experts who can provide more information about their specific areas of concern. For example, if your client is worried about money, a financial advisor or lender may be able to help by providing more information about the financial process and addressing any remaining concerns.
It is definitely better to have a plan and an idea of what your clients are looking for when you are showing them properties, instead of just driving them around for days without a good idea of what they are actually looking for.
What is their motivation behind moving? What kind of lifestyle do they want to have in their new home? Why? Have an honest conversation with your client to get a better understanding of their needs.
3. Show Empathy
Most people distrust salesmen, lawyers, and real estate agents. And there are enough bad stories of dishonest real estate agents to justify that level of mistrust.
One of the first things you need to do is to overcome the suspicion that buyers will have for you. You need to show that you are trustworthy and that you have their best interests in mind.
At the same time that the majority of buyers are searching for homes online, there are also countless articles about buyers who have managed to find the home of their dreams without the help of an agent.
Even if an article is written with the intent of confirming a reader’s bias, it does not make the reader an expert.
Homebuyers don’t want to feel like they’re not as smart as other people when it comes to buying a home.
4. Screen Clients Before Taking Them On
Most real estate clients seem friendly and optimistic when you first meet them, but you may see a different, less pleasant side of them if something goes wrong.
The Trust Smart real estate technology provides thorough background checks on clients before agents find themselves in a tense situation. Agents can choose to verify a piece of the client’s ID or go as far as asking for a photo, which will be saved to the client’s profile and used to verify their identity.
Preliminary interviews are used to screen clients and identify their needs, priorities, and personality.
5. Focus on Clear Communication
Pay attention to how your client communicates from the start. For example, you might notice that they respond well to direct, business-like communication, or that they prefer a more compassionate, gentle approach. Also, try to determine which type of challenging client they are, so you can adjust your approach accordingly.
Negative or aggressive real estate clients think that their own needs are the most important and are not willing to listen to other people’s suggestions or opinions. Know-it-alls are sure that they (or their virtuous son) know more about real estate than you do. The “do nothing” clients are those who expect you to work out what they need without any helpful suggestions or feedback from them about what they want.
6. Get Ready for Emotions
Selling a house is a decision that requires a lot of thought and consideration. So it’s understandable that clients would get emotional and attached to their homes quickly. Real Estate influencer and leading agent, Ryan Serhant, refers to the seven stages of grief you’ll notice repetitively with most clients and that you should understand to seal the deal:
Stage 1: Excitement
Clients at this stage are very excited about the process and their future.
Stage 2: Frustration
Your client may have a more difficult time than they were expecting when trying to purchase something. This is often when you’ll get phone calls and emails from them in the middle of the night.
Stage 3: Fear
What may have been a small worry in the past can easily turn into a full-blown panic. Clients may start to wonder if they made the wrong decision on a property and become frustrated with you for not providing a “higher standard” of service.
Stage 4: Disappointment
This is the stage where your client finally gets the keys to their new property. They should be excited, but instead they focus on all the tiny negative parts, or find problems that don’t even exist. Their brain is pressuring them into second-guessing themselves.
Stage 5: Acceptance
After a period of intense pressure, the couple finally gave in and accepted that the deal was done. They were able to enter the new phase of their lives that they had been longing for. Instead of worrying about the small things, they let go and started to enjoy the feeling of being new property owners.
Stage 6: Happiness
Clients remember why they made the purchase and celebrate having what they wanted.
Stage 7: Relief
The last stage of the process is relief. They can finally relax and enjoy their new home. You deserve the payout for all your hard work.
7. Show, Don’t Tell
The only way to win an argument with the emotional brain is to use logic.
If the buyer is adamant about knowing who lives in the area, which places of worship are nearby, and other demographic information that could attract the Fair Housing Act’s hammer of moral judgment, make sure you tell them that this information is easily found online.
If they want to get to know the people who live in the neighborhood, they should visit at different times of the day.
This makes them feel that they were actively involved in the process and it becomes a source of confirmation.
If your potential clients’ grandson is good with computers, and they think he could do your job better, show them case studies of how you have helped other clients.
In other words, “Show, not tell.”
In the end, the equation is as simple as:
If you want to have a satisfied client, you need to listen to them actively, understand their point of view, and provide evidence that you understand.
What is causing your clients to make a purchase? What are their intentions? What needs are they trying to satisfy?
Utilize the expertise you have acquired to help create a vision of a happy life for them. Prepare an offer that is significant to them on a personal level and present them with supporting evidence. They may try to argue with you, but they will not be able to argue with the facts.