Do We Really Need Realtors?

I am a huge fan of Realtors®.  Used to be one myself, and a home inspector too.  You need one on your power team to run comps, make offers and to negotiate on your behalf, especially if you are new to real estate investing.  I was doing some reading online and I found an investor with a thought/quote about realtors. This individual said that a "Realtor® is only useful if they do exactly what I tell them and if they remember they work for me". It also mentioned that seasoned investors rarely ever use Realtors® and that rookie investors think they are necessary. 

I have to disagree with this notion.  Sure, seasoned investors use the techniques of the pros: wholesaling, subject-to, etc. While rookie investors think that you invest in real estate by hiring a Realtor® to find you an investment property.  Let me tell you that this simply is not true…in my market at least.  It is a truth that in my area 80% of houses for sale are on the MLS (multiple listing services) and only 20% are FSBOs (for sale by owner).  If you are an investor who does not use an agent, then you are leaving 80% of the money you could be making on the table.

Now, I must say that you will not find the BEST deals on the MLS, but believe me; you will find deals and can keep a steady flow of income coming in by using this method. If you are doing enough deal without one…fine.  But if you want to consistently do deals, pay the commission and use a realtor to find you great deals on the MLS, make lots of offers, and do lots of deals. Besides, the buyer of your deal is going to pay the commission anyway so what do you have to lose. 

The only drawback you will have is that you must pay a non-refundable earnest deposit if your offer is accepted.  The way I get around that is that I PAY a $1000 earnest deposit to the Realtor® and I CHARGE the buyer a $2000-$2500 deposit for the deal.  It is part of their wholesale fee.  If they don’t do the deal, I still make $1000-1500 dollars.

Let's go back to that part about how they’re only useful if they do exactly what you say. This is not only true for Realtors®, but any member of your power team. Your accountant, lawyer, and contractor-they all work for you and should be quickly replaced if they're not doing their jobs (and don't forget you will constantly be replacing certain members of your power team such as Realtors®, contractors, home inspectors).

As I mentioned at the beginning, Realtors® are needed for comps. I've received several emails lately from people who are having trouble finding someone to run comps for them. First, you can try the websites www.sitexdata.com and www.realquest.com to run your own comps. Then, you need to have multiple Realtors® who can run comps for you and the best way to find these people is by networking at your local REIA meetings. One of my mentors has a saying "You can't do business sitting on your butt". So, if you don't have any Realtors® on your team you can go hit ALL of your REIA meetings this month and make it your goal that you will not leave until you have at least one business card from a Realtor® who you can now work.

Don't just read over that part about making it your goal to collect one card from a Realtor®. You need to sincerely promise yourself that you will not leave the meeting without a new contact. You need to write it on a sheet of paper. Stare at it before you head to your REIA meetings. These type of small goals—making a new contact at a meeting, making 5 calls per day, spending two hours per week driving for dollars, attending your REIA meetings, sending out 1,000 pieces of mail per month, sending 5 emails per day—these are the "secrets" to real estate wealth and freedom.