“5 Ways to Build a Profitable Relationship with Your Realtor” – Jay Conner

In the past, I’ve talked a great deal about how to find a real estate investor-friendly Realtor to work with. But it’s not enough to simply find a good Realtor—you also need to work to build and maintain a strong relationship with them.

I’ve worked with my Realtor since 2004. My relationship with Chris is one of the best and longest business relationships I’ve ever had—which is a testament to the importance of taking care of your team members. In this article, I will walk you through the five steps of a deal and show you how a good Realtor relationship improves the profitability of a deal.

The week after the tax law was passed, the Los Angeles Times wrote, “The tax plan that President Trump signed into law last week creates one of the largest new loopholes in decades, a 20% deduction for ‘pass-through income.’ In reality, the new deduction disproportionately benefits the wealthy, penalizes workers and, in part because it is so complex, will ultimately reward those who can afford the best tax advice.”

Step 1: Locate Hot Deals

Chris plays an important role in helping me locate hot deals. How does he do it? First, Chris has me set up on an automated email campaign. I’ve provided specific search criteria for properties, and every day I get notifications for all new: bank-owned property listings, bank-owned property listings with a price reduction, short sale listings, and short sale listings with a price reduction. Since this is done on automatic, Chris doesn’t have to waste time searching.

In addition, Chris receives a daily “hot sheet,” which notifies him of all new listings in the multiple listing service (MLS). He reviews this hot sheet and lets me know if there’s a potential deal with a significant spread between the current listing price of a property and the after-repair value (ARV). Because we’ve worked together for so long, Chris is able to estimate the ARV from knowing the types of renovations I do to my homes.

I think the new tax laws give you and me some really good tax breaks. Ben Rucker, the former IRS special auditor that now works with me, recalculated his 2017 taxes using the new tax laws and he would take home an extra $30,000+ if he could refile is 2017 taxes using the 2018 tax laws. That’s pretty good for someone who makes a good living but isn’t “the wealthy.”

Step 2: Comparative Market Analysis (CMA)

You need to have a good relationship with your Realtor. If they know how you operate, they’ll know your exit strategies, which influence buying strategies. Your Realtor should also know to what extent you rehab houses. Chris knows my goal for rehabbing houses is to have them looking good enough for a photographer to walk in and do a magazine-worthy photo-shoot. My houses aren’t listed in the MLS and marketed until they appear to be ready for publishing in Southern Living.

You need to have a good relationship with your Realtor. If they know how you operate, they’ll know your exit strategies, which influence buying strategies. Your Realtor should also know to what extent you rehab houses. Chris knows my goal for rehabbing houses is to have them looking good enough for a photographer to walk in and do a magazine-worthy photoshoot. My houses aren’t listed in the MLS and marketed until they appear to be ready for publishing in Southern Living.

Step 3: In-person Inspection

Never buy a property without either you or your team conducting an in-person inspection inside and out. Why do I say this? Because I’ve made that mistake before and I don’t want you to do the same.

After Chris has sent me the ARV of a property, we go out to inspect the house ourselves. If I’m out of town, I’ll still send Chris and my contractor to get a look at the property. There’s a good chance seeing the house in person will change Chris’ ARV estimate. Many factors go into pricing a property — maybe there’s a junkie house next door he wasn’t aware of, or some of the rooms are smaller than anticipated. Before I consider making an offer, I want Chris to have the opportunity to adjust his ARV.

If during the inspection we decide it’s a good deal, I calculate my maximum offer and ask Chris to make an offer to the seller’s Realtor. Assuming my offer is accepted, I schedule the closing with my attorney, and we move to the next step of the process.

Step 4: Rehab

Your Realtor should make frequent visits to the property during the rehab process. While my team is working on the house, Chris visits the property often and suggests any changes to the renovation that could encourage a quick sale of the home. Realtors know what buyers are looking for, so they know what needs to be done in order for a house to sell.

Once my contractor is finished, the house is clean, and my interior designer has staged the home, I send Chris one more time to the property for him to create a final punch list. Once I receive the final punch list, I forward it to my contractor for final renovation before putting the house on the market.

Step 5: Compensation — Listing Agreement

There are a few different ways I compensate Chris. First, when I’m purchasing a house listed in the MLS, I put all of my offers through Chris. In most cases, Chris isn’t the listing agent, so if my offer is accepted and I buy the house, he gets paid a commission by the seller.

If my marketing finds a motivated seller with a property not listed in the MLS, Chris still researches the property and sends me his CMA and his opinion of the ARV. In order to make sure Chris is compensated for the time spent doing the research, Chris will list the home for sale once it’s ready to go on the market. When the home sells, Chris gets his commission.

Most Realtors and their realty companies get a 6% commission for selling a property. Because of the volume of our business together, Chris and his company are willing to be compensated 5% of the selling price. Our listing agreement also states that I have the right to market and sell the house. If my marketing efforts finds a buyer, Chris cancels the MLS listing and is paid 2% of the selling price when it closes.

In order to have a successful real estate investing business, you must have strong relationships with everyone on your team. Your Realtor is a vital member of your team. This is why it’s important to find the right Realtor to work with and maintain a relationship that’s mutually profitable for both you and them. Since becoming a real estate investor in 2003, I have discovered how important your relationship is with your Realtor! Take care of your people, and they will take care of you.

–Jay Conner