An ongoing conversation in the field of real estate investing is the working relationship between the real estate agent and the rehab investor. Or flipper as some of you would say. Christopher Smith of Equity Scout wrote an article titled Realtors and Investors :: Are you speaking the same language?
First, let me just say that Christopher Smith is probably one of the best bloggers out there on his subject. I love his stuff and the thinking he makes me do. Christopher is an investor. I am an agent. So I answered the post with my own titled Real Estate Investor vs. Real Estate Agent: What’s A Quality Investment Property? In a great many ways I think my post supported his.
Last night I received yet another comment on the post. A recurring theme in the ongoing relationship between agent and rehabber. Frustration.
Rehabber’s Point of View ( I believe)
The rehabber needs properties with enough margin between the ARV (after repair value) and the acquisition costs for him to successfully rehab the house AND cover his acquisition costs AND cover his carrying costs AND to make a profit.
Real Estate Agent’s Point of View
Many newer rehabbers will try to rely on real estate agents to find them. Good luck. I’ve said a million times over the phone that there is not a search I can do for houses that are for sale for 45%, 50% or 60% of ARV. If, on occasion, I stumble across one that the listing agent wasn’t smart enough to buy for himself I will either move on it myself or reward one of the rehabbers already on my list.
The rehabber turns to the agents because if he can get the agent to find these homes for him (rather than doing what successful rehabbers do and that is find the houses themselves through obituaries and NODs) then his job is easier.
The agent (the newer ones anyway) like the idea of working with these rehabbers because they will sell 8-10 houses a year to them, guaranteed!
Well, probably not. The agent will spend hours upon hours searching through the MLS and previewing homes they THINK will work because they do not fully understand the business of rehabbing. Then they will take the rehabber out on tour.
The rehabber gets frustrated because the agent isn’t understanding him and not showing him properties that he can make a profit on. Not when the pencil and paper meet. (Or worse, he doesn’t do the pencil and paper and is a candidate for the next NOD.)
The agent, after showing 20 houses and many sleepless nights covering the MLS, finally says “I’m not working with investors because they are never happy and never buy anything.”
The rehabber says “Agents don’t want to work with us because all they care about is a quick commission.”
Neither side is fully right. Neither side is fully wrong.
For me and my business, I work with mostly Buy & Hold real estate investors. I do have a couple of clients that rehab properties. And like I said earlier, I have a hard enough time finding them enough to keep them satisfied throughout the year. And by satisfied I mean I find them 1-2 a year. I do that for a couple different people. That’s about it. And I KNOW what a rehabber needs. There just aren’t many out there.
The relationship between real estate agent and rehabber can work. But both sides need to fully understand each other, their motivations, their criteria and the results they expect.
BBQ Capital | Kansas City Real Estate Investing 
Rehabbers expecting agents to find them acceptable properties are either dense, or newbies. For the owner of a fixer property, selling it at the price a rehabber needs is like selling cold beer on a Saturday night for $1 pitcher at the local fraternity. Which is, like you mentioned, why they almost never make it to the local MLS.
I think it was Homer Simpson who said it best when he said…
“Ummmmmm beeerrrrr.”
This is so true, I will work with investors, but I try not too. In the end we both end up frustrated.