Using Real Estate Agents as Lead Generation Sources

Why Work with Listing Agents?

• Most of the really nice, pretty houses in good neighborhoods and cities are listed with agents.

• 92% of the FSBOs turn into MLS listings with a real estate agent.

• 75% of the closed real estate deals involve a Realtor.

• Free lead generation source.• There are a tremendous amount of houses

that do not get sold and go "expired." • Agents are not taught to bring creative options

to the seller, and most sellers want to be cashed out. BUT, when a home doesn't sell, then sellers become frustrated, creative and flexible.

Why Work with Listing Agents?

• In a buyer's market, there are many, many homes on the market that sit for a long time.

• "If my home doesn't sell soon, I am going to have to RENT IT."

• Some of the best types of deals never hit the MLS because they are in default, distress or foreclosure.

Why Work with Listing Agents?

• FSBOs aren't listed with agents.• Agents are primarily trained on the laws of

real estate, fiduciary duty and contracts. • Agents are not trained on creative real estate

listing, marketing, sales mastery and finance.

Why NOT to Work with Listing Agents?

Why Most Real Estate Agents Fail

How Most Traditional Agents Get Paid

• Step 1: Get a listing.• Step 2: Market the home (most agents skip

this and just put it on the MLS). • Step 3: Set up and execute showings. • Step 4: Locate a buyer.

• Step 5: Negotiate and sign a final contract. • Step 6: Have the buyer obtain approval for a

mortgage. • Step 7: Close. • Step 8: Collect a 3% commission for

representing the seller.

How to Find Real Estate Agents to Work With

Where to Look?• Newspapers.• Signs.• Personal contacts: friends and family.• Investor groups.• REIA clubs.• Foreclosure auctions.• Call the local real estate board to see when they have

functions and networking events you can attend.

• Realtors know lots of other Realtors. • Lunch appointments.

Finding Agents Using Direct Mail• Letters – 90+ days on the market• Sample letter to Brokers:

“Dear [insert broker name], How would you like to help your agents to sell more properties and earn more commissions? How would you like to make more money by having your average days on market cut by 75%? I buy [insert number of homes – ex. 5-10] homes per month using a unique and creative solution for sellers who have little or no equity. This is not a short sale and your agents receive a full commission. I have a presentation full of facts and figures teaching your agents how to thrive in this crazy market by working with sellers who have little or no equity. I am requesting a chance to meet face to face to discuss this program with you, and once it makes sense, to present this to your agents so they can thrive in this type of housing market. I have several references including [insert references name and phone number]. I will be following up with you in 3 days to establish a time when we can meet to discuss ways to help your agents sell more houses, confidently get more listings and make more money. My phone is [insert phone].Thanks, [insert name]”

• Stop in at Broker’s office

Telephone Calls“Hi [insert listing agent name], this is [insert investors name]. I

was calling about your listing on [insert property address]. I see it's been listed for a while now, and I wonder if the sellers are open to something a little more creative to sell there property? [wait for answer]

I was thinking about something creative that might work, like a lease option. If your sellers would like to make sure their monthly payments are paid for them, and they can still get their cash out down the road, it could work out real well for them. I can also make sure you get a full commission.

You can call me at [insert phone number]. I buy homes where the seller can consider terms like this yet still need to have their monthly payments covered. Again, you can call me at [insert number].

Thanks.”

Telephone Calls

Call 1x per month to follow up and see if they have any houses you can buy.

Giving Presentations to Find Agents

• What to bring?– One-page handout on your company.– BBB.– Business cards.– Donuts, bagels, fruit.– Your presentation

Your Presentation

Create a PowerPoint presentation about the economy, the state of the housing market and they types of people out there who are trying to sell their homes:

Like my MMI presentation - showing how sellers are going to need creative selling on terms.

Agenda for the Presentation

1. Introduce yourself and your company.2. Ask attendees to write down the top 5

problems they are having right now with their real estate agent business.– You want them to start thinking and be engaged in

your presentation, not just sitting there listening.

3. Today's Agenda– Why so many sellers have no equity.– Why I can help.– Traditional vs. creative real estate.

4. Our Perfect Seller– This is not their perfect seller.– Is exactly what they don’t want.– Someone with little or no equity who wants to

sell; is facing default.

5. Our Perfect Buyer– This is not their perfect buyer.– Is exactly what they don’t want.– Someone with bruised credit who cannot get a

bank loan.

6. Introduction to Lease Options– How it works.– How I pay commission.– Benefits to the seller:

• I handle everything.• Take over payments.• Take over maintenance.• No rental headaches.• Avoid default and foreclosure.• No short sale needed.

7. Benefits to the Listing Agent:– Quick sale.– Commission paid up front.

8. What types of homes I’m looking for.9. Price range that’s best for these deals.10.Other referral fees paid.11.Close.12.Q&A.

Offers That We Can Make To a Seller

• Option 1 - All CASH at 65% of FMV.• Option 2 - 80% of FMV with some

seller/owner financing.• Option 3 - 85-100% of Full Market Value. – Lease options/taking over payments.– Paying on terms means we can pay a higher price.

Real Estate Agent Commissions on Lease Options

Agent Commissions• They are not due their commissions until the

property closes, which could be 2-5 years down the road.

• The investor will still want to pay them their full commission so the agent is happy and brings you more deals.

• If the Realtor is dead-set against a lease option, then move on. If they are open to it, continue presenting your offer.

• Most agents don't do lease options because they cannot get paid up front for doing them, and because sellers want their cash up front or don't understand how a lease option can help them.

• The Realtor cannot feel like they are being used or they will kibosh the deal.

• The Realtor cannot wait to get paid or they may suggest to their client that lease options are a bad idea, simply because the agent won't get paid.

• Commissions are paid in full, not paid up front.

• Pay 1-1 ½ % up front. – Pay the rest upon closing of the "A" to "B"

transaction.

• Sellers pay the real estate agent commission, not the buyer. – Since we are paying the seller’s commission up

front, this amount gets taken off of what we would owe to the seller later.

Example:– Investor agrees to buy a house for $170,000.– 6% commission = $10,200. – Net after commissions = $170,000 - $10,200 =

$159,800. – 1% commission up front is $1700. – $170,000 - $1700 = $168,300 paid up front.

• The agent is still due $8500 dollars more upon the "A" to "B" closing. – The remainder of the commission (6% total, so 5% is remaining)

will be paid upon closing the "A" to "B" transaction from the seller’s proceeds.

• The realtors commission doesn't get paid until you find your tenant buyer. – The transaction is always contingent upon finding the tenant

buyer.• Commissions come from the investor, so it's a low money

down deal.