7 Reasons Why Investors Are Great Clients by Jon Morrow
Imagine an untapped market of clients that buy more than one property per year, frequently sell directly after buying, and have marketing budgets you can spend to sell the property faster. It's not a fantasy. I'm talking about real estate investors. Here are seven big benefits to working with them. Investors Buy More Than One Property The problem with regular homebuyers is they only need one property: a home. Once you satisfy that need for them, you have to start prospecting again, so you can pick up more clients. It's a constant cycle, and most agents have grown to accept it. Fortunately, there's another solution. Instead of competing over homebuyers, why not work with investors? Unless it's just a hobby, most of them buy more than one property per year. I know one investor who buys over 120 properties per year. Scoop up one guy like him and you don't need any more clients. The reason investors buy lots of properties is simple. If you make money from each property you buy, it makes sense to buy as many as you can. While there are limits, many investors are constantly looking for the next good deal. That translates into a constant stream of business for savvy agents. Investors Sell More Than One Property One of the hottest techniques in real estate right now is called "flipping" or "wholesaling," where an investor buys a property and sells it for a quick profit. The economics of the strategy are complicated, but it can mean big money for selling agents. You can profit from both ends. Consider this scenario. You just uncovered a great investment property with a hefty profit margin. One of your investors is thrilled with the opportunity and buys it immediately, netting you a nice little commission. Two weeks later, he's fixed up the property and is ready to put it on the market again for a fast profit. He calls and asks you to list for him. You sell it two months later, making another commission. Do you see the dollars here? You can potentially make 12 percent or more from each property your investors buy without investing a dime yourself. On a $100,000 property, that's $12,000 in commissions. Repeat the process 10 times in one year and you've got a nice little business. Investors Sometimes Buy Big Properties With investors, you can also focus on quality instead of quantity. For example, I rarely buy a real estate investment for less than $400,000. Some investors, like my father, are only interested in multimillion dollar investments. The agents that work with him typically make several hundred thousand dollars from each transaction. Now, there's obviously a lot of competition among realtors for his business. You'll have to work hard to differentiate yourself and prove value. When you're making $200,000 from one deal, you're expected to demonstrate absolute commitment and continuously deliver results. In other words, you can't get angry when someone calls at 2 a.m. in the morning, and you'd better make your investor tons of money. Investors Are Unattached to Their Properties I work with a lot of real estate agents, and the number one complaint I hear is sellers getting attached to their properties. When you've lived in a house for 20 years, it's natural to be emotionally involved in the sale, but it makes it very difficult for an agent. For example, one of my favorite realtors is suffering through a client that has rejected three full price offers because he didn't like the buyer. With real estate investors, this rarely happens. They're unattached. If Satan himself brought a full price offer, they would accept it. Emotion has nothing to do with the sale; it's all about the money. If you can convince the investor that the offer makes financial sense, you'll have a sale and your commission. It's much less of a headache. Investors Have Marketing Budgets In a normal listing agreement, the agent is responsible for paying all marketing expenses in exchange for their 6 percent commission. Since a sale is far from guaranteed, most agents are unwilling to risk too much money on marketing or fixing up the property. As a result, the seller unwittingly causes their home to sit on the market longer. Most investors are smarter. I typically require my agents to pay for their own brochures, flyers, and newspaper or magazine advertisements, but everything beyond that is on my dime. For example, I usually put several thousand dollars into landscaping, a professional cleaning, new paint job, and carpet. I might also pay for the house to be staged or to create some other gimmick. The reason? Not only do those improvements increase the value of the house, but they make it sell faster. I can take my profits and roll them into another investment, making even more money. In the end, I make more money, and all of my seller's agent love it because the house is so much easier to sell. Investors Follow through In my experience, your average home buyer or seller is fairly unpredictable. They may put a property under contract without realizing they can't afford it. Or, they might just be browsing with no intention to buy. Either way, the real estate agents involved typically lose time and money. Investors, on the other hand, depend on their reputation. If they don't close on a property, word spreads. So, they have a lot of motivation to follow through on their contracts. When they contact you to find properties for them, they're also serious about buying at least one. They're much less likely to waste your time. Investors Know Other Investors The real estate investment community is tight-knit. Everyone knows each other. If you make one investor some money, he'll probably brag about you to his friends. I know I do. I once recommended an agent on a teleconference, and within a week, he had over $1 million in listings. It's the best referral he's ever received. The Bottom Line: If you can break into the market, real estate investors are nearly the perfect client. Instead of continuously prospecting for new buyers and sellers, you can build a database of core customers and make a living from them forever. It's a dream come true. | 
