BiggerPockets Real Estate Podcast - 940: Crucial Questions to Ask an Agent and How to Negotiate Commissions w/James Dainard

Starting point is 00:00:00 Welcome to the Bigger Pockets Real Estate Podcast. I'm your host, Rob Abasolo, joined by my good buddy, Henry Washington. Hello, good buddy. How you doing? I'm doing great. Thank you so much. I'm very glad to be here. And we've had some shakeups in the real estate industry lately, especially around agent commissions changing. And I think it's left a lot of investors wondering, what does a good real estate agent even look like? How do I find real estate agents that meet my needs? And what the heck am I supposed to pay them? Yeah, it's a big one. And today we're going to be talking. with James Dainard about how to find and work with an agent who can help you meet your goals as a real estate investor. We're going to talk about things like how to find an agent that is suited for investors, questions you should ask a potential agent to make sure that the right fit for you, and how to negotiate a commission rate with an agent, and what type of services should they be providing at those different commission structures? So let's get into it. And with that, we would like

Starting point is 00:00:53 to welcome James Dainard to the show. For those of you who don't know, James Dainard is one of the co-host, along with myself of the Bigger Pockets on the Market podcast, where we talk about current events within the industry and how they are impacting or not impacting real estate investors. But James Dandard is also a licensed agent, a broker, a lender, and knows pretty much everything there is to know about all sides of real estate. So James Dandert, welcome to the show. Welcome, man. Yeah, it's always nice to have someone else from the BPCU on the pod, the Bigger Pock Cinematic Universe. So excited to jump in today. James, can you tell us a little bit, since you're obviously very well-versed in this whole real estate game, help us paint a picture between your typical run-of-the-mill realtor who just opens doors and puts signs in front yards and a realtor who's truly working towards fulfilling the goals of other real estate investors.

Starting point is 00:01:48 Yeah, I think that's important to kind of discuss and kind of clarify. Many times your residential investment brokers are more set up like a commercial-based broker where they're selling math, They're looking through the investment and they can provide extra value to investors as far as analyzing the property, whether it's pulling comparables for what the property's worth in the as-as-is condition, whether what it's going to be worth after a renovation. It could be pulling rent data for you. And they're going to be able to help you provide that data to help you analyze that deal to make sure it's a good investment. And that's really the big difference is a lot of brokers, when they're selling their services,

Starting point is 00:02:24 they're selling themselves, their teams, a smooth transaction. and they are selling almost like the dream of like, hey, do you like this house more? There's a lot more opinions, whereas investors are more about dollars, cents, and money, and does it make a return? And that's really the big difference is the service is provided. One's more to make you feel warm and fuzzy and to get your sale completed, and one is going to be more to get you warm and fuzzy to financial freedom. Yeah, I mean, that makes a lot of sense.

Starting point is 00:02:52 I happen to have a very good investor-friendly agent. And I think the characteristics of a good agent are the same across one who wants to help a retail buyer and one who wants to help an investor. It's just the kind of information that you are anticipating and relaying to your client is different. I would assume that a good retail agent will understand what types of amenities or features that a home buyer is looking for in a home. And they're out pounding the streets looking for the opportunities that fit that criteria. whereas my agent, he knows what my buybox is, he knows what neighborhoods I buy in. He understands how I uniquely analyze properties. And so I think the best characteristic is one of somebody who is proactively looking for things

Starting point is 00:03:39 that are of benefit to that client and then getting those things in front of them in a way that helps them easily digest and understand that information so that you can make quick decisions. 100%. I think that is a pain point. Realtors are a pain point for a lot of investors like all. all of us on this podcast, but also the lifeblood of our deal flow. And so that's what we're going to be talking about today. We're going to be talking about how to determine if an agent is a good fit. And then I'd like to open up the conversation a little bit on how to negotiate with realtors in

Starting point is 00:04:08 24 because I think a lot is changing in the landscape today. So does that sound good for everybody? Yeah, let's talk about how to negotiate my commissions. I'm all in on that. Yeah, I guess it was a bit of a loaded question, huh? So James, tell us a little bit about some of the services that you offer as an agent versus some of the services that some of the more, I don't know, low-lift, not as proactive realtors these days may be offering to their clients. One thing I'm a firm believer of is real estate agents aren't just paid because they sell a house. It's because they're providing an experience, a professional experience in the services to get someone through a transaction.

Starting point is 00:04:45 Most of the work's done before you even get into contract on a property. and one thing that really separates any broker, whether their investment or retail or commercial or multifamily, is how well does that broker support their clients with additional services? And so when we started our brokerage back in 2010, we were off market operators. We were selling a lot of properties. And then what we were seeing was that clients would see a deal and it was below market value, but they didn't really know how to analyze it. They didn't really know how to execute on it. and they would stumble through the deal. And so as brokers, what we did is we designed a service platform that provided solutions

Starting point is 00:05:25 for our clients at any step in that transaction. And that's why we've done so well as brokers and we sell over three to 400 homes a year with investors. We do that by what do investors need? Well, the first thing they need is analytics. What is the property worth? What is the mathematical equation for that property after you do you lift? How much will this property rent for?

Starting point is 00:05:48 and what is your cash flow situation if you buy this property at this price? And what does that look on a return basis? The second thing that they need is access to capital. And as a broker, what we do is we make sure that our clients have an option for any type of capital for any type of deal that they can buy. That gets them ready to go through the buying process. So your traditional broker is going to refer them out to a mortgage professional. They're going to get qualified for maybe whatever loan they can get.

Starting point is 00:06:15 Whereas in our shop, we are bringing our clients and getting in the money. qualified with a hard money lender in case they find a burr property or a fix and flip. We get them qualified with permanent conventional financing so they know what they can cash flow and buy as a rental property. And then we get them set up with commercial financing too if they want multifamily properties. And so by providing them with the capital platform, it allows them to execute at the highest level. And then we do additional other things to help them facilitate that plan and that deal by

Starting point is 00:06:44 helping them design the property, giving them specs for it, referrals to vendors that will give them construction costs less than what the average consumer can. And so depending on the broker and what you're trying to hire and what specialty they're focusing on, that's the services that need to be created. And as an investment broker, we're here to help the client be financially successful, not just sell them a house. And that's why we built our whole platform to cure those issues, funding, analytics,

Starting point is 00:07:13 construction resources, and then a distance. position, whether it's property management or sales, so they can complete that sale and rack the return. And that's really the big difference between an investment broker and a retail broker. We're still offering good services, but the services are built for different things because investors are more concerned about returns than they are about that perfect feeling flowing house. Yeah, I think one of the very key things you said there was you want to put your investors in a position to complete that sale. Right. That's the win for every. If your investors are closing deals that are actually deals and are going to make them money and you are then closing that deal and getting a commission, that's the win for everybody.

Starting point is 00:07:59 And what it sounds like is the additional services that you're offering are all things that are going to help get that investor from the information stage all the way down to the closing table. It's the relationships they need with the lending. it's the information they need or data around the property. That is what's key. That's one of the best features that my real estate agent provides to me. When I ask him to analyze a deal or maybe if they get a lead, I immediately get a full analysis as if, and they have no idea if I'm even going to offer on this property. And to me, what that shows me is that they are going to put in this work every single time, whether I close on a property or not. And that gives me peace of mind. All right. So now we're clear on what a great agent looks like and some of the services

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Starting point is 00:11:27 Let's pick up where we left off. How do you find the agents who are going to work for you like this? How do you find those agents? How do you vet those agents? Because there are more agents than there are properties for sale. and finding these diamonds in the rough are crucial to your success as an investor. So what are some of the things that people should be looking for when they're looking for an investor-friendly agent?

Starting point is 00:11:54 Well, you want to look at what's their background and their resume and how much experience do they have inside the type of investment that you're looking to purchase? I feel like I'm a fairly experienced real estate professional. I sell a lot of multifamily, but I also have a couple brokers that I work directly with that we buy a lot of our large apartment buildings with because that's their specialty. They know how to find the deal. They know how to underwrite the deal for us quickly. And we use them as a broker.

Starting point is 00:12:19 I'm using them for those services. But, you know, the reason why we like working with brokers that are also investors, you know, like our company, Heaton Dana real estate, our tagline is built by investors for investors. And I think that's really what you want to look for is if you find that connection with someone that you relate with, who are you going to relate with, another fellow investor that is going through that same journey with you, because if they had that background, they also know how to run those analytics. They've ran into the same problems that you have on your site,

Starting point is 00:12:54 whether it's a bad tenant, maybe a construction project that's going off, maybe their house isn't selling. You know, when you have any professional that you're hiring, whether it's a broker or anybody you want to put on your team, if they're on that same page with you and they know you're pains, they can actually help you through that process a lot better. So if I want to talk to a broker, I want to interview them, make sure that they have some sort of experience in investing and working with investors or they're really winging it at that point. And for me, it's a high risk business. I don't want to invest in people where I got to put more risk into the deal that's already there. I can't agree with you more. I think having an agent who is also an investor is a huge benefit.

Starting point is 00:13:35 But a lot of the feedback that I hear from people who maybe haven't worked with an investor-friendly agent, they say, well, why would someone who's looking for deals just like I am? Why are they? Why would I want to work with them? It seems like we're putting each other against each other, like it's some sort of competition. So how should people be thinking about that relationship? And you're talking about the competition between clients? Between you're both investors in the same way. I think that's, you know, one thing that we hear that a lot, right? Because I buy a lot of property and see. Gabon, they're like, oh, you get to pick all the good deals. And in all reality, what I get is the slop. We get what's left over because as a broker in a big picture business, right, we generate a lot of inventory. Our job is to make sure that we're providing a good investment opportunity. And if we secure that deal and offered out, our guarantee is if none of our clients want to

Starting point is 00:14:25 buy it, I will buy it to put our proof behind the deal. And then we show people, how do we revenueize this deal and we use it as a teaching event for ourselves. But that question comes down to that it has a little bit, people aren't thinking that through because investors buy all sorts of different types of product. There we go. I will buy a lot different product than what Rob or you would buy because we're in different markets. We have different teams. We have different funding. And based on that, each investor should define their own buy box. And we spend a lot of time with our clients, If they come in, they say, hey, I want to buy a flip property. We spend hours with them mapping out the flip.

Starting point is 00:15:05 What kind of flip do you want to buy? Do you want a cosmetic? Do you want a heavy fixer? Do you want one that has some development upside? And we take them through all those risks and the teams that they need to be successful on those deals. And, you know, for us, it's funny because we get a lot, people ask me that all the time because we actually find deals, give them our contractors and help them facilitate that

Starting point is 00:15:25 project. And they're like, wait, you give out your own contractors. you just pass on these deals, why don't you take them all down? Well, we run eight different businesses, and those businesses are set up as a service business to take care of investors, and we have to balance those out. And so if you're concerned about that, I would say you have the wrong person that you're working with,

Starting point is 00:15:45 and it comes down to that trust. Do they financially care about what you're trying to accomplish, or are they just trying to do a transaction and sell you something? And when you interview that person, you're going to know if they have a genuine interest in your growth as an investor. And if you generally believe that, you should not be concerned they're going to take your deal. But I can say we buy hundreds of deals. And I basically buy the ones that none of my clients will buy.

Starting point is 00:16:09 And then we use it as a teaching event to how to get them to that next level. And we just get a, that product allows me to develop my clients rather than take away. That's gold. I love it. So how should an investor actually go about finding an agent like this? And what are some of the questions that they should ask to vet that agent? Well, I do think that we probably over-deliver our services a little bit, but we did start our brokerage in the worst market there ever has been, 2008, 9, and 10.

Starting point is 00:16:34 And so for us to earn business, we really had to over-provide service and get people to buy. And that's why we kind of built our company that way. It just has never changed. But finding that right broker, you know, when I meet with any client, it's about building that right team. One of the first team members you should meet with as an investor is your title rep. find a title rep that closes a lot of investment transactions, builders, flips, those are typically the people that are plugged into your network. They're going to know the brokers that are constantly selling flip properties, rental properties, and development sites.

Starting point is 00:17:08 They have access to them. They track those investors and they want to give you that business because it gets some title business as well. Another way that you can track it is look for that common broker that's always selling the flip houses. Like if you go into Seattle and you pull up a bunch of renovated homes that sold in the last two months, you're going to see my name 20 to 30, 40 times. And you're going to look for that consistent broker that's always representing those fix and flip properties, building sites, because when brokers source dirt, a lot of times they get the development and the list back on the other side. And then you can go on to even bigger pockets agent finder to find your burr types of investors.

Starting point is 00:17:48 and, you know, so look for that common denominator. Where are they moving product? Track it through the MLS and then have your title rep provide you with those referrals because they have those people on lockdown. Yeah, and if you want to use the BiggerPockets agent finder, you can go to biggerpockets.com slash agent finder and you can get connected with the agent in your area that, you know, very investor forward, possibly offering a lot of the services that we're talking about today. I want to take a moment here and just really highlight what you said because I think

Starting point is 00:18:18 this is the most underrated and easiest way to find investor-friendly agents. People say all the time how difficult it is to find those agents who understand investing. But you mentioned talking to a title company. And it doesn't just have to be your title company. Think about what a title company does, people. A title company is closing real estate transactions all day, every day. And at almost every single one of those closings is an agent sitting next to their either buyer or seller. Your title company or all title companies know exactly who the investor-friendly agents are. You can call one up right now and you can ask them, hey, who are the agents who are always closing deals for builders, who are always closing deals for filippers, who are always closing

Starting point is 00:19:11 deals for landlords. They will give you one to three names off the top of their head of people that you can then Google and find their number. It is outside of going to, I would say this is a better way to do it than finding people at a meetup. This is going to be the people who are actually doing deals. It's a fantastic tip. Thank you, James. Yeah. Yeah, for sure. Well, let's say you find this this, this realtor that can actually bring us deals and analyze. They're really good at what they do. How can we actually start to vet them? What are some of the questions that we can ask them? Henry, I'm going to flip this to you. When you're vetting a new realtor and you're building that rapport and you're trying to figure out, are they able to walk to walk and not just talk to talk? What are some of the

Starting point is 00:19:52 questions that you ask to just make sure that they're on top of their game? Well, first and foremost, what I think that is important here that gets overlooked is you need to have your stuff together. You need to know what you want to buy, where you want to buy it, you need to have your buy box dialed in, and you need to be able to relay to your investor-friendly agent how you would like to be worked with. If you don't know those, things, then it's going to be hard for you to vet and find somebody who's going to be able to provide the services that you're looking for. So you have to first and foremost, know what you want to buy, know how you want to be worked with. And know how you want to be communicated with.

Starting point is 00:20:32 But once you have that down, first of all, yes, you can ask any investor-friendly agent if they invest themselves and how you can check on that is you can ask them, what's the name of their LLC? And in most cities and most markets of the country, you can go onto the city assessor's website and look up their LLC to see if they actually own property in any of their company names. Another thing you want to be able to do is, again, you have to know what you want. So you have to know your numbers. You have to know how you want to analyze your properties. But what I want from a good investor-friendly agent is an understanding of the market.

Starting point is 00:21:08 So I always ask investor-friendly agents, hey, what's the average days on market? right now. How long are the flip properties that you're listing taking to sell? What are some of the characteristics of the properties that are selling quickly? What are some of the common characteristics of those properties? And maybe what are some of the things that are common among the properties that aren't selling or sitting on the market a little longer? Any good investor-friendly agent will have answers to those questions off the top of their head. If those are things they're struggling to come up with answers for, that's probably not the investor-friendly agent for you. Okay, we have to take one more quick break, but stay with us. After the break, we've got more tips for you, and we'll share

Starting point is 00:21:46 our thoughts on how to negotiate your agent's commission. And while we're away, go ahead and browse some investor-friendly agents at biggerpockets.com slash agent finder. We'll be right back. Thinking about wholesaling or flipping your first property, but not sure where to start. The truth is, deals don't just fall into your lap anymore. You need to go out and create opportunities. That's where PropStream comes in. With PropStream, you get instant access to over 160 million properties nationwide. Use 20 pre-built lead lists such as pre-foreclosures, tax delinquencies, and vacant homes to find motivated sellers fast. And now PropStream has integrated batch leads and batch dialer to provide you with a complete all-in-one solution. That means you can not

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Starting point is 00:24:33 If you own rental properties, short-term rentals, commercial buildings, basically anything that's not your primary residence, you need to know about cost segregation. It's an IRS compliance strategy that lets you accelerate depreciation on your properties, which means you're paying less in taxes this year and keeping more cash in your pocket for your next deal. Cost Segregation Guys is the go-to firm, having done over 12,000 of these studies with $500 million in total depreciation identified. Head to Costsegregationguise.com slash BP to get a free proposal and see your potential tax savings. Welcome back investors. We are giving away our best tips on how to find and work with agents. So let's jump back in. So now, James, I guess let me ask this from a let me get both sides here. Do you think it's fair to judge an investor-friendly agent based on the amount of investments they have or currently working on?

Starting point is 00:25:31 You know, I don't think it's totally necessary that they're an active investor. They may only have a couple rentals. and maybe bought one flip property, and that's okay as long as they've set up the services. But what I do like to work with is salespeople that understand and can be in my seat. Because, you know, investors, you go through good times, you go through bad times, and that broker that understands that is going to look at deals a little bit differently, too, with you. And they're going to take your feedback really well. What I, you know, one thing, if an investor hasn't bought or a broker hasn't bought that many properties, but they still have taken the steps and they've gone through the motions,

Starting point is 00:26:11 but they have other additional resources. That's still going to be a broker I'm very interested in. What are those resources, finding deals. And then I want to go, as I'm interviewing that broker, how can you help me be successful as an investor, right? It's not just about, hey, how can you help me find a property? How can you help me be successful? Well, that comes to resources.

Starting point is 00:26:30 Hey, broker, do you have any referrals to hard money lenders for me? Do you have any referrals to general contractors? Do you have any referrals to cabinet companies if I'm trying to get my renovation cost down? Just by asking those three questions, if that broker has those resources or at least knows where to point you in the direction, that they're used to servicing with those clients. If they cannot provide you with those resources, that's where that's kind of part of my vetting, asked strategic questions, can they answer them, can they provide the value? It's going to tell me whether it's my person or not.

Starting point is 00:27:02 Yeah. You know, if I'm going to go list a luxury home and I'm interviewing brokers, I'm going to go, what are your resources for marketing and how are you going to get this broadcasted to wealthy people? If that broker has an internal directory, if they have a professional video crew and they can show you how they market that property, they have a marketing team. That's a lot of what goes into luxury sales is like that making it feel good, getting it out to the public and getting out to people with deeper pockets that can afford it because that's a smaller demographic. graphic. If they have those resources, that's a great interview because I'm going, okay, they have the business built off that. But if they don't, that's where I'm probably going to move on to the next broker. So, you know, ask for referrals, ask for resources. How can they help you improve? And if they

Starting point is 00:27:50 can't answer that, probably not the broker for you. I'm with you there. I think it's important to have someone that's invested before. But honestly, what I'm looking for most is because at this point, I know my buy box. I know what I'm looking for. I typically source my own deals and I call the realtor, I make their job easy. I say, hey, this is the one. But what I really need out of a realtor is references and referrals. You know, when you're in the short-term rental side of things, I call them the Airbnb Avengers. I need my cleaner, landscaper, pull person, handyman. And I need to be able to build my team.

Starting point is 00:28:20 And getting those referrals from your realtors are huge because it can save you a lot of time. I think a firsthand referral is worth its way in gold in this industry. So, yeah, I think that's usually what I'm leaning towards a little bit. Is that important to you, Henry, or are you more, do you want the investor side of it? Do you want them to invest in things? No, I want them to have to be an investor, i.e., meaning they own some property. I don't care if they've done a deal in the past six months or not. It's more just about understanding the concepts.

Starting point is 00:28:46 But your point, exactly. You said what I need out of an agent, right? Which means that you understand your business and what you need. And what you need is probably different than maybe what somebody like myself needs. And so make sure you understand that and make sure you can communicate that. Because I think what happens a lot of the times is people, somebody says they're an investor-friendly real estate agent. And then an investor starts working with them. And then like an investor like me, part of what I need a real estate agent to do is make a lot of offers and make offers substantially under what the asking price is.

Starting point is 00:29:19 Yeah. And writing up offers is a lot of work. Like people don't realize it. It takes a lot to write up an individual offer. And when I'm asking you to do five, six, seven, eight, ten a week. And on top of that, all of those are 50, 60, 70, $100,000 less than what's being asked like that. that can wear down an agent who doesn't understand why that needs to happen. Yeah, yeah, yeah.

Starting point is 00:29:42 Well, we're going to move into commissions next, but there was a little quick tip, if you will, from the forums from Bruce Lynn. He said, bring your agent, your investing business plan and ask for their feedback. Bonus, it forces you to make a business plan. So I think that's actually kind of nice, too, to sort of write it out and say, hey, what do you think of this? And you can kind of quiz them on their, you know, do they know terms, do you know what cash on cash is, and kind of work around those parameters a little bit too.

Starting point is 00:30:07 And one thing on that, too, you know, for new investors that are starting to look at meeting their investment brokers, you might not know exactly what your buy box is, but you know what generally you want to purchase, right? I want to buy a single family rental. I want to buy a multifamily rental. And or I want to buy a fix and flip. You know, you can keep it as simple of, hey, this is what I'm looking to buy and then what's my goals with this in five years and then leave it alone.

Starting point is 00:30:33 because a lot of what that investment broker is going to actually educate you on is how to create a buy box that you can still transact with. As the market moves, you have to adjust your buy box, and that broker that's selling investments should be able to educate you on what the investment returns are in your local markets. And so don't think that you have to make this huge, huge business plan. Just come up with the concept. What do I want to buy? How much do I want to make? And what kind of product can I buy in this market? and the broker should be able to educate you on what to buy.

Starting point is 00:31:04 Nice, nice. Okay, so let's talk about negotiating commission. And I think just a caveat for everybody, a quick note, technically commissions have always been negotiable. I think that's something that we should say, but kind of moving into this, let's talk about how to approach this in 2024. And do you think James will start seeing broker just setting their own standard commission rates?

Starting point is 00:31:26 I think, you know, everyone's kind of wondering what's going to happen. and, you know, there's so many different types of brokers out there that provide different services, right? And they charge different commissions. And there's nothing wrong with that. Like, if you have a broker that's going to throw a sign in the yard, visit it once, take some photos and take phone calls, maybe you pay them less. And maybe that's what they're offering. And that's somehow a lot of brokers build their businesses that way, too. Volume, getting transactions done.

Starting point is 00:31:52 I think as we go into this new kind of commission conversation, what it's going to really do is allow the professional brokers that offer a, a more unique boutique service to charge more. I'm actually kind of excited because if the commissions are more up to services, like you said, we overprovide the services. Maybe we should charge 5% instead of 3. And it's going to make it actually an easier conversation because it's kind of like a menu. Like you pick and choose your poison as an investor. What services do you want?

Starting point is 00:32:21 What services do you need? And then you can kind of work with the right broker. But yes, I do think brokers are going to fix their commissions. I know I won't provide all these services for any less than 3% because it costs me 50% just to run my business that way. So if I go to 1.5% I'm breaking even for giving them nine months of services. And so I think it is going to be standardized. I think they are going to be negotiable. And it's really going to make brokers step up and run it like a business, not just a referral network and trying to put tag on houses.

Starting point is 00:32:53 Yeah, I think what a lot of people miss when they think about agents and services. agents provide is that they only think about the services that that agent provided for the deal that closed. They're not thinking about all of the other leads that you ran analysis on, all of the other contacts that you organize for people and put in front of people, all for deals that never made it to the closing table. There's work that you are doing for leads that never make it to closing, but that's part of providing that concierge type services.

Starting point is 00:33:29 don't really know which deal is going to actually get to the closing table. So you have to provide it consistently. And I think now that you have to kind of, you know, make a case for why you want to be paid a certain amount, I think you're going to start to see more concierge type services and people, and people being able to put a price tag on these higher price services. So should you just start calling brokerages, offering a rate? you know, that you're willing to pay and then see who bites? Or, you know, do you think that's the approach to take? Or how do we have that conversation with the agent? You know, I think it's just about asking what they offer you. Like, what is your services list? How can you help me be successful?

Starting point is 00:34:13 That's it. You know, as an investor, what can you do for me to make me successful? Well, for us, we can divine it is we help you with the construction, the design, the analytics, and we can help make it very laid back for you. And you can work your nine to five and have a team behind you that's going to help you implement that business. I wouldn't go around saying, how much do you charge everywhere? It's kind of like, you know, no one wants to hear that. If you call a bunch of contractors, you're like, well, how much do you charge? They're not going to call you back.

Starting point is 00:34:40 You're not ever going to have a contractor. Right. Or the ones that do respond are the ones that are really desperate for business, and they might not be able to facilitate your business in the first point. And so I would just say, sit down, ask what the services are, focus on building the relationship, and then get to the commission statement. Hey, what do you charge or what do you charge for these services is a much nicer way to ask than what deal are going to give me?

Starting point is 00:35:05 Sure. Yeah, I will say the fastest way to get written off by me is to ask me for a discount, you know, first time, you know, on Airbnb, if someone's like, hey, will you do 30% of the rate you have listed? I'm like, no, I won't. So I think that's, it's just common courtesy to try to build a rapport, inquire about the list of services and say, hey, what are your, what is your service typically range from a commission standpoint, let them answer, and then I guess you go from there.

Starting point is 00:35:30 Yeah, and I think, you know, if you're going to pay someone a bigger commission, make sure they're working for it. So do you think there's anything to the idea of having like an incentive structure? This is an idea I've seen floating around where let's say maybe you get an extra half a point for getting a property under contract for 30 days. Do you think that's something that's like worth exploring or do you think that's kind of a weird arrangement to try to strike up with your realtor? The one thing you have to watch out for, and you know, because we actually floated this by our attorney at one point where we wanted to do a shared commission with investors saying, hey, if we sold you a flip property, here's your return, and it was low. We're going to,

Starting point is 00:36:05 we're in charge 1%, 2%, 3, and then it would go up to 6. So like if the client was doing really well, we would get do better ourselves. If the client wasn't doing well for whatever reason, we were going to discount and do the same. And we wanted the shared balance commission. Problem is, I was told that that's more of a security at that point. And the broker's now part of the, uh, part of the investment. And so it doesn't really work that way. But I think it is just, hey, I'll pay you this much commission if you're going to offer me these services. You know, it always makes me chuck a little bit. These new changes have caused us to speak about real estate agents like we would speak about any other business. But it's been operated so differently from other businesses before

Starting point is 00:36:47 that now that it needs to be operated like a regular business, we're like, oh, how was this going to happen? Like, Like, you guys, when you're looking for a real estate agent, you just want to think about what's important to you, right? If what is important to you is to save the most money possible on commissions, then you need to be asking questions around that. And then you're probably going to find somebody who's going to do as little work as possible in order to just get your house on the market and hopefully get you some offers. But if your goals are more customer service oriented, if they are more. more like Rob, you said you need the relationships. Like if those, like think about all of the things you need out of an agent, rank them in order

Starting point is 00:37:33 of importance and then generate your questions that you're going to ask these agents around the things that are important to you. And you'll have a better opportunity to find an agent who's going to provide you the services that you're looking for. It's just like when we're evaluating any other type of service. We're always going to go look for who's going to provide us the thing that's most important to us. If you want to be able to get relationships and to get great deal flow and to have more of like a concierge where all I need to do is tell you what I want,

Starting point is 00:38:07 you're going to find me a deal, you're going to help me get the lender, you're going to help me get the contractor, you're going to help me get to the closing table. Well, you're going to pay a little more for that, right? And you should. And if you're just saying, hey, I got a great house. It's in great shape. It doesn't need any work. I just need somebody to go stick a sign in the yard. This thing is going to sell itself. That's a different agent that you need and you can probably pay a little less. You just have to understand what you need and go looking for those things specifically. It's like any other business. Awesome. Couldn't agree more, man. And this has been, this has been great, guys. This is how to talk to agents and work with agents in 2024 in the ever-changing landscape of real

Starting point is 00:38:45 estate. James, it is always a pleasure to have you on the podcast, my friend. Of course, Henry, is always nice to share the mic with you too. For anybody that's looking to work with an agent that is investor forward, don't forget, you can always head on over to biggerpockets.com slash agent finder. We will see everybody on the next episode of Bigger Pockets. Thank you all for listening to the Bigger Pockets Real Estate podcast. Make sure you get all our new episodes by subscribing on YouTube, Apple, Spotify, or any other podcast platform.

Starting point is 00:39:33 Our new episodes come out Monday, Wednesday, and Friday. I'm the host and executive producer of the show, Dave Meyer. The show is produced by E&K, copywriting is by Calicoe Content, and editing is by Exodus Media. If you'd like to learn more about real estate investing or to sign up for our free newsletter, please visit www.com. The content of this podcast is for informational purposes only. All host and participant opinions are their own. Investment in any asset, real estate included, involves risk.

Starting point is 00:39:58 So use your best judgment and consult with qualified advisors before investing. You should only risk capital you can afford to lose. And remember, past performance is not indicative of future results. Bigger Pocket's LLC disclaims all liability for direct, indirect, consequential, or other damages arising from a reliance on information presented in this podcast.

BiggerPockets Real Estate Podcast - 940: Crucial Questions to Ask an Agent and How to Negotiate Commissions w/James Dainard

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