The Science of Flipping - Episode 172: Getting Deals Using Realtors

Episode Date: November 6, 2020

There are many different kinds of relationships you can leverage in order to get deals, but one of the most effective relationships is with realtors. So what are the things you need to do in order to get deals coming your way from realtors?

Welcome to the Science of Flipping Podcast. I'm your host, Justin Colby. What's up, everybody? Welcome back to the Science of Flipping Podcast. I am your host, Justin Colby, and this podcast is all about these systems, tools, tips, tricks of real estate investing, business, and entrepreneurship. If you have not yet gone and subscribed to my YouTube channel, make sure you do that. I give away daily videos on YouTube. So it's youtube.com forward slash Justin Colby. Make sure you go subscribe there. And if you ever want further conversations with me, you can go to thescienceofflipping.com.

There are plenty of resources and a strategy session form that you can go fill out at thescienceofflipping.com. Today is an exciting topic as I am gonna talk to you all about how we are currently doing anywhere from five to 10 deals with realtors right now, where I am not spending any of my own money marketing. I am simply finding the right realtors to find me deals and we're able to make it a win-win for everybody. So how do we do this? What do we say? Why would realtors do this? First and foremost,

I think I want to overcome this stigma that realtors do this? First and foremost, I think I want to overcome this stigma that realtors don't know what they're doing, that we don't like working with realtors as real estate investors. I think it's all crazy. I think it's nonsense. I think you need to be working with realtors for multiple different reasons. One of those reasons is to get more deal flow. So if you do not have a marketing budget or even have a large marketing budget, this one technique is something you need to implement in your business today. So what is it that I say to these realtors and how do I find them? Well, first and foremost is talk about how do I find these realtors? Now, there are several different ways you can go about doing that. One of which is go in the area that you're looking

to find deals in and go into a software like PropStream. If you just go to tsofdata.com, they'll give you seven days free trial on PropStream. Go to tsofdata.com and they'll give you free seven days. Go into that area and go look up comps in the area. Go look at homes that are rehabbed homes or look at homes that sold as is. And I would start calling those realtors, right? Because the information will be right there on PropStream for the realtor's phone number. And I would be giving them this pitch. This is what you want to say to the realtor. I introduce myself. I say, hey, Mr. Realtor, saw your property. Actually, I was looking on PropStream. Not sure if you're aware of it. Saw your property. It's a beautiful property. It's not a great fit for me because it's already remodeled. Now, let me ask you, do you actually come across

properties that you list that may be challenging or need a remodel? And I wait for the answer. Now, from there, I'll simply say, great. Well, let me tell you a little bit about what I do. I want to make sure there could be some good synergy here. I'm always looking to buy more properties, but as we all know, it's challenging to buy enough. And so I am now taking my time to reach out to realtors such as yourself to see if there are ever properties that really aren't a great fit for a listing on the front end, but might be a great listing for you after the repairs have been done.

And if so, how often do you come across those things? Wait for his answer. Great. Well, what I'd like to be able to do is to build a relationship with you, continue to follow up with you. I know this doesn't happen to you every day. I totally understand that, but I would like for you to send me those properties to see if I can make an offer, whether it be through you or directly the homeowner, and I'll make sure you're paid. Now, here's the key to this. Every realtor, this is their livelihood. This is what they do for living. They need to make money. So every conversation with realtors really need to be about what's in it for them. How are they going to make money?

Where do they see that money along the transition of making an offer either for you or potentially relisting it for you as a rehab or a wholetail? There are technically four different ways that they can make money. They can either represent the seller and make one end of the deal. They can represent the seller and ourselves and make two ends of the deal. They can then also list the property if we so choose to wholetail it or rehab it, make three ends of the deal, or they could also bring the buyer and make four ends of the deal. So all along this way, there's going to be an opportunity for them to make multiple checks depending upon

what you're going to do with your exit strategy. So you need to paint them a great picture of how they're going to get paid along this model. Now for us wholesalers, I still rehab and I still wholetail, but for those that don't yet, or they don't have the money to, what you want to make sure that the realtor understands is how are they going to get paid when you submit your offer? And it can happen two different ways. You want to make sure that they can either represent you and the seller would pay it in a traditional model. And in that case, they might even be able to get two different points of commissions, or you can actually build them into a fee that you pay as the wholesaler, right? Where, hey, if I can offer $150,000 directly to

the homeowner, if I can get that done, I'm happy to pay you an extra four or $5,000 to make this happen as long as I can get my price at $150,000? Well, how much would a realtor actually be making at $150,000? They'd be making roughly the same amount of money, but this way you're going to be paying for it, not them, right? Because 2% of $150,000 is going to be three grand. You're offering to pay them anywhere from three to 4,500, maybe five grand if you can get this accepted. Now, one question I get all the time from people is, do you tell the agent you're going to look to wholesale it? And I think the answer is, it depends. If you have a good agent and I have one agent who has worked with me over time, they obviously know for the most part, I'm going to be wholesaling

this property, but they see the value because they're able to make a commission or a fee on a property that they normally would not have been able to make because it wasn't a listable property. It was just a, you know, kind of what I call a dumpster fire, right? Like it needed a lot of work. The homeowner didn't have any money to do it. It wasn't going to be able to be listed and get a, you know, a number that a bank would approve, right? So it was not bankable. There are another deal that we just closed. The homeowner literally had to be out within 10 days. That was the reason they couldn't list it. They would have, but the homeowner had to be out in 10 days for reasons, personal reasons about their children. So the realtor called me immediately

and said, Hey, can you make an offer on this? I'll make sure I'm fit in the middle of there somewhere, make the best number you can make. And I'll make sure there's a couple of dollars in it for me. Another deal that I was able to get done recently was there was a COVID homeowner. He was tired of, well, he had COVID, he beat COVID, but then he was tired of just being in the city. And he was like, I need to get out of the city. I wanna take my equity right now and I wanna go buy an RV and live up Northern Arizona. The friend of his was a realtor that has done business with me.

She called me and said, Hey, do you mind just making an offer directly to him? I don't need to fit in the middle. This is a friend of mine. I know you're going to be good for it, but he wants to go now. Like he just beat COVID. He's an older gentleman. He wants to get out of here. He wants to buy an RV. Can you make this happen? I know for him, speed was another thing. In these two examples, it was because we were able to close one in seven days, the other in 10 days, and it really helped them. Now, one example, the agent did make a full-blown 3% commission on the sales price. She negotiated that with the seller. I did not have to pay that commission. Another example, the realtor actually took no fee and it was because she was

more interested in helping a friend out and she knew I could execute on that. And in both scenarios, we wholesaled it over to an end buyer. I didn't buy either of them. The realtors were aware of it. They were totally okay with it as long as I could execute and get it done. So that type of confidence on my part comes from how well my buyers list executes. And I know that they are incredible buyers list. So I have a lot of confidence dealing with realtors in that sense, because I know I can usually move it as long as I can get it accepted at my number. That's why I give them the number I give them. So with all that said,

the idea here is you want to paint a picture of what you're looking to do. Make an offer, want to make sure the agent's able to get at least two or 3% commission, whether I have to pay it as a buyer or if the seller pays it in a more traditional model. And if I am going to wholetail it or rehab it, I want to make sure

that they also understand they can actually get two or three or four sides of this commission. There's an actual vision here that they can actually accomplish. And I also understand they're not going to have a lot of these deals come across their plate. So it's my job to follow up with them. Would they mind if I just keep following up with them? I'll ping them every week or two, maybe three, just say, Hey, is anything looking good for me? Anything out there that, you know, might need a lot of work or isn't a great listing option. And then it's my job to keep up with the agent to make sure that they actually send me the opportunities and for us to work.

That is what you wanna say to an agent. You wanna paint the vision for them about you're gonna submit an offer as cash, all the benefits of it, cash closes quick, et cetera, right? And that you are looking for properties that are not on market. That's the key. I don't wanna see all your listings, Mr. Agent. I called you because I saw your listing. I'm saying it's

not right for me. I need something that's not on market. And here's the kind of specs of what I'm looking for. And now it's your job to follow up, follow up, follow up with that agent. Agents provide me a lot of deals every year. It's a great resource. It costs me no money. Even if I could do one a month, which we do more because of agents, even if that was the case, it's a free deal. And even if I only made five grand per deal, that's an extra 60 grand to my bottom line that didn't cost me anything. That bottom line needle is all I really care about, right? And so that way helps to increase that bottom line. So the profitability of the company continues to raise.

This is such a crucial conversation. So where to find them? Again, great places to find them. Again, if you are not watching my YouTubes, make sure you're gonna go over to youtube.com forward slash Justin Colby. I have daily trainings on YouTube. If you're watching this on YouTube, smash the like button, hit the subscribe button. If you're listening this on iTunes, awesome, welcome, or any other platform,

go over to the scienceofflipping.com. There are a lot of resources there. In fact, I'm happy to give you a strategy session call with me if you would like further help about your business. That is over at thescienceofflipping.com. So with all that said, I digress. Now, where do you want to find these agents? I find them on PropStream, on comps, comparables, rehab listings. I go into the area and I just see what is active, active listings. Obviously, if you have the MLS, you can do the very same things on the MLS. Another great resource here is your title company. I actually go work with Fidelity title company quite a lot. They'll have me actually speak to their agents

and I can get in front of agents through the title company. They also will be able to send me lists. So utilizing your title company and then asking and utilizing all the social media platforms is a great area, right? So Facebook, you know, Facebook primarily, but you also can leverage LinkedIn as far as agents are concerned, realtors, you know, they use Instagram, but it's probably not the best platform to be doing it. And then it's just about engaging. And you will see the more realtors that you can get and the more contact you can get, you can start to leverage emails as a way to get ahold of them, right? So if a title company can get you a list of realtors, you can send out an email to these realtors, explaining the very same thing that I just taught you guys right now is to go and,

you know, get them on the phone, create the vision, what you're looking to do. I have a great email template that I use with realtors, which is great, which is held in my closed Facebook group for our students. So you students will have access to that. But yeah, that is, again, it takes the work. There's not a lot of money to spend there, but this is something, again, even at the worst case scenario, if I can get one deal a month, that's an extra 12 deals. Let's just say I can only make five grand. It's an extra 60 grand a year. Imagine how that extra 60 grand a year could help you. And I'm not spending any marketing on that.

Realtors are the real deal. They're an incredible way to get more deals. And on a further episode of our podcast, maybe I'll talk about how these same realtors are helping me sell my deals and finding me buyers, which is an incredible strategy in and of itself as well. And so hopefully this podcast helped you. This podcast is all about the tool system strategies as a real estate investor, business owner, and entrepreneur. I hope this helped. Go to thescienceflipping.com. If you would like further strategy session call with me, you can fill out a quick form. Also YouTube is every day, more and more videos on YouTube. So get over to Justin Colby, subscribe to YouTube. See you guys later.