The Science of Flipping - Episode 53 – What To Say To A Realtor… | Real Estate Investing Podcast

Episode Date: November 11, 2014

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Welcome to the Science of Flipping Podcast. I'm your host, Justin Colby. What is up, guys? Welcome to the Science of Flipping Podcast. I'm your host, Justin Colby. It is an absolute gorgeous day here in Phoenix. It finally cooled off. I think the high today is going to be about 80 degrees. It is November 3rd. So I know some of you who are listening are out in the snow and the cold and the rain and all that out here in Phoenix, Arizona. It is a wonderful day. Blue skies. It is roughly about 80 degrees. So it is a gorgeous day here. I'm happy because I tend to like colder weather rather than hotter weather. I know that's ironic because I'm out here in Phoenix, but that's typically my preference is to have

cooler weather rather than hotter weather. So welcome to the podcast. This is episode 53. We are here. We're in the 50s. And I just want to say thank you all for being such loyal listeners. I really bring it each and every week and give you all that I can. And so, you know, I hope you really appreciate it. And today, guys, we are going to be talking about something pretty relevant right now. I get a lot of emails. I get a lot of students asking about how to approach and handle realtors. That is going to be what we're going to talk about today. If this is the first time that you have listened to this podcast. If you randomly chose episode 53, I have a couple things to tell you. First and foremost, get over to thescienceofflipping.com and download your free e-book.

The main reason you want to download your free e-book is because the e-book is awesome. It is the 15 most costly mistakes an investor can make in today's market ask me how I know those mistakes right so it is absolutely free get over to the website and the science of flipping calm and download the free ebook the 15 most costly mistakes a Estate Investor Can Make in Today's Market. Now, if you have been listening and you like what I'm giving you and I give you everything I can each and every week and you're interested in taking your game to the next level, building a bigger business, feel free to email me directly at info at thescienceofflipping.com regarding coaching or mentoring.

If you think we would maybe be a good fit and you would like for me to personally help you bring your business to the next level, again, email me at info at thescienceofflipping.com and I'll personally reach back out to you and we can have a free strategy call. Also, if this is your first time listening to the podcast, this podcast is all about creating your lifestyle by design, building a business but not letting that business own your time, being able to be on vacation and get deals done. There was an episode, I forget the episode, but I was in Punta Mita, Mexico closing deals and I did a podcast out there just to make sure everyone understands I still live the life that I want to lead. I want to be on vacation. I want to spend time with my family. I'm going back to my family for two weeks this month of November. One for the Thanksgiving holidays, I get to be around

my friends and family, and another here coming shortly. I try to spend all of my time with friends and family because that's what means most to me, but I want to build a business and have a level of financial security. So how do you do both? Well, this podcast helps you systemize and organize your business so that you don't have to be in it all the time. Whether you're outsourcing something to a virtual assistant, hiring in a lead manager, hiring in a project manager to handle your flips, whatever that may be, it allows you to go do something else that you'd prefer to do and your business can keep running. So that's really the goal behind this podcast, guys. All right, enough of that stuff. Let's just jump right into today's topic, which is finding and developing a relationship with a realtor.

I've had a lot of students over the last couple months really be asking me, I've been talking to realtors and they just don't seem to get it, or what do you say to realtors? Because every realtor I talk to says that this can't work or whatever. They make excuses. What I wanted to first mention, and I have a list right here that I'm looking at that I want to make sure I cover for you, but first and foremost, guys, not all realtors are going to make a good fit for you. I don't want to sit here and bash realtors. That is not the point. Some of my best friends in the world are incredibly successful realtors, make millions of dollars, that are great with their clientele. They are awesome.

But for the most part, realtors are all about what's in it for me, how are you going to get me the next paycheck? So if you don't have a rapport with a realtor, if they don't see the vision, if they don't know what you do and how you do it and how frequently they will be able to make paychecks, it will be very hard for them to understand your business. You see, most realtors are taught in their classes that they have to take for their license, as well as just the industry standard is traditional real estate, right? They either list the property for sale on the MLS and or represent a buyer, drive them all around the city trying to find a listing that will work for

them, and then writing an offer for a single buyer that usually will have a loan, whether it be conventional, VA, FHA, or otherwise. That's really what they're good at. That's really what they understand and know. When we investors are looking to build a good group of realtors to work with, we have to understand out of the gates that most of the realtors will not understand what you are doing. They don't get it, right? They don't understand how this is going to work and how your direct marketing to sellers and how you would like them to possibly come to you before they list the property because you might like the

property or they don't understand wholesaling. You are going to have to go through a lot of realtors. I don't know how else to say it. There's no easy answer. There's no magic potion. Not every realtor is going to fit the bill. Quite frankly, when we first started, I started to really count how many realtors I had to talk to before I found one that actually understood what we were trying to do. And the number really became about 1 in 20 realtors that I talked to wanted to work with me and or understood where I was going, what I was doing, and wanted to work with me, right? So the key there is a rapport. You need to build a rapport. They need to trust you and vice versa. That is why I would highly suggest trying to find a realtor that knows you already. Whether it's a family member or a friend or a friend of a friend or a friend of a

family member, somebody who knows you, they'll trust you inherently or at least give you more trust than just a Joe Schmo that you just met or that just met you. So, you know, the first bullet point was you're going to have to go through and talk to a lot of realtors to find one that will work with you. Now, bullet point number two was the path of least resistance is to make sure you reach out to your friends or family who might be realtors or know realtors. Someone that knows you is going to give you a step above than just trying to call or co-call a realtor off Craigslist or the MLS or realtor.com or whatnot. Now, the third part that I want to talk to you about is what is your pitch to them? What is your elevator pitch? Now, remember, if you're coming from a place that you understand this is their livelihood,

they feed themselves off this. They feed their family. This is how they make money. This is their livelihood. So they don't want to waste a lot of time. So if you come from a place of understanding their situation, it gives you an ability to create a sales pitch or an elevator pitch to give them a brief focus on what you're doing, right? And so it's something very similar to this. And I've done this over and over and over again. And, you know, it's natural to me, but if I were you listening and maybe you haven't been doing this or it hasn't been that effective, maybe take some notes, edit it around, you know, reformat it, change up a couple of words that I say, but

here's exactly what I say to them. Um, when maybe we're meeting for coffee. Or I'll give you two examples. I'm calling them off a listing that they have. And then I'll give you an example just simply about, let's say we are meeting for coffee because my brother introduced me to Johnny Realtor. So the first example will be, I'm calling off a listing that they have. So, all right. Hey, Mr. Realtor, my name's Justin Colby with Phoenix Wealth Builders. I saw your listing on 123 Main Street. Is that still available? It does say active. And they're going to say, yeah, that is still available. And okay, great. So I'm not so certain or sure that this property is going to be the right fit for me. I'm an investor here in town. I'm a local investor.

And let me tell you a little bit about what we do and what we're looking for, Mr. Realtor. I'm a pretty traditional investor. I buy the home, I rehab the home, and then I relist it on the MLS. Very similar to what you see on TV. So again, pretty traditional, not too creative. I'm sure you're pretty familiar with what I do, correct? Yes, the realtor says. Okay, great.

Well, again, I don't know if this home is really going to work. However, I am interested in networking and seeing if we can build a relationship. Have you ever worked with investors before, either on the buy side and representing to buy the home and or on the sale side after they fix it? He says, yes. Okay, great. Well, you know, I think I'd like to sit down and have a cup of coffee with you. But before I do that, are you even open to taking on more clientele or working? Because I'm really looking to buy a decent amount of deals this year. I would like to see if I could get at least one to two a month, but I would be more than happy to just start with one through this type of relationship,

one a month, and then go from there. Again, not all deals are going to work for me, but I do have a group of investors I do work with. If I don't find the numbers that I can fix and flip it, Mr. Realtor, I have a bunch of buy and hold friends that love to buy and hold. Needless to say, whether I buy it or if I just bring in one of my other rental type buyers, you're going to make your commission. It's important to me that you understand that this relationship is driven upon making sure that you get what you want, which will be your commission,

but also that I'm getting what I want, which would be a good property for me to fix and flip or at least bring in another investor who would buy and hold it. So it would be a win-win scenario. Does that sound fair to you, Mr. Realtor? Yeah, that sounds great. Okay, listen, why don't we have a cup of coffee? We can talk a little bit more. I don't necessarily like buying off of the MLS. And so a lot of times I work with realtors that will bring me a listing or a pocket listing before it's a listing. And Mr. Realtor, I want to make sure, again, you know, I would make sure you make a commission on that,

even though it doesn't go all the way through the MLS and through that channel. So that's my guarantee to you is when I buy a quote-unquote pocket listing, we build your commission into that number so you still make your commission. Sound fair? Yeah, sounds great. Okay, let's go meet at Starbucks and continue our conversations. Okay, so that's example one, right?

Pretty easy. I've had that conversation a million times. Obviously, depending upon how the realtor is gonna respond to me, changes kind of what I say, but for the most part, that's really what I'm trying to get across. You're gonna make a commission no matter what.

I don't necessarily want MLS listings. And so let's try to figure out a way that we can work together where it's a pocket listing. You bring it to me. I buy it cash and booyah, right? So I don't get into the whole wholesaling, assignment, double closing. I don't do all that with the realtors. In fact, I don't do anything until, I don't say anything kind of confusing or maybe something that would be outside their realm until they bring it up to me. I just want to go find a deal.

At that point, I will deal with the deal separately, right? So independent of everything, a realtor brings me a deal, I write an offer, it gets accepted. At that point, once I get it accepted, now I will have conversations possibly with the realtor if I'm not intending on buying it. I'll say, hey, listen, Mr. Realtor, after review on these numbers, I'm going to bring in my other investor buddy who would like it more than I would. His rehabs are cheaper, blah, blah, blah. You're still going to make your commission, Mr. Realtor. You're still going to make it. But unfortunately, it's just not going to work for me. So you'll still make your commission. I'll just assign it over to him, right? Boom, boom, much clearer than coming out of the gates with that type of explanation, right? So it's a lot easier to have that kind of conversation once you have a contract ready to go

and in contract with you and in title. All right. So that was based off a listing that I called. Now, let's say someone, let's say I meet a realtor at a REIA meeting. Let's say I meet a realtor through a friend. Let's say I just randomly meet a realtor at a REIA meeting. Let's say I meet a realtor through a friend. Let's say I just randomly meet a realtor. So instead of sitting there and having a conversation right then and there, I'll usually say, let's go grab a cup of coffee, see if we can put some business together.

Now, this is how the conversation goes if I met them through someone or met them at a REIA meeting or whatnot, is, all right, Mr. Realtor, so great to meet you. Thank you for meeting me for coffee. I just want to explain a little bit about myself first, and I want to see if there's a synergy there that we can develop some business around. Again, I'm a pretty traditional investor, as I'm sure you're aware. I buy it, I fix it, I flip it, and resell it. And so very similar to what you see on TV, right?

You understand what I do. Yeah. Okay. So most traditionally, I try to find homes that are not on the MLS. I want to find homes that are directly to the seller. Now, I don't mind paying a commission, and that's why I'm speaking with you because anytime that there comes a property that is a pocket listing or a listing about to happen or maybe even you're going on a listing appointment and to get the deal, you might need to bring an

offer. I can give you that cash offer just to get the listing. But ideally, I want to be the one buying it for the offer I give it to you. Ideally, I don't want it to even hit the MLS and I want to have it before anyone else. Again, I'm a cash investor. I close quick. Quite honestly, even if it doesn't go to the MLS, I want to make sure you still get paid. It's a win-win scenario. I know that this is your livelihood and I know this is what you do for a living. You spend a lot of time, effort, and money into your business. So I want to make sure more than anything, any type of relationship that we develop, we're going to make sure you make a commission on each and every one of those deals.

So that is first and foremost in my mind. At the same level, I want you to understand that I'm an investor, so there needs to be some sort of margin there. It doesn't have to be 50 cents on the dollar. Of course, I would love that, but it doesn't have to be. What I'm looking for is deals that I can buy pretty much direct from seller, get you your commission in the middle of it that can be paid out through the HUD, and I can still fix it and flip it and make a nickel and everyone wins. That's really what I do. Now, Mr. Realtor, do you think this is something that you would be interested in working with me together? Have you ever done

this before? Have you worked with investors in the past? Tell me a little bit about yourself, Mr. Realtor. And that's that. So that's how, again, a lot of similarities just positioned slightly different. So, you know, it's important that you have kind of that foundation of a script. So what I truly, truly suggest is I want you to write this down so it makes sense for you. Make it your own. I've said this hundreds if not thousands of times to realtors. I know it. I'm comfortable with it.

I want you to make it your own. I'm going to give you a couple of the one, two, three, four things to say. Number one, understand who you are. You are an investor who buys the house, fixes the house, and sells the house. If the numbers don't work for you, you'll bring another one of your investor buddies in to buy the house and make sure that the realtor makes their commission. Okay. So that's number one, that gives them the kind of slight hint that you might not be closing and that you might assign it to another buyer. Okay. If you're looking to wholesale it. Number two, you want them to make sure you know that they're doing this for a commission and that no matter what, you will be getting them a commission on every single one of your deals that you guys do together. Okay?

And number three, quite frankly, is you want this to be a long-lasting relationship. However, let's crawl before we walk. I would like a good realtor on my team, and I'd like to build a good business together and I want us all to make money. This isn't just about me. So, you know, I want this to be a long-term relationship. And that gives them some security, right? So that's why I put that as the number three is you're not just a, you know, one trick pony and you're not just coming in for one deal and you're gone tomorrow. You're looking to make this relationship last. That gives that realtor some security.

That's really the three components I would make sure is involved in what you're talking about and building that relationship. Maybe right before number three is just that rapport and that relationship is super important. Building that rapport, building that relationship, making sure that they understand. This is, you know, I'd like this to be a long-term thing with us, right? All right. It is 20 minutes in. I'm sure half of you guys are like, oh, I'm asleep. But thank you for the other half that are sticking with me thinking this is awesome. Make sure to take notes. Make sure to rewind this. Make sure to re-listen to this. Make sure to develop your own script. If you do need help and you're ready to get to that next level and you like what I have to say and you would like some mentoring or

coaching, email me directly at info at thescienceofflipping.com and I'd be happy to give you a free strategy call. My name's Justin Colby. I'm your host. This has been another episode of the Science of Flipping podcast, and I will see you guys next week. I'm out. Peace.