Quick Answer Series: What About Working with Investors?



It sucks! It’s right up there with root canal.  OK.  So it beats a jab in the eye with a sharp stick, but not by much.  It’s horrible!  Let me explain why.

As a real estate professional, your revenue is limited only by your time.  That means that you need to spend as little of it as possible on each transaction, while maintaining a high level of professionalism and client service.  So what does that have to do with investor business?  It has everything to do with it.

First, many investors will want you to lower your ethics to accommodate their tactics, in negotiating, in non-disclosure, in loyalty to other clients, and in many other ways.  Many are not licensed agents themselves because they couldn’t do some of the things they do if they were.  I know of investors who have started to take the real estate pre-licensing course, only to quit midway because they realized that it would prevent their style of real estate practice.

Investors, typically, lack any loyalty to you (or any other agent for that matter).  I have personally spent weeks working on investor business, only to have them cut me out and buy a FSBO property without me.  I’m quite certain I’m not alone.  To most investors, you are an expendable commodity.  They want you on demand, and expect you to drop everything to work on their business.

And what business is that?  It is typically low-end homes that make good rentals with cashflows.  And not only are they looking for low-priced homes, but they are looking for bargains on them, meaning offer, counter-offer, new offer, counter-offer, oops, we missed that one, start over again.  When you can’t work a miracle on some low-ball, they are off to the next agent.

And aside from the lack of loyalty, and the added work involved, investors want you to work wholesale.  If you’ve ever worked with an investor, cutting your commission will come up again and again.  Eventually, you will be replaced by a desperate agent who will work cheaply.

I guess to me it really comes down to this:  Why work harder for less money, and less loyalty if you can work less hard, make more money, and have clients that love and appreciate your hard work.  Why work for wholesale when you could work for retail?  But that’s just me… and that’s my quick answer.

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Matt

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Comments 3

  1. author Pam Keen posted June 14th 2010. 9:06 am Reply

    I do have a few investors that are loyal and I do make extra sales to them and get referrals as a result of it, but many investors I have met fit your profile exactly!

  2. author Las Vegas Real Estate posted June 15th 2010. 4:22 pm Reply

    We have also experienced several of the issues mentioned in the article. However, investors make up a great proportion of our market and we have done significant business with them. Its definitely been worth our efforts. The upside is that one investor may buy multiple properties and this cancels out the lack of performance by other investors. One also has to do some due diligence on the investor. Seek proof of funds, determine if they have bought elsewhere and do they ask smart, specific questions or do they act like they just want a city tour and some Starbucks.

    • author Matt Jones posted June 16th 2010. 12:34 pm Reply

      Thanks for reading and for posting, John. I totally agree as to qualifying your “investors”. I personally, just refer those clients to someone else. I’d rather work for retail than wholesale, but that’s just me. If you had the option between working a retail customer or an investor, I’m willing to bet you’d take the retail buyer. Thanks again for your comment. It means a lot.

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