Peter Pays Paul

This is part two in the series on how to find distressed property.

Use a Professional

The second method of finding distressed property is to utilize the services of a professional real estate agent or agents.

Sidebar:
I have chosen not to use the term REALTOR®, because a professional real estate broker/agent may choose whether to pay for the use of the term REALTOR® or not. Many qualified broker/agents do not see the value in paying for the licensing agreement.
End sidebar.

A License, Does Not a Professional Make

Having a license to do something does not make you a professional.

I have a drivers license. However, that does not mean that I can get out on the track with professionals like Dale Earnhardt, Jr. or Kyle Busch of NASCAR.

During the extreme run up in home values many individuals saw an opportunity and pursued a real estate license. However, many of these same individuals only used the license for friends and family.

The newly minted licensees never committed enough time or education to support themselves fully through the marketing and sale of real estate.

Sidebar:
This scenario is more true in the residential market than the commercial market. However, it could be true of a residential agent that is transitioning to commercial real estate.
End sidebar.

Mark of a Professional

The term “professional” should only be applied to those agents that solely support their lifestyle from the marketing and sale of real estate.

Sidebar:
The professional’s lifestyle should not involve a rusted ‘85 Yugo or living in mom’s basement.
End sidebar.

A Professional’s Value

Market Knowledge

A skilled real estate professional is intimately acquainted with the target investment market. A professional should know what areas to avoid and which areas are ripe for investment.

Trained Eyes

Professional real estate agents have eyes trained to evaluate real estate assets. A professional agent will evaluate more property in a month than a layperson might in a year or more.

Agents and brokers, when trained to recognize what characteristics you are looking for, can provide quality leads. They are rewarded/paid only when they find a property you like and assist you in the purchase of that property.

Pocket Listings

Though “pocket listings” are frowned upon they can provide opportunity.

A pocket listing is a property that the broker has a signed contract to sell yet has not released to the general masses (MLS), but kept in their “pocket”.

Many brokers and agents have pocket listings that they release to a selected group of repeat buyers or investors that the broker knows will be interested in the property. Being on the short list of investors increases the likelihood that you will be able to find a distressed property to buy right.

The Network

Most professional brokers and agents have a network of individuals (escrow, mortgage, attorneys, finance professionals, other brokers, etc.) that can be put to work for the investor. Now the number of eyes and ears alert for an investor’s property type has just exponentially increased.

Downsides

The professional real estate brokers and agents that an investor wants to work with are busy people. An investor needs to prove to the agent that they are serious about investing and that the agent will be rewarded for bringing properties to the investor.

Brokers and agents need to be trained to find what types of properties meet your criteria. This can take a while and may also need some refining as they send you deals. Investors should follow up with brokers that send you deals. Let them know why a property is not right for your investment strategy.

Conclusion

While training a broker or agent what to look for may take time, it is definitely worth it in the end. Their trained eyes, experience, and network are well worth their compensation.

Related Posts

• How to Find Distressed Properties #3
• How to Find Distressed Properties #1
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• The Need for Speed - Hard Money Solutions
• Buying Right - The Art and Skill of Evaluation