I work primarily listing and selling homes valued in our area greater than $600,000, in the luxury industry. By default, this experience also positions me as a real estate expert in the investment niche as well.
I have several clients who are constantly looking for that great deal, and most of the time they are all-cash buyers. Working with cash investors can be so rewarding if you understand the investor and how to serve his or her wants and needs.
Cash investors are looking for that purchase that you can prove a great ROI (return on investment). They are almost never in a hurry and cannot be bullied into a purchase. They require you are looking daily for deals because, most of the time, those properties sell within hours of listing on the MLS (multiple listing service).
They want to know that you are diligently working for them. You are not their only agent. Given that information, they most likely will not sign a buyer broker agreement covering the entire county with you.
They have several agents looking at the same time and will purchase from the agent that continually provides the homes they specifically want. It is always a first come first serve with them. It’s not personal, it’s just business. However, setting yourself up as a valued resource is the most important thing you can do for your cash investor.
Being an excellent agent in the investment industry requires you know several aspects above and beyond the purchase price.
You need to have connections with other real estate agents in your area. You need to be the one that realtors call to let you know what is coming on the market before it hits the MLS.
It’s important to remember that having this relationship with other agents means that you are not thinking competitively toward them. You are in a working relationship. It could, and should, always be a win. You want other agents to know that when they give you information, you will use it to sell the home — not go behind their back and “steal” the listing. Having this type of relationship requires a lot of trust and respect.
You need to have connections and relationships with professionals in the building industry. People you can call for estimates and evaluations based on necessary repairs or remodeling needed to resale or rent out the home.
You should also know the general prices that subcontractors charge for minor facelift work. It’s a benefit to you to know tile installation prices, carpet prices, hardwood floor and installation prices, average paint price per square foot, etc. Building the relationships with construction individuals should never be based solely on if that contractor or subcontractor refers you clients. This relationship is professional. My advice: always recommend the best person for the job. In turn, if you are the best person, they will soon be referring you, too.
You must know current rental prices. So you can give advice on how much money to expect per month as an investment and to make sure they are making money. Now I know what you’re thinking. We are talking a cash buyer here, so clearly, they will be making money. In this situation, you need to be looking ahead. You need to make sure that if your client needs to get a mortgage at any time on this purchase, they will be able to rent the home and make money above and beyond a prospective mortgaged monthly payment.
You need to know hot rental areas as well as areas where homes quickly sell if they are flipping. If your community is like ours, there are a few chosen school boundaries that provide areas of higher rent and places where it’s easier to find renters. This tactic is not redlining — it’s educating your clients on the community of your expertise. You are not steering them to purchase any given area, but you are educating them on all different price points in all given areas. They need to know all the pros and cons.
Is there a projected value increase or decrease in a given area? Is there a new development that you know is coming up? Are there new schools coming in a particular area?
Attending your local planning and zoning meetings and city development meetings will answer most of these questions for you. I know that another meeting is just one thing that you feel you don’t have time for, but hear me out. Most other agents in your area feel that same way. If you can provide your investor information about new areas, new schools or any other new developments you will gain a reputation as someone who is in the know.
What special selling tactics do you employ when working with cash investors? Please continue the conversation in the comments section below.
Melinda Goodwin is Luxury Home Division Director with Re/Max First Realty in St. George, Utah. Follow her on Twitter.