The one question that actually tells you whether an agent works with investors

Question

After a round of coffee meetings, it's common to hear every agent describe themselves as investor-friendly before being asked, and just as common to then receive owner-occupant listings with a cap rate typed at the bottom, which doesn't actually demonstrate anything. The useful exercise is finding one short question that separates the ones who really do this work from the ones who just say it. Two schools of thought tend to disagree here. One says ask how many rental properties the agent owns personally, on the theory that someone who has never held a unit can't fully explain what a unit does. The other says ownership is beside the point and can even be a conflict, and what actually matters is whether the agent can underwrite fast and correctly on a property whose numbers are already known. There's also a references approach, asking for two investor clients who bought more than once, and a talk-me-out-of-it approach, where the real signal is whether the agent will ever tell a client a deal is bad. Of these, the underwriting test tends to be the most reliable in practice, since it's hard to fake in real time and doesn't depend on personal ownership history that may or may not translate to client-side skill.

ryanmck27 · Accepted Answer

Take a listing you've already underwritten yourself and know you'd pass on, and send it to them cold with no comment. Ask what they think.

That one question does everything your four candidates do separately. If they come back with a rent range and a source for it, they've leased units like cairn says. If they mention that the taxes reassess on transfer in your county and blow up the number, they've closed investor deals. If they tell you to pass, and give you the reason, you've learned the thing that actually matters, which is whether they'll ever say no to a commission. And if they come back with "great potential, want to see it Saturday," you're done in one email and it cost you nothing.

The reason I'd use a property you've already worked rather than a fresh one is that you get to grade the answer. On a new listing you can't tell whether they're right, so a confident wrong answer beats a careful right one, which is backwards.

On the ownership question, I've watched people who own eleven units and can't underwrite, and people who own nothing and can, because they've sat through forty investor closings. Ownership is a decent tiebreak. It's a bad filter.

One warning. Some of them will figure out they're being tested, and honestly, an agent sharp enough to notice is probably one you want.

wendy_park48 · Answer

Neither of those two candidate questions gets at it. The better one is to ask an agent to send the last purchase agreement they wrote for an investor client, with the names blacked out. What that shows is whether they know how to write an assignment clause, an as-is provision, and an inspection period that's actually a due diligence period. A cap rate typed at the bottom of a listing costs nothing. A contract shows what an agent can do under pressure, and it's also the thing that costs money if they get it wrong.

renee_dubois · Answer

Ask what a two bedroom in that submarket rents for, then stop talking. Rent is where amateurs are most often off, usually by $150 to $200 high, and that error alone is enough to turn a deal negative. An agent who says something like $1,250, maybe $1,325 with the kitchen done, and it will sit two extra weeks above $1,300, has actually leased property in that market. One who says about $1,400 read a website.

nicole_adeyemi · Answer

Halyard's version is right, and the land variant is slightly different. Send a parcel and ask what it is zoned and what it would take to split it. The good ones say, I don't know, I will call the planner Monday and tell you what he says. The bad ones answer confidently, and they are wrong about half the time, because zoning language differs by jurisdiction and nobody memorizes it. Willingness to say I don't know is the whole test on the land side.

The one question that actually tells you whether an agent works with investors

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