Which single question tells you an agent really works with investors

Question

I've now had coffee with four agents and every one of them said the word "investor-friendly" before I did. Two of them then sent me owner-occupant listings with a cap rate typed at the bottom, which I don't think means anything.

So I want one question. Something short I can ask in the first ten minutes that separates the ones who do this from the ones who say it.

The two candidates I keep hearing disagree with each other. One camp says ask how many rental properties they own, on the theory that someone who has never held a unit can't tell you what a unit does. The other camp says ownership is irrelevant and can even be a conflict, and what matters is whether they can underwrite fast and correctly on a property you already know the answer to.

There's also the references argument, which is that you should ask for two investor clients who bought more than once, and the talk-me-out-of-it argument, which is that the real signal is whether they'll ever tell you a deal is bad.

I'm slow about decisions and I'd rather ask the right thing once than interview eight more people. Voting on it below.

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

None of your four candidates is my question. Mine is "send me the last purchase agreement you wrote for an investor client, with the names blacked out." What I'm looking for 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 you what they can do under pressure, and it's also the thing that'll cost you money if they get it wrong.

renee_dubois · Answer

I'd ask what a two bedroom in that submarket rents for, then shut up. Every unit I own taught me that the rent number is where amateurs are off, usually by $150 to $200 high, and that error is enough to turn a deal negative. An agent who says "$1,250, maybe $1,325 if you do the kitchen, and it'll sit two extra weeks above $1,300" has leased property. One who says "about $1,400" read a website.

nicole_adeyemi · Answer

halyard's version is right and I'll add the land variant, since it's slightly different. I send a parcel and ask what it's zoned and what it'd take to split it. The good ones say "I don't know, I'll call the planner Monday and tell you what he says." The bad ones tell me confidently, and they're 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.

Which single question tells you an agent really works with investors

4 replies