Reaching out to real estate agents is one of the best lead generation strategies a wholesaler can have in their arsenal.
I even coined the term agent outreach because the ability to build and grow a relationship with agents is literally second to none. I have built relationships with many real estate agents, which has provided me the inside knowledge of what properties are on the market.
While agent outreach is phenomenal, there are a few traps – 12 to be specific – that you might encounter when doing this type of communication. Here are 12 agent outreach traps you need to be aware of.
12 Agent Outreach Traps to be Aware of
Before I get into the types of traps you might encounter, let me give you a brief insight into what agent outreach entails.
Agent outreach is a strategy that involves cold calling and texting real estate agents in order to find out if they have any leads on properties that have been either sitting on the market or are coming to the market.
Now, these types of properties need to be in their original condition – meaning, there hasn’t been any type of renovations – or are dated and need to be fixed up.
Considering that many people who are starting or in the process of selling their homes will turn to real estate agents, these individuals are the perfect source to learn more about properties on their market.
Now that you know what agent outreach is, let’s examine the traps you should be aware of:
Drip campaigns
Sends other wholesaler deals
Expects future listings
Won't do a dual agency
Ask to be the buyer's agent
Exclusive buyer broker agreement
Title companies
View it before acceptance
POF
Non-assignable contract
Ask to view property before contract
Guilt trip
1. Adds you to a drip campaign
This happens mainly due to miscommunication and often on the agent’s part. What happens is you reach out to an agent, disclosing that you’re an investor and you’re looking for either distressed houses, houses in original condition, or houses that need to be fixed up and that haven’t been listed.
Unfortunately, the agent wasn’t listening or didn’t understand the ask, so they place you on an email drip campaign.
These campaigns will often feature listings that are on the market; now this isn’t a bad thing. These types of campaigns can show you what’s currently on the market and you might find one that ticks the boxes on your list.
But this was not what you asked the agent about.
How to Respond to an Email Drip Campaign
The easiest way to respond is to call the agent back and, very respectfully, just say there must have been some miscommunication. Reiterate what it is you’re looking for or go into deeper detail on the properties you’re looking for.
Again, be respectful and kind in this call, but also make sure that they are more aware of what you’re asking of them.
2. Sends you other wholesalers’ deals
Getting another wholesaler’s deal isn’t a bad thing, necessarily, as in some cases you can work with the other wholesaler.
However, if an agent is sending you another wholesaler’s deal, that other wholesaler might think that you’re trying to be or expect you be a buyer for their property.
They may not know you’re trying to JV the deal or co-wholesale the deal and along with that, the agent might not understand how the buying process works in this type of real estate investing.
How to Respond to Another Wholesaler’s Deal
Some of the ways you’ll know if you’ve gotten another wholesale deal from an agent is through the language that is used.
If the agent says something like, “there’s no inspection period” or “non-refundable EMD”, then you know that they’re most likely sending you a deal from another wholesaler.
In this case, you want to let them know that you’re in the market of fixer-uppers and that you have relationships with other wholesalers. Just nicely tell them that you actually don’t need other wholesaler deals and reiterate what you’re actually looking for (off-market properties, original condition properties, properties that need work).
3. They expect future listings
The agent understands what you’re looking for and does have something for you, but they’ll only offer it if they get the future listing of the property.
Essentially, they’re dangling a carrot in front of you, hoping that you’ll take a bite. Now, if you’re just starting out as an investor, you might take them up on their offer. And that’s fine.
What I like to do in these situations is tell the agent that while I would love to work with them in the future, I already have vetted agents that we use for our fix and flips and if they’d like to be considered as part of that, we can definitely set up a meeting.
I then continue with the fact that we have a process in place for our agents and that I can’t just give a listing to this particular agent. You want to explain this, again, in a kind way and try to compromise.
4. Agent refuses to do a dual agency
In this case, you’re asking that an agent represent you in a particular deal and they won’t. They might say, “I don’t do dual agency” or “dual agency is illegal”, or whatever their reason is.
How to Respond to a Dual Agency Refusal
When an agent won’t do a dual agency, this just means that they don’t want to represent two people. And that’s fine.
Instead, what you can do is ask if they have another person they can refer you to. This is great because the agent doesn’t compromise their reasons, but it also means that you’re still in their network.
And at some point, they may want to bank on that referral in the future with you.
5. Agent asks to be the buyer’s agent
In this situation, an agent may say they don’t have anything at the moment, but they see the type of properties that you’re looking for and they’ll ask if they can either write the offer for you or if they can be the buyer’s agent.
In this case, the answer is a very hard no!
There are several reasons why you don’t want to have an agent become your buyer’s agent:
It creates friction in the situation
They pepper other agents with very low offers
They don’t create rapport with other agents
You’re left spinning your wheels and wasting time
How to Respond to an Agent Request to Representing Buyer
As with the other responses, be respectful when speaking to these types of agents. Just say no to their suggestion. Tell them that you work with a lot of people and you prefer going directly to agents.
6. Exclusive buyer-broker agreement
This is one of the most thirsty agent outreach traps. What this trap does is trap you in a 6-month agreement from an agent on an exclusive deal. That means that any house within that 6 months that you buy, they want a commission on.
You’ll usually see this from newer real estate agents and the reason they do this is because they’re a little insecure. They may believe that you’ll find someone else to work with, they’ll lose you completely, or they believe they don’t have any value because they aren’t sure how to retain customers.
How to Respond to Exclusive Buyer-Broker Agreements
The way I handle this type of trap is to tell the agent that I’m happy to do this type of agreement, but that it has to be property specific. That means the commission they receive is only for this particular property, at this particular time.
I let the agent know that I would end up breaking their agreement because I work with so many people. I then offer an option for a non-exclusive agreement, so this way they can still get the commission on the deal we’re doing, but I can also still work with my other agents.
7. They try to direct the title company
The next trap is where the agent tries to direct which title company you use.
The reason they do this is maybe they have an established relationship with that company, where perhaps the agent gets discounts or a few freebies for that partnership.
You don’t want to use the agent’s title company for the simple fact that realtors have retail-based title company relationships and investors have investor-based title company relationships.
These are two completely different entities. A retail-based title company may not do things like assignment contracts, creative financing options, wraps, etc.
How to Respond to Agent Title Company Request
As with the last two traps, the response to this type of agent trap is a hard no. Just let the agent know that you have a relationship with your own title company because as an investor, you’ll often be using cash payments and paying any closing costs.
Most importantly, you’re the one that decides on the title company, not the agent. You’re the buyer and the one who’s paying the cost, so you want to use your title company.
8. They ask you to view it before accepting a contract
As a famous internet sensation once said, “ain’t nobody got time for that!”
This is a trap where an agent won’t accept an offer contract until you and anyone you’re speaking to about this property have seen the physical property.
No. Just no.
How to Respond to Viewing Before Contract Requests
Pictures, as they say, tell a thousand words. If the agent hasn’t sent you pictures of the property, have them do so and then tell you about the property itself. If there’s anything in the images that you see, then ask about them!
Be kind, but firm. Let the agent know that viewing the property before a contract is accepted and signed is a waste of time, for all parties involved, and it would be a disruption in your business.
9. Proof of funds
This trap is actually an easy one to handle. In this case, the agent will ask for proof of funds. That is a perfectly logical request and you can easily send over that document.
If you need proof of funds, then send a quick email to FlipFundLLC@gmail.com
10. Agent says contract is non-assignable
This trap is where a real estate agent tells you that you have a non-assignable contract.
First and foremost, most corporations that purchase homes or real estate have an assignable clause within their contracts. This is because companies assign contracts to other companies, and it happens all the time in business.
When you get an agent that tells you this, this is a sign that this particular agent hasn’t done a lot of deals with companies.
How to Respond to Contract is Non-Assignable
It’s honestly your own business who you assign your contract – whether you’re working under an entity, you’re working with a funding partner, etc.
Just let the agent know that there are various reasons why you need to have this assignability clause in the contract. If the agent still refuses, you can do a double close or use transactional funding if need be, just don’t let a good deal die because of one agent.
11. Mutual cancellation clause
This is a big one, especially for anyone who is doing gator lending. This clause means that both the buyer and the seller need to agree to cancel a contract in order to get your earnest money back.
This can be a big risk to EMD because if you have a salty seller, for example, they may not want to give you back your EMD if you cancel.
How to Respond to Mutual Cancellation Clause
Ensure that this clause is not in the contract you sign or you put in the terms and conditions that cancellation is unilateral, meaning that either the buyer or the seller can cancel the contract within the inspection period and the EMD is returned.
12. Guilt trip
Sometimes you have to cancel a contract. It happens and it happens for a variety of reasons.
Perhaps during the inspection period, you see that this deal isn’t for you. And that’s okay! But then the agent starts giving you a guilt trip about the seller being mad, etc.
How to Respond to Agent Guilt Trips
Again, this! Is! Business!
It happens, so don’t let an agent send you a guilt trip over it. Don’t let yourself get caught up in the emotions of the situation because that can happen. Just let the agent know that you have to cancel and yes, if you think you might have another investor where this deal would work, then tell the agent that.
If you’re able to help find another buyer, then great, but don’t let the agent guilt you into staying in a deal that won’t work for you.
There you have it, guys! The 12 agent outreach traps you should look out for. As you can see, many of these are easily handled by further communication between you and the agent.
Having relationships with real estate agents is a fantastic way to build and scale your business and can help deliver opportunities you wouldn’t have been able to find without them.
If you’re trying to start agent outreach or you aren’t sure how to go about starting agent outreach, then come and join AstroFlipping.
Not only do we give you the tools and scripts to get started, but many of our members are real estate agents that you can build rapport and relationships with. So what’re you waiting for? Let’s do some deals together!