World Wide Property Sales
Pocket Listings - Be an Insider and Profit
by David Whisnant
One of the most frustrating things early in my real estate investing career was
to see a “For Sale” sign go up on a listed piece of property, call the agent
that same day, and hear that the property went under contract the day before the
sign was even put out. Furthermore, these deals were often great ones that I
would have snapped up given the chance.
What is really going on here is that the agent obtains a “fixer-upper” listing.
The agent then “pockets” the listing, offering it to a few insider investor
clients. One of these investors sweeps it up, and the deal never hits the larger
market. By the time you see the sign, it’s too late. In some areas, a
surprisingly high percentage of the houses sold fall into this category, with
the agent selling the property before it is even on the market. Agents love to
sell a house this way because they make the whole commission (no splitting with
the buyer’s agent), and they keep their investor clients, who have listings to
give them in the future, loyal to them.
This practice MAY be slightly unethical for the agent, as it is really in the
client’s best interest to have the property out on the general market. For
example, if the agent advertises the property on the computer MLS (Multiple
Listing) system, and places a sign in the yard, numerous parties may want to
make an offer, potentially bringing in a higher price. On the other hand, one
might argue that the agent helps the client by getting a quick sale, and that
the client doesn’t have to accept any offer that is not high enough.
As an investor, we don’t really care. We just want to be on the call-list for
this type of deal. We want to wrap these deals up before anyone even knows they
are out there. How do we do this? Here is our game plan.
Select Our Agent
When you have narrowed down the area you want to invest in, and you are familiar
with the market, you need to create ties to an agent. The agent that you want to
select is an agent that does a lot of business in our target area. You can find
this agent by simply driving the neighborhood and seeing who has the most “for
sale” signs up.
Send A Letter To That Agent With The Following
A) A statement that you are interested in buying investment property in
that neighborhood. You don’t mind fixer uppers, and are looking to buy,
renovate, and resell properties. The agent will realize that you are going to
resell, and that you probably will need to list properties in the future. This
gives the agent two chances for profit: The first when you buy, the second if
you list with them when it is time to resell the property.
Include a business card with this letter. Optional: attach a magnet onto the
back side of the card. Magnets to stick on business cards are available at
Office Depot/Staples for a reasonable cost. Your cards can contain the
information on which neighborhoods you’re looking for. (Example: “Interested in
buying homes in xyz neighborhood to renovate and resell.")
B) Attach a letter from a mortgage broker showing that you are
pre-qualified to buy an investment home in the approximate price range of the
homes in the target area. In the alternative, get one saying that you have met
with the mortgage broker, and the mortgage broker will be handling your
financing needs for rental properties. Feel free to let the mortgage broker
include some PR about his firm in your packet.
The mortgage broker will bend over backwards for you in the future because he
will see that you are helping to build his business. This letter from the broker
will make you seem like a real player, i.e. someone who can close on the deal
and pay the agent. Mortgage brokers are happy to hand out letters like these to
anyone with a pulse. That’s a big secret that most sellers don’t know, but now
you do.
C) Optional, but recommended: Attach a newsletter that you come up with
each and every month. In it, give information on helpful homeowner tips. You can
get your raw information out of any number of books on the subject at your
library or local bookstore. Rewrite the content in your own words so you don’t
violate any copyrights. For example, you might have one on how to fix a roof
leak, or how to select a contractor.
The articles should be valuable to her clients. Tell her that she can copy these
and distribute them to her clients. (Leave the top blank so that there is space
for her to insert her name with a word processor). Get one to her each and every
month. It will keep your name front and center. Topics you can use include:
- How to unclog plumbing leaks without a plumber
- Replacing broken window panes
- How to find good sub-contractors
- How to avoid being ripped off by subcontractors
- Why you should always keep gutters clean
- How to select the right plants for your house
- How to replace a cracked tile
- How to paint a room
- New loan programs and refinancing ideas (from your trusty mortgage broker!)
- Basic yard maintenance
- Question and answer format is great, i.e.:
Q: “My house recently had a new roof put on. Unfortunately there are some
old water stains on the ceiling left over from the old leaky days. I tried to
paint over them, but they keep coming back. What would you suggest?
A: Use a quality primer made to cover water stains, like Kilz. The oil or
shellac based primer is the product that you will need to use, as opposed to a
water based primer. Either of these products may be covered with oil or latex
paint. (Check the packaging.) The odors on these primers are extremely strong,
so be sure to open as many windows as you can and ventilate the area. You will
want to make sure that any loose paint is removed before painting, and that the
surface is totally dry. If the stains are especially bad, 2 coats of primer may
be required. Because it can take up to 24 hours for old water stains to bleed
through the primer, it is a good idea to wait before applying your finish coat.
(There is a good magazine called Family Handyman that contains some great
articles you can use for inspiration and accurate content. It should be
available at larger bookstores, and is available at Home Depot. Also see This
Old House Magazine).
If You Buy Or Sell A Property, Let The Agent Know With A Letter
Note to her that you are still very interested in finding more properties in
area x. This will demonstrate that you are a serious investor, and move you up
in the pecking order.
If You List The Property, And Don’t Have A Particular Reason To List With
Another Agent, List With The Agent You Are Cultivating
This will bind you to them. I’ve personally listed properties with an agent to
establish a relationship even when I think I could have sold the house “by
owner.” If that agent brings me 4 deals with $30,000 of profit each, the extra
$7,000 I spent on a commission for one deal was well worth it!
If You Have Good Subs That You Really Like, Make A List And Give It To The
Agent
Explain that you have used these folks in the past, and that their names might
be helpful to her clients. Such lists are super-valuable to the agent because
they help her to sell houses. For example, a house may be perfect for a buyer,
but it needs repainting. The agent can tell the buyer that he knows a great
painter who can handle the job, and potentially close the sale. This will also
make your subs loyal to you. If your job or another client’s job must be
delayed, yours won’t be if you are keeping a steady stream of referral business
going to the sub. These subs will see you as so important to their business that
they will also give you a great rate for your work.
I would use this technique with the top few agents in your target area. I now
work with only a select handful of agents. All are totally committed to the
success of my business.
Bio:
Dave Whisnant is an Atlanta investor/attorney who is dedicated to helping people
land their first deals and create whatever level of success in real estate that
they desire.
After successfully building a real estate law practice, Dave walked away from it
to focus on real estate when he saw the profits that his clients were making.
Jumping in with both feet, he created a proprietary model that rocketed him to
the top of Atlanta investors almost from day one.
Dave is different than other investors in his single-minded quest to perfect a
series of cutting-edge prospecting tactics to locate and then land motivated
sellers who other investors are not even aware of.
A master investor AND teacher, Dave’s precise and easily duplicated systems have
been successfully implemented by his students around the country in competitive
markets of ALL kinds.
He believes in freely sharing his expertise and information for the benefit of
anyone who is serious about succeeding, and believes that his techniques will
create more success stories per student than any other real estate investing
coach in the world in 2006.
Real estate investing has enabled Dave to have the freedom that enables him to
spend time with his two young daughters, wife, and “herd” of golden retrievers.