Template for Selecting Your Agent
In summary, a broker—the right broker—can add value. You need to be careful about how to choose one. The main qualifications should be unscrupulous ethics and familiarity with investment properties. Here’s how to run interviews to find the perfect broker for your investment deals.
- Have them do a building cash flow statement (or two). Even if you have your own cruncher, this will give you insight into their level of competence when it comes to investment buildings.
- Speak to previous clients, especially investors. Getting a referral from someone who’s purchased a single-family home won’t tell you whether a realtor is any good with rental properties.
- Check if the realtor has owned rental property. If you can shop with someone who has the eyes of a landlord, awesome!
- Ask about other deals they’ve done on the type of property you’re looking for. For example, if you want to purchase a multiplex property and you’re working with an agent who deals mostly in condos, you might not have the right person for the job. A realtor’s willingness to discuss other recent deals will give you a sense of how active they are in your niche market.
- Interview more than one agent before you award business.
- Work with someone who has no investment property experience even if they’re your cousin or your father’s best friend or your sister-in-law. They might be ethically beyond reproach and very astute at making deals, but they won’t be able to help you if they don’t understand the market. Sorry!
- Work with someone who’s unfamiliar with the area you want to buy in. Tenants, construction techniques, building age, and so on vary a lot by the district. If you work with an agent who’s used to doing business only in suburbs where buildings are recent, lot lines are clear and straight, and by-laws are simple, they’ll be out of their depth pretty quickly in older neighbourhoods where these lines are blurry and the buildings are older.
- Sign an exclusivity contract with a broker, but do be fair to them. Keep in mind that realtors get paid only when they make a sale. If your agent is doing their job right, they’ll put a lot of work in for you. Be mindful of this. Don’t act in a way that will cause them to lose out on payment for the job they’ve done.
- Feel that you need to sign a binding contract that requires you to purchase only through them. You want to be able to jump ship without being penalized if at some point in the search process you become dissatisfied with their service. Just make sure to be transparent. Don’t work with more than one agent at a time. You’ll burn relationships that way.
- Be pressured, coerced or guilted into working with the wrong person. Many realtors are highly motivated by commission cheques. Their pressure tactics are good for one-time deals, but because their service is transaction-focused and not client-focused they need new clients all the time. Repeat business goes to competent and pleasant professionals, not unpleasant sharks. As a result, it’s normal that, at first, you meet more sharks. Don’t despair. Pleasant and competent agents exist and they can make your life a lot easier!
Above all, listen to your gut. You want to have a feel for a person’s ethics, level of competence, and familiarity with the market you’re doing business in. Your realtor’s competence directly affects the quality and types of deals available to you and their professional style will affect how you experience making your investment decisions.