Find an investor
Auction investors can generate a steady stream on listings, but first you need to find the investor who is actively buying foreclosures in your market. You can do this by searching the recent third-party sales through ForeclosureRadar and looking for the current owner. You can also go the courthouse steps and see who’s buying. While you’re there, go ahead and introduce yourself, pitch your superior local knowledge and let them know that you are ready, willing and able to help make them bigger profits.
Birddog for investors
If you haven’t yet found your gold goose investor with the endless supply of listings, try sniffing out properties going to auction for a single deal or two that you can refer to an investor. Investors can share with you in their good fortune when they capitalize on your lead and will then look to you to bring them more. Next thing you know, you could have that pocket investor. Birddog deals with the mindset that it’s your cash and do your homework accordingly. See our Investor Guide for all the in’s and out’s of auction investing. Remember, as a local Realtor you have market knowledge that can give you the advantage.
Investors are sellers too
Not only are investors a great potential source for listings, they’re sellers too. If you’re a buyer’s agent, investors are a source of fresh inventory and are motivated to close. Follow the auction and you will know the day that a property is bought by the investor and can be first to the opportunity with your buyer, before your competition is even aware that it is available.
Provide Services to Auction Investors
Investors need BPOs
Most auction investors need accurate BPOs and who better to get them from than you, a Realtor® with local market knowledge? An accurate understanding of a properties retail price is critical to the investor when making the bid-no bid decision at the auction. Too low of a valuation and the investor could pass on a good opportunity. Too high of a valuation and the investor may end up losing money on the flip. The role of an accurate BPO from a Realtor who knows the local market can be crucial to the investor’s success.
Investors need feet-on-the-ground
The Realtor is in the community and can spot auction opportunities. You can check properties coming up for auction for condition and occupancy. This reconnaissance work will not only be of direct benefit to your investor bidding at the auction, but will start conversations with homeowners and renters that can lead to other new business opportunities.
Investors need property management
Once a property is bought at the auction by an investor, there are always ownership issues to be addressed that can range from changing locks and turning on utilities, to trash-outs, cash for keys negotiations, evictions and repairs.
Investors need a Realtor.
Investors need to sell the properties bought at the auction and usually do so through a Realtor. It’s common practice for the Realtor who has assisted through them through the BPO or otherwise to get the listing. Even investors with a buy and hold strategy need a Realtor to find renters. Either way, the investor needs a Realtor.
Tales from the Trenches: It can be like winning the lottery!
I know a Realtor who worked for a well-oiled auction investor. In exchange for daily BPOs on auction properties (that took about an hour of work each morning), the Realtor received all of the investor’s listings, and there were a lot of them. The Realtor’s commissions for those early morning BPOs and the listings that followed – a million dollars. They joked that it was like he won the lottery.
Tales from the Trenches: Investors need agents
Although I am a licensed broker in California, when I was actively buying properties at trustee sale, I always used a listing agent. This was largely because I relied on the expertise of a local agent for valuation information to insure that I was not overpaying at trustee sale. I also did this because E&O insurance would not cover me for properties where I had over a 25% ownership interest. I paid my listing agent over a million dollars in listing side commissions over a three year period.
Provide Services to Short Sale and REO Investors
Find Active Investors both before (Short Sale) and after (REO) the Foreclosure Sale
As the frequency of short sales grow, so too do the opportunities to find deals that can be flipped or held as rental properties. The same holds true for REO properties, as the banks may become more motivated to move them off the balance sheet. Just like with the auction investor, all of the same reasons are there for a short sale and REO investor to partner with a Realtor who knows the market. These investors need to find the short sale and REO opportunities, know the retail property values, know the condition of the property and neighborhood, manage the property after acquisition, and ultimately need to sell or lease. Here again, the investor needs a Realtor.
Understanding the risks
It is important to understand the risks associated with buying at trustee sale. This is less important if you are working with a seasoned auction investor than if you are working with an investor that is new to auction investing. If you are unfamiliar with the auction process and the inherent risks you may not want to work with a new investor.
Opinions vs. Facts
It is critical that you never provide legal, tax or other advice that you are not qualified to offer. An auction investor, however seasoned, is still a client and you should refrain from making any statement you are not qualified to make.
Partnering with legal and tax professionals
It is always a good idea to partner with an attorney, CPA or other professional that can offer tax and legal advice to your client. This includes shorts sale sellers and auction investors. A partnership with an attorney or CPA could also provide reciprocal referrals.