Earlier this year I met a Realtor from the Southern California area who stated that she doesn’t get out of bed for any house under $1,000,000 to which my response was “I sold a house for $4,200 yesterday.” We are both top Realtors in our markets but I achieved my status with a willingness to work with clients who buy at the bottom of the market as well as those who buy near the top.
I’ve been a Realtor since 2006 and built my business on selling foreclosures and working with investors. Technically, I didn’t have a choice since that was pretty much the only type of properties selling during the real estate crash of 2008-2012.
As the market has improved, I definitely find myself spending more time with buyers and sellers who are in the higher price range and pay a higher commission at closing. But it’s important that I don’t cut ties with my investors who buy and sell crappy homes since this segment of my business is my favorite for three reasons.
1. Quantity vs Quality is a sound business strategy
The commission on crappy homes is generally around $1000. Early on, investors would “apologize” for taking up my time for such a low commission but I see no reason for these apologies. I generally make a minimum commission of $1000 or so per transaction and when they close 8-12 transactions per year, the commissions add up.
Those clients who have paid me the most over the past 9 years have been my investors who annually put $10,000 in my pocket. Most of my traditional clients won’t generate that type of income for me until 6 hours or so (remember I live in Cincinnati, not Malibu).
2. No no drama… no no no no drama
As Fergie says from the Black Eyed Peas, we don’t want no drama! The best part of working with crappy homes is that there is NO drama. Here is how the typical conversation plays out:
What do you want to offer? $8,000. It’s a piece of crap but I know how to value property.
Do you want inspections? Of course not. I see what’s wrong with it and again, it’s already a piece of crap.
Will you be getting a loan? Of course not. You can’t get a loan on this piece of crap.
Want to close next week? Sure.
I am generally a glorified paper pusher who writes an offer, negotiates it and sends it to the closing department to close the following week. It takes about 2-3 hours of my time TOTAL and I make $1000. And now thanks to sites like Hubzu, my investors can do their own bidding, execute offers and close with very little assistance from me making my job even easier but keeping the pay the same.
3. Bottom Feeding Investors are People Too
Let’s not forget that just because these clients spend a lot of time buying and selling low end homes doesn't mean that there aren't additional opportunities within their network.
For every investor who I have helped buy and sell crappy properties, they have either used me for their primary residence or recommended me to their friends and family. Since my investor client is the go-to-real-estate-expert amongst their sphere, my name is given out to traditional buyers and sellers all the time.
In conclusion, don’t turn down this business, just look for those investors who are a good opportunity. Get yourself a real estate assistant and use Nekst to put together simple listing and closing systems so that the majority of this work can be done by someone else.
Make real estate task management easy with Nekst! Create a custom real estate to do list, share with your real estate assistant or real estate team, sync important dates to your calender and never miss a deadline again. Nekst is the perfect tool to to streamline your real estate processes from listing to closing and beyond!
You will soon view selling crappy homes as your “bread and butter” sales. They are consistent, easy and more profitable over time. Who wouldn’t want this in their real estate business?