Why Selling Rental Property Is Easier Than Real Estate Agents Think

By Author: James Kobzeff
Total Articles: 44
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Chances are good that every real estate agent will be given the opportunity to work with one real estate investor and close one income property transaction during any given year-whether by a walk-in, up-call, previous customer, relative, friend, neighbor, or some aggressive cold calling.

Unfortunately, most real estate agents fail miserably to take advantage of those encounters, to win over an investor, or to convert to a listing to a sale. Not for a lack of intention, though. After all, who wouldn't want to make one more commission? The problem with most real estate agents is simply that they do not prepare themselves to engage real estate investors.

In this article, I want to discuss what it takes to prepare for those opportunities to work with rental property. You might be surprised to discover just how little it takes.

Making the Right First Impression

All salespeople understand the value of the first impression--that winning or losing a sale often rests solely on the perception a customer develops within seconds during the first encounter.

Real estate agents know this. ...
... They service customers who make buying decisions based on the first impression of houses (curb appeal) all the time. They also adorn clean suits and freshly washed cars, why, to impress customers, when, before the meeting, not afterward.

It is ironic then, given that agents know the importance of the first encounter, it is often their inability to make a good first impression on investors where most agents lose the opportunity to gain a rental property sale due to their failure to recognize what generates a good first impression on investors.

What Do Real Estate Investors Look for in an Agent?

Winning over an investor is more than style and panache. Real estate investors are less impressed with the agent's Armani and Mercedes then they are with the agent's ability to discuss and service real estate investment property.

The reputation of a residential agent with the grandest record for selling houses means little to an investor. There must be some evidence that the agent can assist them in making a sound buying decision, and feel confident that the agent genuinely cares about how the investor spends his or her money.

This is not the result of a friendly smile or warm handshake. The investor wants to feel that you are concerned enough about real estate investing to adequately prepare to work with it.

Okay, now think back and consider your last encounter with a real estate investor.

How did you respond when asked about the value, profitability, and capitalization rate? What reaction did you give when the investor requested an APOD or proforma? If you stood there like a deer staring into the headlights of a car then you experienced one of several outcomes.

1. You got lucky and made a sale, regardless
2. You referred the business away and lost 75% on potential commissions
3. You scrambled around trying to learn about cap rates and APODs and finally referred it away, only to discover that the investor went to your competitor

In other words, though you were given a perfect opportunity to convert a real estate investor into a commission, you had to rely on pure luck, settled for a small portion of the commission, or did not make a penny.

I have seen this happen numerous times to real estate agents. Moreover, I am certain that it can be prevented with simple preparation.

How to Prepare Yourself to Meet an Investor

First, dismiss the idea that you need to become a real estate investment expert. Hundreds of deals are closed every year by residential agents who know little about rental income property.

Secondly, recognize the importance of numbers to a real estate investor and make a conscious effort beforehand to discuss and present those numbers. At the very least, know the difference between capitalization rate and gross rent multiplier and be able to create an APOD.

1. Search online for real estate investing resources where you can become acquainted with and learn the formulas for key terms and returns.
2. Use a program like Excel to design an APOD that clearly shows the property's income and expenses, mortgage payment, cash flow, and rates of return.
3. To save time, invest in real estate investment software that provides the computations and reports for you.

Thirdly, be willing to accept the notion that the time or money you invest beforehand in preparation for income property can result in a sale, or perhaps more then one sale. The untold secret about real estate investment property, what others would not want you to discover, is that real estate investors typically purchase more than one property over time.

Finally, don't wait until you meet with an investor to service the investor. If you do, you may blow a transaction. Prepare for the investor. Putting your best foot forward for a customer is a truism of successful selling and only increases your chances for success.
James Kobzeff is the developer of ProAPOD - superior real estate agent software solutions since 2000. Create rental property cash flow analysis and marketing presentations in minutes! Go to => www.proapod.com