7 key questions for your new Realtor

by Tahani Aburaneh30 May 2012

Today’s markets are filled with potential landmines and dead-end deals," she tells CREW. "For you, the investor, this means hiring the right agent is more important than ever.  Unfortunately, not all real estate professionals are created equal."

Following this list of seven questions will help small and large property investors seperate the real estate wheat from the chaff.

1. How do you determine if a property is a good investment?  

This is your million dollar question… so when you ask it, sit back and listen carefully to the agent’s answer.  Your agent should have a proven process to evaluate potential investments.

Do they discuss cash flow, cap rate and return on investment?  Do they know how to properly calculate these figures? Your agent should also have a rubric to filter out bad investments.

My clients all get access to an investment calculator that crunches numbers for them.  If the investment makes money, we dig deeper.  If not, we move on.  Make sure your agent understands the investment language and the process.  

2. Are you an investor yourself?
As an investor, you need an agent that speaks your language.  You need an agent that not only talks the talk, but walks the walk.  You need an agent that “gets it.” 

What better way to ensure your agent “gets it” than if they invest themselves?  As a fellow investor, your agent knows first-hand which strategies will work for your particular type of investment, and which won’t.

They view deals through a different lens as they’ve been in your shoes themselves.  You wouldn’t want advice on the stock market from a broker who had no money invested themselves … real estate is no different.

3. How much of your business is based on working with real estate investors?  
As the old saying goes, Jack of all trades, master of none; and never does this axiom prove truer than in real estate.  Most agents in this business focus almost exclusively on residential real estate, working on investment requirements only when one happens to fall into their lap.  You should avoid this kind of representation like the plague. 

You need an agent that specializes specifically in investment properties.  When you’re looking at investments, it’s not about the size of the kitchen or the paint in the bedroom; it’s about the bottom line, plain and simple.  There’s no room for emotion in investing.  You want an agent who understands this.  After all, you wouldn’t ask a divorce attorney to handle a patent case, you’d want a specialist.  It’s the same in real estate.

4. What kind of  real estate investment  do you specialize in?  
Many agents now-a-days will sell absolutely anything and everything to make a buck.  This is a huge disservice to you, the investor.  Selling ABC retail centres is a different world altogether than selling multi-family investments, or residential housing.  In fact, it’s a different universe.  Not only do the hot-button negotiation topics vary considerably between property types, but so do the players and the trends. 

A great agent will understand the power of specializing.  For example, while vacancy rates for residential investments may be low in one market, the same market may exhibit high vacancy rates for retail centres.  In order to stay up-to-date on these trends, an agent has to specialize.  Make sure your broker is a specialist in your particular property type.

5. How well do you know my market?
Real estate is a highly localized industry.  National or even regional market fundamentals may not reflect the realities of your particular market.  You want a broker who knows your local market inside and out. 
6. Are you familiar with strategies such as seller financing or LTO?  
Your real estate agent should be more than an intermediary between you and a multiple listing service.  A good real estate agent will find you opportunities you never even thought to look for.  They’ll help you look at opportunities in a different light, they are creative and bring power to you and your business.  They’ll be an expert and adviser.  If your agent can’t discuss strategies like vendor take-backs (VTB), lease-to-own options (LTO) or seller financing, you’re missing out on valuable opportunities that might have otherwise made you a lot of cash.  If your agent can’t discuss these strategies, you should find an agent that can.
7. Do you have a power team of professionals that you can refer to me?
A real estate deal requires more than just an investor and their agent; it requires the experience and expertise of a diverse group of professionals including lawyers, accountants, mortgage brokers and appraisers.  I call this my “power team.” 

Your agent should be able to refer you to their power team, who, just like the Realtor, specialize in these investment transactions – this way you know you’re covered from the start of your deal to the finish.

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