Balance your REO business with real estate investors

If you’re looking to enhance your business, it may be a great time to cultivate your buyer-side business—specifically, your investor-buyer business.


By FORCE member Steve Rivkin, Planet Realty, New Haven, Connecticut


FORCE agents are typically looking for new ways to grow their REO listing business; that is a logical and obvious place to focus. Yet, most successful REO models include multiple streams of income to even out natural dips in their unique business cycle. Attracting buyer business will enhance your bottom line and grow your REO listings. Acting as buyer agent and selling an REO for your asset company that is NOT your listing shows a great deal of motivation on your part. This will be noticed by your asset manager, and may just lead to extra listings.

Many real estate offices maintain a growth plan to attract retail buyers as another “spoke in the wheel.” However, not every office has a strong plan to attract and develop relationships with investor-buyers. There are some differences in what is important to each group of buyers.


“How’s the Market?”

When you’re asked, “how’s the market?” by a first-time homebuyer, it requires a completely different response than when asked by an investor-buyer. An owner-occupant may ask this in passing; their motivation is more often conversational than pointed. Owner-occupants are interested in security in their purchase and making the right decision. After all, this is a game-changer in their life. They are worried about how they will pay the “monthly nut” and also what will be said of their purchase at the dining room table on Thanksgiving.

Investors have different motivations. They are interested in “return” and “profit.” Investors are typically less emotional, and their purchases are simply business. If an offer is accepted, they are excited. If their offer is passed over, then it’s on to the next one.

What does this mean to your business? Investors can provide a reliable, ongoing income stream in the way of repeat business. Even better, most real estate investors have certain products they look for over and over. This means you can develop a mix and match approach.


The Money Is Always in the List

Keeping an accurate list of your clients and prospects is most important to your long-term success. Hopefully, your database allows you to “tag” your prospects and clients by product. Some high-profit agents will add a tag for the property address a buyer calls on. If they have a price reduction, it’s easy to send a bulk email to this specific buyer group who may have renewed interest in the property. This can also speed up your “days on market,” which should make your asset manager happy too.

When an investor-buyer calls, take some notes on the property they are targeting. You may be surprised by what you hear. For instance, an investor may call on a multifamily home. After asking, you may find that they buy single-family homes as well. The more you segment your list by housing type, the easier it will be to match the buyer with the exact product they are looking for. Putting buyers together with sellers (houses) becomes easy. Hasn’t this always been our business anyway?


“Buy and Hold”, or “Flip”?

Investors will have different investment approaches based on their specific objectives. Some will “buy and hold,” looking for cash stream and potential upside equity over a long period of time. As credit tightened and bank deposit yields dropped in recent years, private liquid capital flooded to these “income properties” as a way to create long-term, stable investment opportunities.

Investors come in all shapes and styles. There are investors looking for multifamily homes. Some of them want only three units and up for greater income per location. Some buy everything in a singular area to be efficient in their travel. Others will buy single-family homes, wait on appreciation, and then cash out at a future date. Some only buy condos because there is little to do in the way of “ongoing maintenance.” These investors prefer to pay an association management fee than to get involved with exterior repairs, landscaping, or snow removal.

Some investors don’t hold at all. These are the investor style we see on home improvement “fix and flip” TV shows. Really these “investors” are speculators, as an investment would typically consist of a property hold of more time, say a year for instance. Flip buyers have their own set of goals. These may include a percentage or a specific dollar return per transaction. Usually, resale should happen as fast as possible. Your investor may be just starting out and need a lot of your help. (For some this is a win-win as you can learn and research together). Or they can be very seasoned, take a liking to you, and provide a wild ride.


What’s The Risk?

Remember studying for your license? Without exception there was a question that included, “I / R = V” (income divided by rate = value). We’re not going back to math class right now, but it can be advantageous to ask exactly how your investor measures his or her return. The more you expand here provides more value to your investor. Speaking the same “language” with investors will give you instant credibility.


Owner-occupant Versus Investor

There’s a saying “List to last” in the real estate business. How about “Sell to stay well”? In the end, you have lots of choices to make about how you grow your business. For many reasons, adding investors to your mix can be a “spoke in the wheel” that you come to love.
You can reach Steve Rivkin at