I read an article today by a real estate broker entitled Get a Grip on the Real Estate Market for 2009.  The article is directed towards real estate salespeople and brokers, but there is something that real estate investors can learn from this market commentary.  What I see is that successful agents will be able to talk about owner financing options to their perspective listings.  Agents can also help investors locate motivated sellers who can structure financing that makes sense and allows the deal to happen without a bank, if necessary.  Let me explain:

The Divide: Traditional Thinking vs Creative Thinking

The one thing that I took away from this article is that there appears to be a divide in the real estate professional community.  There are the traditional thinkers who, in their attempts to fight for the home owner, will often give in to the seller’s desire for a “market priced” listing.  In reality, the market is in such a sweeping decline, that in order to price today’s house to sell, it needs to be priced for tomorrow’s market.  By the time the house is priced, it’s already worth less.  It’s similar to the new car buying experience; you drive off the lot and the vehicle loses value immediately.  In this market, houses need to be priced aggressively or come with great terms.  Like I sometimes say when referring to traditional-thinking real estate agents, “if you want to get your house listed, go to a real estate agent.  If you want to sell it, come to me.”

The other side of the debate within the real estate professional community is from the creative thinkers.  Out-of-the-box thinkers have a better chance of surviving this downturn.  These agents will start to think and act like investors.  A common practice of the traditional thinker is that if the buyer doesn’t qualify for traditional bank financing, then they probably aren’t a good buyer. “Sorry, go somewhere else.”  I disagree because many of these prospects need time to either save for their down payment or repair bruised credit.  I just heard, from a fellow investor, of a self-employed buyer with an 800 credit score and 40% to put down, but he couldn’t get a bank loan.  That’s where either a lease with an option to purchase (also known as when we lease purchase homes) or owner financing would have sealed the deal. In a market where financing is scarce and home values are on the decline, closing a deal quickly is key.

Real estate agents need to strike reality into their sellers when they list.  Either the price or the terms have to be attractive, especially in this market.  As the article states: they also need to seek discounted pricing or special financing options for their buyers.  This is where a great relationship can be created between investors and agents.  When bank financing is difficult, many times, a real estate investor can be a solution to that problem.  We have solutions that get the property sold and the commission paid, so another new homeowner can join the ranks in the American Dream.

In summary, while working with a Realtor can reduce our profits, especially on the selling side, a relationship with a creative thinking real estate agent can be a plus in a tough market.  The right agent can make a savvy investor a lot of money, if selling properties is what you want to do.  The same works in the reverse; smart agents should have a list of creative investors with whom to work because then…everybody wins.

What are your thoughts?  Is it possible for Agents and Investors to work together to buy/sell real estate?