One of the real estate professionals you want as a part of your real estate team is a broker. A great broker is one that sends you deals, and more specifically, sends you off-market deals. However, like all relationships, it must be reciprocal. Most likely, the broker will have countless investors asking them for deals. Therefore, when approaching a conversation with a new broker, it is important to realize that they are interviewing you as much as you are interviewing them.
Read on for tips on how to approach these broker conversations. First, I will provide a list of questions you need to ask them. Next, I will outline how you can win the broker over to your side by focusing on coming across as a serious, credible investor who will close a deal. Finally, I will provide a list of questions the broker may ask and that you should be prepared to answer.
Questions to Ask the Broker
When interviewing a broker, you need to know your outcome of the conversation. For me, as an apartment syndicator, my main goal is to determine their level of experience and success with apartment communities that are comparable to my investment criteria.
To accomplish this goal, here is a list of 11 questions to ask during the interview:
- What is your transaction volume?
- How many successful closes have you experienced in the last year?
- How long have you been working as an agent? How long have you focused on apartments?
- How many listing do you currently have?
- How do you find deals?
- Do you offer both on-market and off-market deals?
- What stage is the local apartment market in?
- What is your specialty?
- What are the top three things that separate you from your competition?
- Will you please provide references?
- What haven’t I asked you that I need to know?
Ideally, we want to find a broker that will send us an endless supply of off-market apartment deals. However, don’t bank on this, especially in the beginning phases of the relationship. But after you’ve proven to the broker that you’re the real deal, successfully closing on a few deals, it will become more and more likely that you will be the first person who is notified when they have a new off-market deal. It just comes with time.
How Do I Win Over a Broker?
Again, when interviewing a broker, it’s important to realize that they are interviewing you too. Therefore, put yourself in their shoes and ask yourself “what are they looking for when deciding whether or not to bring on a new client?”
Since brokers are paid a commission at the sale of a property, their number one motivator is to close on a deal as quickly and as easily as possible. They don’t like tire kickers, wannabe investors who waste their time asking a bunch of questions but never close on a deal. Their ideal client is an investor who has a proven track record of closing on deals. So, if you don’t have previous investing experience, that will be your number one challenge.
To win over a broker during a conversation, you need to sell yourself and your business and build rapport. If you have past investing experience, you shouldn’t have an issue selling yourself. If you don’t however, what relevant experience do you have that will convey to the broker that you are serious about closing deals? Have you successfully completed projects in a non- real estate mentor related field? Have you started a business in the past?
If you are struggling to come up with relevant experiences, this is where having a reputable team comes into play. Sell your team members. Talk about your real estate mentor or advisor’s real estate experience. Tell them about the number of apartments your property management company manages. And bring up any other relevant relationships you’ve formed (i.e. contractors, attorneys, CPAs, your meetup group or thought leadership platform, etc.)
Along with the asking them business questions, to build rapport, get to know something personal about them. Find out something that’s important to them and bring it up with genuine interest next time you meet. A quick way to accomplish this is to ask, after having already established yourself, “what’s been the highlight of your week?”
Finally, I recommend preparing an opening statement or elevator pitch. If you already have a deal in mind, you can say, “I’d like to discuss making an offering on ABC apartment.” Or, another example would be saying “I am working with ABC Property Management and will be buying a property in (city name) in the next few months.” The purpose of the opening statement is to grab the attention of the broker, come across as a serious investor, and address their “want” – which is to close on an apartment or questions to ask when buying an appartment – from the start.
Questions to be Prepared to Answer
Don’t expect the broker to simply answer your questions, chat about their business and personal life and then get up and walk away. If they are seriously interested in bringing you on as a client, they will want to ask you questions as well. Therefore, you need to proactively brainstorm questions they may ask and have ready-made answers.
Here is a list of 9 potential questions an interested broker will ask you during the interview:
- Who is your property management company?
- How many units to they manage?
- Are they local?
- Have you (or someone on your team) purchased an apartment building before?
- What type of deals are you looking for? What markets are you looking in?
- How did you find me?
- Will you sign an exclusive agreement with me so I can get you the best deals?
- What are your expectations?
- Can I see a biography of you and your partners?
And as you interview brokers, if you are asked questions you’re not prepared to answer, make a note and tell them you will find that answer right after the meeting and send them an answer.
In today’s market, buyers are a dime a dozen. So, many brokers will simply brush off an investor who is looking to purchase deals. Ultimately, a broker will bring more deals to buyers that they like to work with, and the types of buyers that like to work with are the ones who will close and not lose a deal due to inexperience, laziness or passivity. However, by following the approach outlined above, you will come across as a credible investor who can make aggressive offers and back them up by closing the deal.
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Disclaimer: The views and opinions expressed in this blog post are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action.