How Building Relationships in Real Estate Helps You Close More Deals
As an investor, how is your mobility dictated?
Many understand that relationships go a long way.
But, there are several applications of how those relationships work.
Much of your ability to navigate efficiently through deals is based upon relationships.
Today, we will discuss how your mobility is dictated by the buyer relationships you have.
Let’s get started.
Many of you may think wholesaling is not a high-level skill and I would agree with you for some of the market’s wholesalers out there.
However, for others, many of your best and most savvy investors manage a portion of their businesses by wholesaling.
No matter how large their operation is, many began as wholesalers.
- Possibly to specifically prune their skills and be certain they obtain the ability to evaluate deals effectively.
- Or to build relationships for better mobility through larger acquisitions in the future.
No mater what the objective, there are benefits to becoming the expert at anything that will help you navigate through business.
Afterall, if a better deal comes across your table and your workload is at it’s max, you will need to wholesale the deal you want to trade off. That’s if you plan to maintain good customer service.
To others, maybe your primary objective is to wholesale. Provided you are transparent with your clients, there is nothing wrong here as well.
Both situations, require you to build relationships, so that you can assign the deal when needed.
This brings us to the next topic. Building a buyer’s list.
It is important that you understand the applications of what numbers make sense to each of your end-buyers.
Each buyers criteria can be different since much of what dictates the numbers is their strategy.
- For more insight on how to build your buyers list, see our previous article, 10 Ways to Build Your Buyer’s List.
Now let’s talk more about different types of buyers.
Fix-n-Flip Buyer –
This buyer will need the lowest price because their amount of expenses is the highest. What will dictate a range of purchase prices for each buyer in this category is the following:
1) The grade of their renovations that may help them reach low, mid or high market values.
2) Their funding relationship and the cost of their borrowed money.
3) If they do some of their own rehab work, if they own their construction team or if they hire out all renovation duties.
4) If they intend to rent the property for short-term or long-term post renovation.
Buy-n-Hold Buyer –
This buyer will have a range for the purchase price based upon the following:
1) If they plan to renovate (and add value) or if they will not renovate.
2) If they do some of their own rehab work if they own their construction team or if they hire out all renovation duties.
3) If they are buying liquid or if they are using borrowed funds.
4) If they are looking for performing assets or if they are only looking for value add opportunities where they’ll refinance and try to recoup their project’s “seed” money.
203k Buyer –
This buyer is a homeowner that will utilize a traditional bank’s renovation product to add value and then live in the property long term. This buyer will base their decisions on the following:
1) How much the total rehab is. If it is too extensive, the bank may not support it solely because it may be too advanced of a project to operate efficiently for a new homeowner. There is more risk that something could come up that causes the project to have a change in the project’s assessment. The objective is to keep risk lower.
2) The relationships they are able to establish. Not only will they need the bank that supports the program, they will need a realtor and contractor to all team up together. If any party in this operation, is unfamiliar, it can make the completion of this plan more difficult.
Retail Buyer –
This is a buyer that is looking for a property that needs little to no work and is move-in ready. This buyer will need the following:
1) A turnkey or freshly renovated home that will pass all inspections. The likelihood of this buyer being willing to add value is low. Also, the property cannot have any conditions that would cause the property to be deemed unlivable by the bank.
2) Possibly an agent to represent them in the purchase.
As you proceed through the list just provided, you’ve went from the lowest to the highest possible offer or purchase price capability of each buyer.
When building your buyer’s list, it is important to know which category each of your buyers are in.
When you present your deal, you should be able to express who the deal will work for and why.
When building relationships, it is important to know your customer. It doesn’t matter the source of where the customer comes from.
Each customer requires knowledge of what helps them or what they are looking for.
When building your relationships, be sure to keep in mind that your engagement is vital.
- Building the relationship is understanding of each other and filling a need.
For the topic today of building relationships with buyers, so that you can be efficient in your dispositions is important to having efficient mobility in the market.
Thanks for joining us today faithful readers – future leaders.
If you are a buyer in the central Pennsylvania area, please feel free to join the appropriate buyer’s list linked below.
We hope this article has been helpful for you today.
Love ya and continue to strive for growth.
Please comment your feedback and if this article was helpful.
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