One of the real estate professionals you want as a part of your 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, this one 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's important to realize that they're interviewing you as much as you're interviewing them.
Below are my tips for approaching these broker conversations, including a list of questions you need to ask them and how you can win the broker over by focusing on coming across as a serious, credible investor who will close a deal. I've also provided a list of questions the broker may ask that you should be prepared to answer.
Questions to Ask the Broker
When interviewing a broker, you need to know the outcome of the conversation. Your main goal should be to determine their level of experience and success with properties that are comparable to your 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 this type of property?
- How many listings do you currently have?
- How do you find deals?
- Do you offer both on-market and off-market deals?
- What stage is the local 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, you’ll want to find a broker that will send you an endless supply of off-market deals. However, don’t bank on this, especially in the beginning phases of the relationship. After you’ve successfully closed on a few deals and proven to the broker that you’re the real deal, 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. 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 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 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-related field? Have you started a business in the past?
If you're 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 (contractors, attorneys, CPAs, your meetup group or thought leadership platform, etc.).
Along with 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 the 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 property.” 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 a property — 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's a list of nine potential questions an interested broker will ask you during the interview:
- Who is your property management company?
- How many units do they manage?
- Are they local?
- Have you (or someone on your team) purchased a commercial property 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 partner(s)?
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 it to them.
About the Author:
Joe Fairless is the co-founder of Ashcroft Capital, a fully integrated multifamily investment firm with more than $2.7 billion in assets under management, and the founder of Best Ever CRE. His podcast, the Best Real Estate Investing Advice Ever Show, is the world's longest-running daily real estate podcast with more than 500,000 monthly downloads.
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.