If you are an active real estate agent, you undoubtedly will have at least one opportunity a year to sell real estate investment property.
Whether by a walk-in, up-call, previous customer, or some aggressive cold calling, it is not a question of whether you have the opportunity to meet a real estate investor; the question is “Are you ready?”
Making the Right First Impression
All salespeople understand the value of the first impression, and that winning or losing a sale often rests solely on the perception a customer develops within seconds during the first encounter.
Certainly, real estate agents understand the value of the first impression.
Customers they service make buying decisions based on curb appeal (the first impression) of properties all the time. Moreover, real estate agents always wash their socks, hair, and cars in anticipation of a customer, not afterward.
Ironically, however, it is in the first encounter—where agents otherwise excel—that so many lose excellent opportunities to sway real estate investors and gain rental property sales. Why, because most agents fail to recognize what generates a good first impression to investors.
Real estate investment is not about style and panache; winning over an investor is more than Armani and Mercedes. Real estate investors generally require one thing of agents—enough knowledge about investment property to feel confident that the agent can assist the investor in making a sound buying decision.
Okay, put it to the test and consider your last encounter with a real estate investor. How did you respond when asked about the value, profitability, and rates of return? What reaction did you give when the investor requested an APOD or proforma? Were you clueless?
If you stood there like a deer staring into the headlights of a car, experience dictates one of several outcomes. One, you got lucky, won the investor over, and made a sale, regardless. Two, you referred the business away and took a 75% cut on potential commissions. Three, you scrambled around for a week or two trying to learn about cap rates and APODs and finally referred it away, only to discover that the investor went to your competitor.
Okay, now grade yourself. You had a perfectly good opportunity to turn a real estate investor into a commission, yet either had to rely on pure luck, gave away money, or simply received nothing, why? You were unprepared to meet with that real estate investor during that first encounter because you failed to recognize the weight of it.
Understand what the first encounter signifies to a real estate investor—he or she is interviewing you. Unless you are a relative, the investor does not know you from Adam, and therefore has no incentive to work with you or anyone else for that matter that the investor cannot trust to possess some degree of competence about investment property.
Once you come to terms with that logic, you are ready to proceed to the next step and prepare yourself to meet with a real estate investor. You will be shocked to discover that it is not as difficult as you assume.
How to Prepare Yourself to Meet an Investor
Here is the good news: you can prepare for an investor without needing to become a real estate investment expert. Hundreds of deals close every year by real estate agents that specialize in residential property and know very little about rental income property. How do they do it?
At the very least, they understand the difference between capitalization rate and gross rent multiplier, and when required are able to discuss and create an APOD. In other words, they get it. They understand the importance of numbers to a real estate investor and make the conscious effort to create those numbers and reports for the investor.
During that all-important first encounter with the investor, rather than staring at the headlights and losing the opportunity to capture the confidence of the investment customer, they presented numbers and reports about the property that made the right impression and won the customer over.
Here is more good news: You can do it too.
There are thousands of online resources where you can learn the formulas. Moreover, if you have a spreadsheet program like Excel you can design reports that integrate the calculations. It will require some effort on your part but if it means closing just one additional deal a year, it is time well spent.
On the other hand, you can purchase real estate investment software already developed with the formulas and reports. Of course, this will require a monetary investment on your part, but again, if it means closing just one additional deal a year, it is money well spent.
The important thing is that you prepare yourself to meet an investor before you actually meet the investor.
Remember, when you do not make that all-important good first impression, you run the risk of not capitalizing on that opportunity and losing money. Putting your best foot forward in preparation for a customer is simply a truism of successful selling.
Considering what little is required, and the financial reward real estate investment property offers, why not prepare to meet a real estate investor in advance and take advantage of every opportunity you have to build your business. You will not regret it.
