How to Win Brokers and Influence Them
Winning brokers and influencing them is all about how you can net more deals from more brokers and resources. That's my goal for you. I want to go through five things that you can do with brokers that will net you more deals and five things that will probably sabotage you getting more deals. #1 - update your broker several times a year to stay on top of his mind. All that means is to check in with them every 3-4 weeks and a minimum every couple of months. Let them know some of the things you're working on, maybe some of the deals you've closed, maybe offer to turn in a letter of intent on a property that he may be trying to get the seller off the fence about. Doing this shows that you're in it to win it and that you're serious about doing more deals. #2 - provide proof of funds and/or a statement of experience. Depending on your trading volume you may not need to do this as most brokers probably know you already, but if you're newer to the business and aren’t well known to multifamily brokers, it helps to let them know some of the assets you own or maybe some of the deals you've traded in the past. And if you don't have any experience, providing proof of funds, an approval letter from your bank, or even a letter from your CPA, can help prove your ability to close on a deal. #3 - just give yes or no answers to whether you're interested in moving forward on a deal. This is a very fast-paced business. Even if you give a no to 3 or 4 properties in a row, as long as you can give that answer quickly multifamily brokers will continue to bring you more deals because you were respectful and you answered quickly. #4 - compensate brokers if the seller won't. Now in today's times, it's very rare that a broker would bring a seller an offer that he accepts, it looks good, that makes sense to him, but they won't pay the broker. However, in those instances, it's wise to be upfront before you even get involved and have an understanding with the broker that you'll take care of them if the seller won't. That goes a long way with most brokers. That word spreads and that'll open up your funnel and you’ll see more deals. Okay, #5 - close on deals. The more deals you close on the more deals you'll see. That doesn't mean violating your investment principles just to get a deal done. It just means that when things make sense you close on it. The more you close that word spreads among brokers and they'll bring you more deals.
So now we'll talk about the five things that will probably hinder brokers from sending you more deals. #1 - never go around a broker directly to the seller and try to cut the broker out to get a deal done. I don't think I need to expand on that. It definitely will not get multifamily brokers to send you more deals. That word will spread fast. #2 - don’t retrade deals. Obviously, if something major comes up in a transaction that neither the seller nor the buyer knew about, nor even the broker knew about, most of the time the parties would expect a re-trade on price and terms. Just don't have a business plan in which you know 44 days into a 45-day inspection period that for no reason at all you just decide to change price and terms. Those brokers probably won't bring you another deal and the whole point here is to make your funnel bigger, not smaller. #3 - don't lowball on deals. There are too many market stats available to know what things trade for per unit, per square foot, cap rates, all those different metrics. There's just too much of that available to come in at a lowball price. It’ll net you fewer deals if word spreads that you’re someone who consistently lowballs deals. #4 - don't give impossible purchase criteria. Don't come to a broker and say I’m looking for a C-class asset in an A+ location for a 9% cap rate. Those are unicorns and you probably won't see many brokers who want to do business with you if you have terrible purchase criteria. You need to keep your funnel broad enough to see deals. #5 - don't ask the broker to reduce his fee to get a deal done. Now, this really comes down to proportion. So if there's a $25,000 discrepancy on a $5 million dollar deal, maybe you underestimated construction costs, that's like one-half of one percent of that deal. But if you come to a broker consistently to ask them to eat something like that and it's a 15 to 20 % hit to them, that will stay in that broker’s mind. Not to mention word will spread, which again will net you fewer deals because they don't want to feel like they're going to get beat up every single time.
There are lots of investors out there who consistently buy and sell. And that pool of investors is not that big, but they see lots of deals; their funnel is really big. More than likely it's because they pay attention to principles like this. I want that for you. The more you can make brokers feel like you care about them, that you're going to take care of them, that you're not going to do wrong by them, man, word will spread. Brokers talk. They’ll come to you consistently. And those same investors get more and more deals and that's what I want for you.
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