Finding An Agent Partner With Chris Craddock
Episode 467: Finding An Agent Partner With Chris Craddock
There is a lingering feeling in the industry that investors and agents should have a great relationship, which makes it surprising why that is not usually the case. Chris Craddock joins Mitch Stephen on the show to demonstrate why it makes sense to work with an agent partner if you’re an investor. Chris runs the numbers that will show you how building a strong relationship with the right agent can help you capitalize on dead leads. So how do you find a good one? This is the part where you hit the play button. You will never meet someone as enthusiastic as Chris when it comes to the agent-investor relationship. Don’t miss the fun in this eye-opening episode!
I’m here with Chris Craddock. I met Chris a while back in Tulum at The Multipliers Mastermind. It turns out to be a great group of men out there, he was one of them. How are you doing, Chris?
I’m doing awesome. How are you doing?
I’m doing good. Give us a little background and then I’ll get into the questions.
I got married in 2000. I was on staff with an organization called Young Life. It changed my life. I loved it. I was making $20,000 a year from Young Life, which is doable probably in some places in the country in the early 2000s, but in the DC area, it was not if that’s your only source of income. When my wife got pregnant in 2003, I started flipping houses and I made twelve times what I made in a year in Young Life in about four months by flipping houses. I used that money to get myself to continue to do ministry and be able to afford to live.
During that time, my wife and I had a lot of kids, six of them. The money started running out. I started flipping houses again in 2011. At that point, almost everything was short sales. I got my real estate license so that I could get paid to flip my own short sales. During that time in ministry, I’d always led large teams. I’d gone back to school and gotten a Doctorate in Leadership. I read Gary Keller’s book, The Millionaire Real Estate Agent. It made sense so I started building a massive real estate team. In 2020, we did over 500 transactions. We’re number 20 out of the 200,000 agents in Keller Williams. We built a big organization. A big piece of that was most of the time the investor world and the agent world are these two separate worlds that don’t get along well. What we did was built an organization that meshes the two of them. It’s been an awesome niche that has fit well for both us investors and retail agents.Figure out how you can make money every time the phone rings. Click To Tweet
There’s this big conversation around whether you need to have your real estate license to be an investor. There’s this camp that says it’s a license to get sued and you don’t want a license if you’re an investor. There’s this other camp that says, “You can save yourself a lot of commissions or get in on some commissions you never would have got in on if you had your license.” My personal opinion is I’ve seen people do it both ways. It depends on your personality and how much of a multi-tasker you are. A lot of us though in this business are quite AAA and aren’t even happy unless we have eight balls in the air at one time. If anyone ever takes one of our balls away, we’ll go add two more to show the world that we need to have it. On the idea that it’s a license to get sued, we ought to be given all the disclosures all the time anyways whether you have a license or not. If you bought a house and there’s nuclear waste in the backyard in it and it happens to fall on your court, don’t go dump that off on someone else. Handle your own crap. You bought a bad deal, you got to suck it up and eat it and go on. What’s your opinion?
If you even have a mildly big business, all your friends are going to see you as the real estate guy or girl. All investors should be licensed because of the fact that people are going to come to you all the time. You don’t have to be the one showing them houses or anything else. You can refer that out and have a massive stream of income from that. The other pieces, success leaves clues. As I’ve looked at, not all, there’s a few that don’t, but most of the massive fix and flip or wholesalers or most of the massive organizations across the country, the principal is either licensed or they have an in-house agent that is licensed and can give and receive referral fees. It’s a no-brainer for me.
It’s a natural fit because if you’re an investor and you’re out there bumping around, you’re going to run into people that need some traditional real estate. They have traditional real estate needs. If you’re out there and you’re being an agent, if you’re not buying some properties or getting to the investing side, at some point, you’re missing the whole point of being in real estate. I get it, but the point is you don’t have to do both. I have a hard lending company. I don’t even have a desk in that office. I don’t have a card that has my name on about that. I have a partner in that business. I raise the private money for my creative real estate business investing.
When I get too much money or I can’t get it out, I send it over to the hard money lending side. We get it out to my competitors who found deals before me in short increments, 6 to 8 months a year loans so that when I do need that money, it’ll come back to me and I can put it back in my court and I can go out and use it. That turned into a relatively decent business for me, making an extra $200,000 to $250,000 a year a piece, me and my partner in the hard money. That’s not bad for a side gig that you don’t show up at. I get it with the real estate thing too. Remember, you don’t have to be doing both of them. You just have to be the CEO running them.
That was one of the things that I remember hearing Gary Keller say. Gary Keller is one of the smarter people in real estate. He said you can have 75 different businesses as long as each one of them is like a Manila folder with what goes on inside of it and there’s a face on the front of that business and that face is not yours. That’s that whole thing. You got to have somebody else running it and that face cannot be yours. Otherwise, you’re going to be a bottleneck. I don’t care how talented you are. You are going to be the bottleneck.
You don’t want to be the bottleneck. I have been the bottleneck of many a business. It takes a lot to learn to get out of your own way. It took me a long time. I’m not even sure I’ve mastered it, but I’ve at least learned to recognize it. At some point I become the weaker link in the business in some department and it’s holding up every department.
One of the biggest leveling up that I’ve ever had was when I brought in people that at the time, they were 80% as good as I was. They weren’t as good as I was at what I was doing, but then quickly, because they could devote all their time to that versus me where I had my time in a bunch of different categories, their production was a lot better. When I was going to meet with people to get them signed up, on the first appointment, I would out close anybody. The reality is, because of my time constraints and everything else, I didn’t follow up nearly as well as they went so their actual total closings were much better than I was, but I’ll close them on that first appointment. It’s that same feeling.
That’s exactly how I finally came to the conclusion and how I got out of my business on a day-to-day transaction, I learned exactly what you said. They’re not as good as me, but their attention is undivided so they’re better than me. That’s a big realization.
There are a couple of folks that are taking those appointments that close better than I ever closed. I don’t know whether it’s because of the end divided nature of it. They’re massively talented, but it’s great to let people stay in their lane and me stay in my lane. It’s awesome.
Let’s go your investor side. It’s gotten tough. The market is crazy, real estate in general. If you ask me, it’s tougher than it’s ever been.
If you don’t mind, I’d love to jump into the piece that is the massively amazing genius of the end. I started as an investor and I jumped into the retail side, but the biggest whirlwind is that most investors, they have people calling in, but let’s say 1 in every 10 calls is going to be a distressed seller. Somebody that’s going to either sell at $0.65 on the dollar or be willing to do creative financing or something of that nature. Maybe it’s 1 in 4. Some people have a 40% close ratio. Whatever it is, between 1 and 10 to 1 in 4, how many appointments? That means there are ten appointments that you’re going on where people are likely to sell, but not at your price or with your terms and conditions.
What we did was we figured out, how do you make sure that you’re making money every time the phone rings? If the phone rings, you can get paid. The big key right there, is for us, figuring out how to have investors partner with real estate agents. For me who started in the investor world but then moved to the retail world and then I started partnering, I have one investor that gets sent over $60,000 a month on these leads that were normally sitting dying in their CRM. That’s $750,000 a year right there. I also have a wholesaler that had made no money wholesaling for the five months he’d been wholesaling, and by doing this, he was getting paid more on these leads from the retail pass off than he was from his own wholesale deal. That’s one of the big keys. It’s less about getting new leads but taking those leads and making sure you’re getting paid on all of the leads.The people who make the most money are those who solve other people’s problems. Click To Tweet
It’s not a CRM, is it?
No. It’s finding a good agent partner. Everybody has tried this. The ones that do it well, it’s usually because you pick a good agent partner, but there’s a whole system. I’ve talked to so many people, they’re like, “We do well with the retail passed off.” You hear their numbers and it’s terrible. An average retail passes off means that 25% of those leads should close where you’re getting paid on those deals. If you do well, if you get somebody good, 42% should close when you pass off the lead, but the reality is everybody won and they’re like, “Talk to a real estate agent.” Everybody is like, “No, my brother is a real estate agent. My uncle is a real estate agent.” Fifty percent of the deals that closed would have said no if you were handing him off and said, “Here’s a real estate agent.”
The second thing is you realize you pick the right agent and then you’ve got to know your scripts to hand it off, and then the agents have to know their scripts to close. If somebody called an investor, there’s only five reasons somebody calls an investor instead of a retail person. It’s like when you turn in your car, when you do a trade in at the dealership, you know you’d make more money on Craigslist, but there’s a reason that you turn it trade it in, it’s because, at that point, it’s convenient. If you know what the reasons are that people will call an investor, then you can solve their problem and the people that make the most money are the people that solve people’s problems.
You get it set up and then the agent comes in and he knows exactly how to speak their language going like, “This is the hot button and why they’re doing it. Go over there and get them to list the house with you so you can sell it for retail and then give me my cut.” What is the reasonable cut for someone who’s handing off a lead?
It depends. If you’re setting appointments for them, it can be anywhere from 35% to 50%. What I’ve found is this. Real estate investors are willing to pay more in fixed costs, which means willing to write the check upfront to bring leads in. Real estate agents are willing to pay more in variable costs, meaning they’re willing to pay when the deal closes. They’ll pay more than they would have paid upfront, but only pay on closing because investors are willing to risk a little bit more and write the big checks up front. Agents are a little bit more risk averse and are willing to write the check on the backend. It turns out to be a great win-win on that front.
How hard is it to find a match between the investor and the agent? My experience is a lot of agents don’t understand what we do and don’t want to understand and don’t care. How do you go about getting in the right direction on finding an agent partner?
That’s the biggest thing right there. It is a business partner and it’s like picking a spouse. It is a big deal. It’s important. We coach on four things. I’ll give you the overview of the four things you’re looking for. Happy, hungry, humble, and smart. Happy, this is good for all of your hiring across the board. If they’re not happy people, then they’re not going to be happy with you. When I was in ministry, I had a preacher friend that was mentoring me. He said this. He’s like, “Chris, if anybody ever shows up to your church and tells you how much they hated the church down the road and how your church is awesome, tell him about another church as fast as you can, because it’s a matter of time before they’re going to hate you and hate your church because wherever they go, there they are.”
You want happy people, because if they’re not happy, they’re going to come in and be good with it. They’re going to close a lot of deals and then be like, “You’re nickel and diming me. You’re stealing money from me on the splits.” You don’t want that in your life. You want somebody that’s happy to win. You win and they win. Happy, hungry. There’s this book. If you google it, it’s a PDF so it’s free, it’s called The Go-Getter. It’s 60 pages. The first twenty pages you’ll be like, “What am I reading?” By the end of it, you’re like, “Yes.” This is the person that does not take no for an answer. If the door is shut and locked, they’re going to check the windows to see if they get in right there. You want to be able to rip open their chest and see a heart of a lion inside. The type of person that they’ve got a massive fire, but if you have a massive fire and you throw this system on it, it’s going to burn crazy. If there’s no fire there, you throw gasoline, you just get a wet spot. That’s not what you’re looking for.
You need that hungry person. They’re going to find a way to yes, and then humble. Please don’t get this wrong. This is where most people mess up. They confuse confidence and humility. You need to be massively confident, but humility and confidence go hand in hand. People think that unconfident or meekness or this other side is what humility is. That’s not what it is. Humility is being willing to sit at somebody’s feet and listen and learn and grow from them. Mitch, the first time it was when we were in San Antonio shooting tanks and machine guns. I was hearing your system for the first time and I’m like, “Tell me more. This is your genius zone and you are one of the best in the world.”
I sat there and taking it all in. I’m massively confident in what I’m good at, but anytime you hear somebody that’s a genius in their world, you need to sit down. I don’t care how good you are. Sit down and learn from people that are better than you in their world. You’ll see this with real estate. This is probably the biggest issue with real estate agents, is they think they’ve got it together. They sold 50 houses or 100 houses last year, they think they know everything and they’re not willing to sit and learn the system.
Humility is huge. It’s not because they’ve done a lot of deals, they’ve got to be humble enough to learn the system. Smart, this isn’t like they did well on the SATs, but it also means that they did well with EQ. They can read a room. They can see somebody is smiling. Somebody is rubbing their neck, so you know they’re uncomfortable or nervous. There’s an amazing book called What Every BODY is Saying, about body language. One of the best books I’ve ever read in my life. Happy, hungry, humble and smart. If you go through that on the interview process, it’s going to save you so much pain and it’s going to make you a fortune.
You’ve got my interest piqued because I have four acquisition guys, we probably bump into hundreds of houses a year that they want to sell retail that they’re not going to discount the price. They don’t have a realtor yet. I’m thinking to myself, “I need to go get a few hours with Chris Craddock and figure out what the hell.” I’m probably leaving another $100,000, $200,000 on the table.
What’s the average price point in your market, San Antonio?
My average price point in San Antonio is $290,000. Call it $300,000.
How many appointments or phone call appointments where you’re willing to give an offer to somebody do you get every month?
It’s hard to tell. I don’t know.
Let’s make it simple. Ten appointments a week. If you’re getting ten appointments a week, you’re probably closing somewhere between 2 and 4 of those a week.
We’re closing about 6 to 8 a month because we’re buying about 100 houses a year. During COVID, it was 83. There’s a real good number. Eight houses a month pretty much will get us where we’re going.
That means two a week, which means you’re probably have ten appointments a week. What that means is with the two, it means there’s eight that are closing. Here’s the numbers. What we found is if you have inbound leads from direct mail, TV, radio, all of that, five days after the appointment, you have less than 5% chance of closing those deals and follow up. If you’re outbound, which means voicemail, drop, texts, cold calling and all of that, it’s ten days after the appointment where you’re giving them the number or giving them some sort of number. After that, you go to 5% or less closing ratio.
One of those ten that you’re meeting with, eight of them are going to sell with somebody and you’re not getting paid on that right now. The second thing is, if you have ten appointments, there’s probably about twenty appointments of people that are going to sell but you are pre-qualified that they don’t want to do creative financing. They want retail. Right there, you probably have about 28 bites at the apple. If you get an average agent closing, that’s 25% of it. If you get a stellar rockstar, you’re looking at 42%. What I’m seeing with your price point, you’re probably leaving somewhere between $175,000 and $300,000 on the table every year for leads that you’ve already paid for. There are no more additional costs to you.
Do you teach this?
This is my class. This is what I teach. The first part of it is teaching the agents how to find an agent partner, go through the whole piece there. The second part of it is teaching them the scripts and dialogues for the handoff to the agent. The third part is we train the agent to do their own prequalification once the appointment is set. We give appointments, not leads. The last part of it is teaching them, once they’re in the door, how to close and also how to get the right amount of commission. In my market, the average commission is about 4.2% but on our team, our average commission is over 6% because here’s the deal, if you go in as an agent, you’re going to have agent discussions and they’re going to beat you up on commission. If you go in as a problem solver, it’s about getting them the amount of money that they want. The commission isn’t even a question.
You’re saying an investor like myself could expect 25% to 30% referral fee. Is that what it’s called?
Yes, 25% to 35%, sometimes more. If you set enough appointments for an agent, it’s all about the business decision, because here’s the deal, with the amount of leads you have, you will change somebody’s life. They need to understand the opportunity, because for a retail agent, the key is listings make babies. I always say that. You get buyers from your listings and you get more listings from your listings. They make babies. When you have all those listings coming in, you can build a million-dollar net business because you attract such high talent because you have a lot of business to hand off. If you can explain the level of opportunity to a high-powered agent, it doesn’t mean they’re doing a lot of business, it means they’ve got high horsepower and have a high upside. If you can explain that opportunity, you will get somebody amazing. They should be able to close at a high rate. It will change their life and your life, and you win together.
I want everyone to go to 1000Houses.com/AgentPartner. Over there, you’ll have all the connection you need to Chris Craddock. If you want to learn more as how to find an agent partner as a real estate investor and how to capitalize on all those dead leads that are not paying you at all, then go to 1000Houses.com/AgentPartner. Over there, we’ll have his website, all the connections, anything you need over there will be there. Is there anything else you want to say before we wrap it up? It’s been an eye-opening episode, if you ask me, because I’ve been in this business a long time. I have never ever seen anyone speak with such enthusiasm about the real estate agent-investor relationship. It’s refreshing because I’ve always felt like there was supposed to be a good relationship there. I don’t understand why there wasn’t.
I’ll share one last quick story about how it got built. I did some of this stuff on my own, then I realized that there was a massive investor in my area and he was spending well over six figures a month on leads for his wholesaling and fix and flip business. I started calling him. I was a newer agent, but I was starting to build my team. I knew I was a good salesperson, and I knew that this was a great source of leads, but nobody was closing at a high ratio, but I knew that I cracked the code on how to close this at a high number. I kept calling and they’re like, “We built our own brokerage. We’ve been passing off leads to agents. In the last six months, I’ve given another agent, which was a top producing agent in our market, 1,000 leads and this person has only closed six of them.” He’s like, “It’s not worth my time.”
If you talk to a lot of people that have tried it, they’ll all say it’s not worth their time because of the way their system was broken. I kept calling and kept calling, persistence breaks resistance. Finally, they said, “We’ll send you 150 leads.” They sent me 150 leads. I called 70 of them had already sold. They’re gone. Thirty of them were out of area. I had 40 leads and I’m like, “I’ve got 40 here. That person closed 6 out of 1,000, I’ve got to close 6 right now.”
I pulled everything out that I could. I’ve got six listings under contract. I called him and I said, “I’ve got six of them.” The guy that was the COO of the company was like, “You need to come in.” I came in and he’s like, “Chris, I like you. I didn’t want to tell you to go shove it. I gave you 150 leads that were five years old so that you would have no success and you’d stop calling me every week and you closed six of them? This is unreal.” We get this thing out together. In 2020, we sent them almost $750,000 in referral fees for deals that they had been paying for. That’s $750,000 in found money.Listings make babies. Click To Tweet
That’ll change anybody’s life. You got me excited. My friend, I appreciate you taking the time. If this sounds interesting to you, you’re an investor out there and you’re not capitalizing on these leads and it sounds interesting, I don’t know if you put in the time and find the right agent, which you’re going to need some help, don’t try to do this on your own because if you don’t succeed, you’re costing yourself a lot of money. Pay someone who’s already been there, who’s already done it and let them show you how to get it and how to write the scripts and how to deliver the leads to the agent so that you have a good chance. Go to 1000Houses.com/AgentPartner. Everything you need to know will be over there if you want to pursue this strategy. It would be well with your time.
I also want to say thank you to TaxFreeFuture.com for sponsoring this episode. Tax Free Future helps you redirect your retirement plans into a self-directed retirement plan with checkbook control. They also show you what to do with the money, which is the other step. I put $250 in all my retirement plans to start in. When I started, I had four. That’s not a lot of money and everyone goes, “What in the heck can you do with $250 to make it into anything at any amount of time?” I said, “There’s a lot you can do.” My first move with my $250, it made the account worth $10,000 in one little move.
My point is there are 37 little video vignettes about the company. There are also some of the strategies you can use when you have a little bit of money and how you can parlay that into a lot of money in a short period of time. Be sure to give your little micro-information so that they’ll open the gate for those 37 little video vignettes because those videos are very valuable. They’ll change your life. Chris, I appreciate you being around. Thank you so much. I like to thank all the audience for taking some time to get you some Chris Craddock. Go to 1000Houses.com/AgentPartner and get you some.
About Chris Craddock
A nationally certified Life Coach and member of Gary Keller’s Top 100 with a Doctorate in Leadership, Chris Craddock is the host of the Uncommon Real Estate Podcast, a Realtor, and CEO of Redux Group.