Why do even the most capable and experienced real estate investors still use agents?
Some real estate investors start out in the industry trained to avoid working with Realtors in any way. Others simply see them as the competition and an unnecessary expense. So why is it that when you look at agent listings, public record, and the business models of some of the wealthiest, most experienced, and knowledgeable, that they consistently use Realtors in their dealings?
There may be a variety of reasons, including these…
Access
Realtors still provide privileged access to data, tools, and certain properties. Some properties can only be purchased through licensed real estate brokers. Some data can only be accessed by members of the local Realtor association. That information can unlock sizable discounts.
Property Searches
While MLS properties aren’t the ideal fit for all real estate investors, it can be valuable to have a constant stream of properties being fed to you on a daily basis. Not all investors want to have to sift through every new listing. Automated searches and alerts can help, but some are happy to receive curated deals on tap.
Negotiation
Having a third party negotiator is a huge benefit. That is true no matter how great your own negotiation skills are. You can still call the shots from behind the scenes, but recognize when it pays to have someone else on the frontline. Sometimes simply having that party can make all the difference in getting the deal done and terms you want. It’s for many of the same reasons that you like to deal directly with decision makers on the other side instead of their attorneys or agents.
Reaching Buyers
Established Realtors should have an extensive network of buyers. You may still find your own, but why not augment it by hacking into these preexisting buyers lists? Some will have curated local lists and relationships, others have referral relationships with out of area and even international buyers and investors.
Buffer from Liability
Without a doubt the most pressing reason to use a real estate firm, especially if you are already successful, is to protect you from liability. The real estate world is incredibly litigious. Accidentally omit something, check the wrong box, or fail to answer the phone within three rings and you can have complaints, bad reviews, and lawsuits stacking up. It’s crazy, but true. Most just can’t afford this exposure, hassle, and time drain. A Realtor is a great buffer, and they normally have their own errors and omissions insurance, and legal teams. If there is an issue it is likely to be aimed at the agent, not you as the seller. That’s absolutely priceless.
Marketing Money
Generally speaking real estate agents are still very poorly paid. The average agent barely makes minimum wage. After their broker’s cut, their hard costs of being in business, and spending marketing money on listings in advance, minus taxes, they take home a very small portion of each sale. Not all agents will spend on marketing. Despite their heavy glossy listing presentation folders some barely get their properties listed on the MLS. Others spend heavily with print and online media, direct marketing, and hosting awesome open houses. The better agents can certainly help make your own marketing dollars go further.
Extra Hands on the Job
Sometimes the advantage of using a real estate agent is about having extra pairs of hands on the job. Outsourcing and building your own team as an investor or small real estate business can be smart. Yet, Realtors can often help augment that too. Sometimes they even have large teams themselves. That’s more people power to answer leads, host open houses, chase down sellers to make offers, and provide customer service. This is especially valuable if you prize your free time and don’t want to be tied to your phone 24 hours a day.
Have you worked with Realtors for investment property deals in the past? Was the experience good? How did you find the good ones?
