When I first got started in real estate investing, I read a LOT of books. One thing I seemed to hear again and again was "Whatever you do, do NOT become a real estate agent if you're going to be an investor."
As a new investor, I believed most of what I read and heeded that warning, but it always stuck in the back of my mind and I found myself wondering why you wouldn't want to be both. After some research, I found that the big reason you're not supposed to be an agent AND an investor is that as a real estate agent (or broker, or Realtor), you're held to a "higher level of responsibility".
If a dispute ever arose between you and someone you were involved in a transaction with, it could be argued in court that as a licensed agent, you knew more than the other party, had an unfair advantage and used your additional knowledge to take advantage of the less knowledgeable party.
Herein lies the big question.
Do you plan to take advantage of someone you're doing business with?
Hopefully, your answer is "No."
As a real estate investor and/or agent, it's our ethical obligation, licensure aside, to put together fair, legal and "above board" deals.
So if you're putting together deals ethically (as I hope you are) then it begs another question:
Why would you want to be both an investor and a real estate agent?
As an investor, when you approach a homeowner and talk to them about their property, you may realize that it's not the best deal from an investment standpoint, but it would make for a good listing. There have been many cases where I had a property that just didn't fit my investment criteria, but it made more sense to list. In these cases, we listed and sold the properties on the market and took our commission.
In addition, as an agent, you get leads for sellers looking to sell, some of which may be better opportunities as investments. As a real estate agent, what happens when you're meeting with a seller and you realize that the deal you're looking at has a lot of upside potential, and you would rather pick it up yourself?
Simply switch hats, put the listing paperwork away, and put on your investor hat.
What kind of opportunities do you miss out on when you're only an agent?
A fellow real estate agent at an office where I used to work was a top sales agent. He would knock through 300 cold calls a day, line up dozens of closings a month, and top the charts in the office month after month.
He was a fantastic real estate agent.
One day, he came across a listing where the seller wanted to simply "walk away." In investor speak, this was a "Motivated Seller." The seller was leaving over $90,000 on the table and was wanted to be done with the property and move on.
Our fellow agent listed the property, brought it to closing and the seller walked away with a check for just over $90,000. Our agent friend was busy working on other deals when he got a post-closing call from the seller looking for help.
The seller didn't know what to do with the check, didn't have any place to put it and just needed some money to put gas in the rental truck on their way out of town. As a real estate investor, our friend could have solved the sellers problems from the get go, helped them with the move, put some cash in their pocket and taken away the problem property all while hanging onto the excess $90,000.
So when it comes down to choosing between being a real estate investor, an agent or both, I hands down choose both every time. It gives you more options and opens more doors to more deals.
Jeremy B. Shapiro is a nationally recognized expert on the real estate industry and has been featured in the Boston Globe, National Public Radio, NPR Morning Edition, CBS Nightly News, Fox News, Boston Business Journal, PBS and has even been interviewed by Toyo Keizai - the Business Week of Japan.
To learn more about how local investors are routinely pocketing $10,000+ per deal - even in today's economy, visit:
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