Realtor to Investor?

Question

Hi everyone: I have been doing a lot of reading and research on REI and what I seem to ba lacking is knowldge of the real estate market. I am a stay at home wife and figured I could use my time to get a RE license and start working with an egency/brokerage. The reason I am thinking of doing this is because I want to learn so much more about market values and getting first hand experince in dealing with closings, listings, and public relations.

I could use the knowldge that I gain form being a realtor as a stepping stone for my realty investment business.

I would love to hear some opinions

Thank you much :D

I could use the knowldge that I gain form being a realtor as a stepping stone for my realty investment business.

I would love to hear some opinions

Thank you much  :D

Tom Wood · Answer

There are no limitations to realtors buying deals from the MLS, although in my area some REO listings say that an agent buying the property for themselves will not receive commission.  (Not sure why that is)

As far as wholesaling outside the MLS, there are no problems with that as far as I've ever heard about.

Tom Wood · Answer

I think having a real estate license as an investor is a good thing.  It gives you access to the information without having to rely on someone else. Also, you will definitely learn about values and going through a real estate transaction so that is all good.

However, having a license requires you to disclose that fact when dealing with sellers and buyers.  I don't have a problem with that, but I know some investors do.

Tom McGiveron · Answer

beach,

i hear what you're saying.  you certainly don't have to open with "hi i'm tom and a realtor, i'd like to...."

however, letting them know BEFORE you obtain privvy information that you, as a realtor, can use to your advantage (rather than the seller), is very important in my opinion.

i agree you don't have a "duty" to anyone without agency being established, but as a REALTOR, it is important to note that we are not supposed to use our status as real estate agents to give ourselves the advantage over others whether we have an agency with a client or not.

all i know is that when i find things that are "advantageous" to myself, as an investor, the seller i speak to always finds out i'm a realtor within the first few minutes of our discussion.  it goes something like this:

(hello's)
"i see you're selling your home."  
(response - "yes")
"i'd actually like to take a look at it.  i'm looking to buy in the area."
(response - "okay...")
"i just want to let you know i'm a realtor but i'd like to meet with you and see your home for my own personal interests of buying."

to me this is up front and honest.  and in reality, at least in my market (long island), there really isn't any FSBO who's even coming remotely close to asking for less than market value.  most are WAY OVER what the market will bear at this time.  it's nuts...but that's another story.   :D

Richard F. · Answer

Well, I'm going to go out on a bit of a limb here, but this is my OPINION: First of all, regarding "buying wholesale",  IF you do not establish an actual "Agency" relationship (referring here to the laws of agency, not the Agency you work for), you have no "duty" to a client. You are simply acting as an individual, that happens to be a licensee. Ethics certainly demand honesty, but you do not owe it to every seller you bump into to advise them on pricing. Of course, if you DO create the Agency relationship by soliciting the listing (or by other actions or statements), then you have a clear fiduciary responsibility to your client, and should obtain a separate, written acknowledgment that you have fully advised them of market conditions if you are going to purchase the property.

As to your actual disclosure of licensee status, your presentation of this fact is key to the type of response you will get. If, acting as an individual making an offer, you don't make a big deal out of it, and don't "announce" it, but rather casually bring it up when you reach a certain "comfort level" with the seller, (ideally while writing or presenting your formal offer), their focus will be on the $$, and your licensee status will not be an issue. To be clear, I am not suggesting you try to hide the fact, only that you find the best time to bring  it up in a low-key manner (that is within the requirements of your local license laws). If the first words out of your mouth are "Hi, I'm --- and I'm a Real Estate Agent, I'd like to buy your property" then you will instantly put them on the defensive!

Bottom line...it is a delicate balance, and you really need to be able to separate your efforts as an individual from those as a licensee. You also have to understand and utilize the universal sales process to make the most out of either situation.

Tom McGiveron · Answer

the main issue with realtors "wholesaling" is that as a realtor, it is my responsibility to represent people fairly, whether they're a seller or buyer.  when i start buying houses at steep discounts, this becomes very questionable.

here's two quick scenarios:
1. i call on a house and get a bunch of information that allows me to deduce that i can grab the house 25% cheaper then what it's worth.  i don't offer the information to the seller that this is the case and i go grab it up.

2. i call on a house and inform the seller immediately that i am a realtor.  i schedule an appt with them and have them sign a disclosure statement stating that i informed them of my status as a real estate agent.  i then purchase the house from them at a 25% discount, while fully informing them that the house is priced under current market value  and they sell it to me for whatever reason (behind on payments, closing on a second home  cuz they're moving...whatever).

now scenario 2 is CERTAINLY better (more ethical) than scenario 1.  however, even then, it is contradictory for me as a REALTOR(R) - to buy real estate at such a steep discount...am i representing the best interests of the client (seller)?  certainly not their financial interests...or so it would seem.

most people would say that yes i am benefiting them in every way - both emotionally and financially because i'm taking it off their hands and they don't care about selling it 25% below market value.

HOWEVER...really - the most ethical thing to do would be to take the listing, inform them of a better pricing plan possibly and sell it for them as the listing broker.  it's straight up this way and there's NO room for questionable ethics.

Account Closed · Answer

You will learn what agents do. You will learn how to work with retail buyers and sellers as they are most of the business for any agency.

You will learn how to legally represent buyers and sellers.

Most agents have no contact with investors. The few that do work with investors still learn little about doing deals. I am not talking about agents who invest but even some of them are not very skilled as investors.

Being an agent implies dealing with RE but it is not the same as being an investor. An investors is a specialist as is an agent. There is not as much overlap as some would think.

Being an agent might be perfect for you. Do look around and notice that most all the agents do not invest and very few do much business of any type. Pick the firm you join carefully. Make sure its business mix matches what you really think you want to do. Expect that most new agents work long hours and the hours are when others are not working (nights, weekends, etc).

I have had to educate a number of agents and their brokers as to how RE offers work. It is not uncommon for them to say something is illegal but be completely unable to show any evidence of the laws which apply. They know well how to handle a deal after a 20% down 80% financed offers has been presented so agents tend to work harder after a deal is accepted then before IMHO.

I use agents to buy and sell. They can chase up details and arrange showing a property.  I do not find many that can do a deal and I do not expect them to handle that aspect.

Really good investors make more money than really good agents. It comes down to the math as an agent tends to make no more than 3% and has to recreate their business each day.

There can be lots of problems. When you contact a seller and declare you are an agent you are putting them on notice that you are there as a possible representative to them. They will tell you things that as their agent you can not use for personal gain.

If you then switch sides you can have an issue.

If you do not tell the seller just what they could sell the property for you might be misrepresenting yourself.

Your broker might not allow you to wholesale deals as the broker's license is on the line each and every time you do a deal.

There is another thread on the forum (I do not have the link) where wholesaling with a license was discussed. Almost all the posts from agents boil down to the agent agreeing a commission that is close to the normal commission if you just listed it rather than wholesaled the property.

Note also that some MLS local boards have clear policies about your ability to take a listing and not immediately put it on the MLS. Hence your ability to wholesale what you are calling non-listed. Likely you will need to list all deals even if you have an agreed sale already lined up (immediate sales pending status).

A license means you are armed and dangerous so the courts hold you to a higher standard than an investor. In exchange you are allowed to legally broker deals and get paid.

John Corey

Account Closed · Answer

It avoids any conflict of interest.

Some investors who have a license refused to take a share of the commission when buying.

John Corey

N/A N/A · Answer

noobdog,

I work for a real estate investment company and we mainly operate out of the Boston area right now but we are looking to expand.

How is the new york area treating you and have you had success with real estate investors?

Tom McGiveron · Answer

Ara,

in my local market - ny long island, i decided to get my real estate license because there's SO MUCH MONEY in it, even now.

many agents are struggling because they've become stagnant.

when you do it, search long and hard for ULTRA SUCCESSFUL broker or associate brokers, with teams.  you may make a little less in commission, but the experience will be so much more valuable to you in the long run.

N/A N/A · Answer

Great info. Thanks Tom! I'll push on and start studying for that license then  :groovy: