In the real estate industry, ‘There is no such thing as free lunch’ when it comes to hiring a real estate broker to help you capitalize on your real estate investments.
For investors, hiring a broker is no free service and the trade-offs for getting professional advice comes at a cost in the form of high commission fees. If you are one of those real estate investors who can manage on their own and eliminate the need for a mediator, then kudos to you. This case usually works in a hot seller’s market, where demand is really high and you can sell your investment property very easily. If you are amongst those who prefer some guidance, then fret not because there are many advantages that come with hiring a real estate investment agent. It is worthy to mention that buyers purchase homes via real estate agencies than on their own. So if you think about it, you could be losing out on a large percentage of the buying population if you were to ride solo. With that said, however, there is really no right way to real estate investing, and it is at your own discretion how you want to strategize your real estate business portfolio and make lots of money in return!
Related: Getting into Real Estate: Expert Tips and Tricks
4 Advantages of Hiring a Real Estate Broker
1. You save lots of time
When you hire a real estate broker to do the job right, you are off the hook to learn everything about buying and selling real estate properties. You save lots of time and effort when you work with a professional who has the right education and experience to close a deal on a house or any real estate transaction for that matter. Not only is this time-effective, but it is also convenient. Realtors act as mediators between buyers and sellers, and they have easy access to all other properties listed by other agents in the area. For example, if you are looking to buy a rental property, a real estate broker will find properties that meet your criteria and preferences, get in touch with the sellers’ agents, and schedule appointments for you to view the properties.
2. Negotiation is an art
Not everyone has mastered the art of persuasion, and it is certainly no easy task. For real estate investors, hiring brokers to negotiate and close a deal on a property is much easier and is less of a hassle for the buyer and the seller. This way, the agent is articulate and objective in the way they negotiate a discount to get a really good deal on your investment property.
3. Finalizing the contract and paperwork
If you like reading endless pages of contract terms and filing paperwork, then you should reconsider hiring a pro and stick to a one man show. All joking aside, investors hire a full time real estate broker to finalize contracts and the required paperwork because they are familiar with the terms and conditions to ensure a legally binding contract.
4. Market trends
Real estate brokers have continuous knowledge of and access to analytical tools and databases to decipher market trends in the real estate industry and make better decisions about your investment property. All in all, you definitely get your money’s worth when you hire a pro.
Related: How Agents and Investors can use Predictive Analytics
4 Disadvantages of Hiring a Real Estate Broker
1. Commission margins
Hiring a professional real estate broker is not cheap, especially if he/she is an experienced, full-time agent. Ideally, real estate investors pay up to 6% of the total sale price of the house, and NOT from the profit they make on the sale. So, even if you don’t make profit, the agent guarantees his/her piece of the pie no matter what. Alternatively, you can hire a discount broker if you want to pay lower commission fees.
2. Be careful with whom you hire
It is imperative you do your research before you hire an agent. Check out credentials, experience, recent sales, etc. The key is to hire someone who can maximize your investments’ profit instead of turning into another burden.
3. You are not the only client
In most cases, full-time agents work simultaneously with a number of clients and in turn, depending on how busy your agent is, your property may not get the full attention it needs. This might result in not having your calls returned in time, deadlines being missed, and deals falling through.
4. It might take a while
If your agent does not devote the necessary time, your income property may stay lingering in the market longer than necessary. Again, you have to work with your agent’s schedule and be a little patient. This is the cost of working with a real estate broker at times.
Related: 6 Tips on becoming a real estate investor on your own
Finding a Real Estate Broker That Works For You
Did you hear of the 80/20 rule? To put it in perspective: 20% of realtors do 80% of the business and this applies to the majority of real estate transactions done across America. If you want to cut your time in half and be efficient, then hiring a really good real estate broker is key to financial success.
What you should do before you hire
1. Check out credentials. Make sure he/she is licensed by the state and does this job full time. A good rule of thumb is to go for an agent who has between 3-5 years of experience. Most importantly, hire someone who you like and trust.
2. Get referrals from friends and family and/or word of mouth. You want a real estate broker who knows your local real estate market inside and out.
3. Ask to see recent sales to get a sense of the agent’s track record. Don’t be shy to ask to see a list of the homes he/she sold recently and check to see how much they sold for.
4. Interview at least three agents before you make a decision. You should not feel pressured to hire someone on the spot; do your research and interview as many agents as possible to find the right one for you.
Eventually you have to consider your specific situation to decide whether you need to hire a real estate broker or not in each particular case. Use Mashvisor service to gain full access to data and market trends to help you make more informed decisions on your real estate investment portfolio.
