If you are a real estate investor, you must be constantly asking yourself the question whether you should be going with or without a real estate broker every time you want to buy a new investment property and sell one of your rental properties. Doing your real estate investing business with the help of a professional real estate broker – or agent – has both advantages and disadvantages, depending on your particular experience and situation. Thus, it is important to know when you need to hire one and when it is OK to go without a real estate broker. For advice in this regard, keep reading:
It is OK to go without a real estate broker if you are an experienced real estate investor
After all, hiring a real estate broker or agent costs money, which automatically decreases your positive cash flow, cap rate, and cash on cash return from your future investment property. Consequently, it is always better to avoid the services of this real estate professional, as far as you know what you’re doing. Real estate investing is learning by doing, and if you are an experienced real estate investor, you should have enough knowledge as well as practical experience to be able to buy and sell rental properties on your own. This way you can save a few hundred dollars in each transaction to facilitate the process of making money from real estate investments. However, if you are a new investor, it is probably best to work with an agent to make sure you get the best sale price possible.
Related: What Is a Real Estate Broker and Does a Real Estate Investor Need One?
It is OK to go without a real estate broker if you have enough knowledge of the local housing market
There is no such thing as a US housing market. The real estate markets across the US are as diverse as the cities and towns within the country, and each one of them comes with its own peculiarities. If you are an expert on the Miami real estate market, this doesn’t mean that you know anything about the Los Angeles housing market. Thus, if you are thinking about buying an investment property in New York and have never before invested in this city, even though you have a real estate investment portfolio of 20 rental properties in other real estate markets in the US, it is best to hire a real estate broker and pay his/her fees to get the best deal. On the other hand, if you have already bought and sold properties in the New York real estate market and feel confident that you have enough knowledge about it, you can go ahead on your own.
It is OK to go without a real estate broker if you can perform real estate market analysis and investment property analysis
A real estate broker will be able to secure the best price for a property not because he/she simply knows the property prices in the city and the neighborhood but also because he/she is an expert on real estate market analysis and investment property analysis. Housing and rental markets are very dynamic, and anyone dealing with real estate should keep analyzing them all the time to update his/her real estate comps and analytics. If you want to be able to make successful property purchases and sales, you have to know how to perform real estate market analysis and investment property analysis. Even if you have access to the best real estate investing technologies – which you by all means should – you still need to know what goes into such analyses in order to understand the dynamics of the market and the business. So, if you know how to analyze specific markets and properties, you are good to go real estate broker-free.
Related: How to Find a Real Estate Agent for Investment Properties
It is OK to go without a real estate broker if you have the best real estate investing tools and sources
Related to what was said above, any real estate investor aspiring to succeed in the real estate investing business nowadays needs to get hold of the best real estate investing tools and sources available on the market. Since the diversity is so wide, you have to be able to distinguish the tools and sources that will match your needs best. To start with, you will definitely need an investment property calculator like Mashvisor’s, which is very interactive as well as highly reliable. All calculations and estimates are based on traditional and predictive analytics. If you get such a great rental property calculator, you will be able to: 1) skip the tiresome process of analyzing real estate markets and investment properties manually and 2) buy and sell properties without a real estate broker.
It is OK to go without a real estate broker if you possess excellent negotiation skills
Buying and selling anything – including real estate properties – requires a set of personal skills, the most important one of which is the ability to negotiate. Regardless of whether you are trying to buy or sell a real estate property, your counterpart will almost never agree right away to the price that you are initially suggesting. You will almost eminently enter into a cycle of suggesting a new price, rejecting it, suggesting again, and so on and so forth until you and your counterpart arrive at a mutually acceptable price. That requires strong negotiation skills, and if you have those, by all means go ahead and make your real estate transactions on your own. If, on the other hand, you are a weak negotiator, it’s best to hire a real estate broker. Otherwise, you might end up losing a lot more by buying an investment property too high or selling a rental property too low, compared to what the broker’s fees would cost you.
Related: The Pros and Cons of Hiring a Real Estate Broker
One of the best things about real estate investing is that you have so many options, including the option to hire a professional real estate broker or to buy and sell investment properties on your own. Although this decision might seem trivial, it is an important one. Before you opt to go on your own in your real estate transactions, you have to think carefully and consider all aspects of your situation to know that you can succeed in buying and selling real estate properties without the help of a real estate broker.