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Real Estate
Investors Should Avoid Realtors......
Like the
Plague
(c) Gerald Romine - All Rights reserved –
www.kickasswholesaling.com
Many of you know that during the 80's and 90's I
was a licensed real estate agent and broker who owned a national
franchise office. But most real estate agents and investors are
surprised when I tell them that once I "saw the light" as a real
estate investor, I surrendered my broker's license because I no
longer wanted to work for tips when I could make "real money" as
an investor. Many real estate investors ask: Should a
real estate investor
work with Realtors? Answer: NO!
There are 3 main reasons to avoid using a
Realtor if you want to become a profitable real estate investor.
1. Realtors cannot get you a deal dramatically
below market value. Realtors list properties near the top price
range for that particular market. In addition, once a property
is listed, it is available to every investor in the market, and
competition for the property will drive up the price. This is
not where you go looking for a good deal.
2. Realtors poison your dreams. Successful real
estate investors know how to buy property significantly below
market value. Most Realtors are completely ignorant of how we
function as investors. Realtors are not trained or experienced
in finding properties at wholesale prices. An inexperienced real
estate investor could be at a disadvantage by listening to a
Realtor's advice and perspective. I can see the so-called
"professional" Realtor laughing at them for trying to find
wholesale deals, and then telling them they know of a "real
deal" where they can get a $100,000 house for a steal…only
$95,000! To the inexperienced investor, this Realtor "help" can
be career-ending.
3. Investors are better at selling houses.
Realtors like to base the sales price on the average price of
homes in the area. By comparison, experienced real estate
investors understand that if homes in the area are selling for
$250,000, and they have just rehabbed a similar home, it is
worth more than $250,000 because their house is much nicer than
the comparable sales. Plus, most Realtors base sales prices on
MLS sales that do not factor in properties sold by
owner/investor. They could be missing the highest comparable
sales available and cost you tens of thousands in lost profits!
The 3 reasons above illustrate why I am against
real estate investors using Realtors to help them buy
property... and that's coming from a former real estate broker!
However, as with most rules, there are exceptions. Let me
explain and define the times when I do think using a Realtor is
the good business decision. When should an investor use a
Realtor? 1. In a HOT real estate market. A credible Realtor and
MLS listing can help create and manage multiple offers. A real
estate investor may earn a high net profit even after paying the
broker/agent commissions.
Example: I had just completed rehabbing a house
in a lower income area that base on comparable sales had a top
value of $125,000. The market was hot and buyers were in a
feeding frenzy. Given the upward neighborhood price movement and
quantity of buyers, we listed the property at $135,000. We soon
had offers coming in from $135,000 to $151,000! And this is for
a house worth only $125,000!
2. The other time to use a Realtor is any time
they bring you a great deal. Realtors do occasionally find or
hear about incredible property deals.
I understand this article may not be well
received by Realtors, but then again, I'm known for telling
people what they need to hear, not what they want to hear!
If you have a Realtor or broker's license and
want to start real estate investing, be sure to check all of the
state's disclosure and licensing laws. While there are ways to
use the license to your advantage, you should realize having a
license can kill your marketing when you follow all of the
disclosure laws (i.e. - putting "Realtor" or "agent" on an 'I
Buy Houses CASH' ad will kill your response rate). Happy
Investing!
About the author:
Gerald Romine is a nationally recognized real
estate expert that has been featured across North America
sharing the stage with political leaders, film stars, and
business leaders. Since 1989, Gerald has been involved with real
estate as a real estate agent, broker, rehabber, investor, and
builder and has been involved with everything from houses to
apartments. For more information about Gerald’s products or
services visit
www.KickAssRealEstate.com
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