Real Estate Agents vs. Real Estate Investors
If you’ve ever bought or sold a home, you’ve probably worked with a real estate agent. Agents represent their clients in the purchase or sale of property – some even represent both sides of the sale. If you’re familiar with the real estate world, you might also know a bit about real estate investors. Agents and investors do roughly the same thing – facilitate purchasing and selling properties like single-family homes, multi-family apartment complexes, and corporate buildings. But there are a few fundamental differences between what they do overall.
If you’re an agent considering a first-time investment property, bringing a pre-listed property to Blueprint Homes can benefit you. We can complete renovations at a much lower cost and on a faster timeline, and we’ll invite you to represent the listing when it’s ready for resale. Before we get into the details, we’ll outline some of the responsibilities of agents versus investors and explain how agents can even do both.
Real Estate Agents
Real estate agents represent either the buyer or the seller in the sale process. Sometimes, a single agent can represent both sides of the deal. Agents work hard to get the highest market value for their sellers and the lowest purchase price possible for their buyers.
They dedicate themselves to pleasing their clients to market themselves as trustworthy and market savvy, thus attracting more clients. For agents, a higher quantity of sales means a higher level of success.
Agents earn commission on every sale; this requires a good balance of pricing for their clients with good commission for themselves. Agents typically take 5-6% commission on a sale, so a more expensive property means a much higher return. Still, only a fraction of real estate agents sell homes that yield significant returns on a single sale. For the most part, agents rely on a high volume of sales each month to be profitable.
One of the critical differences between agents and investors is the need for a real estate license. Investors are not required to be licensed, as they usually work directly with buyers and sellers to facilitate deals. Agents must have the proper licensing to represent their clients.
Real Estate Investors
Investors can choose the amount of profit they’ll see based on the quality of the rebuild and the state of the real estate market. They can also close on a seller’s timeline, whether that means a quick cash sale or a future closing date while the client prepares for the move.
Investors purchase properties directly from the property owners. They often close deals in as little as seven days, versus the standard 30-60 day closing time with an agent. Property owners who have a distressed property or have limited time will usually go with an investor over an agent. However, the same can be said for slower closing times. Some sellers aren’t ready to sell that quick, and an investor can be flexible on closing dates.
Investors typically cover closing costs to speed up a sale to entice buyers and sellers further. Speed and simplicity are the names of the game in real estate investment. Most investors don’t want properties sitting on the market for too long (whether they’re buying or selling).
Investors need to spend money on renovations after they purchase a home. At Blueprint Homes, we’re able to make repairs and updates at a rate 30-50% cheaper than our clients and sellers. This is because we are constantly working on renovations and maintaining good relationships with our vendors and contractors.
Keep in mind that most iBuyer or REI companies don’t require repairs or deep cleaning from homeowners. Since we incur the renovation costs ourselves, they aren’t subtracted from your selling price, giving you more for a home that needs a lot of TLC. After the purchase, the investor will spend money on improving the property to get the highest value possible. Blueprint Homes will even donate leftover furniture to local charities on your behalf.
Investors typically look to buy properties that they believe can increase in value. However, anyone looking to sell a property fast should contact a real estate investor.
Why should agents partner with investors like Blueprint?
If you’re an agent looking to expand your portfolio, partnering with a real estate investment (REI) or iBuyer company is a risk-free way to do it. As an agent, you’re familiar with the market, buyer, and seller needs and can identify suitable investment properties. Blueprint Homes works with San Diego agents to make the REI process easy. By partnering with us, we will purchase distressed, unlisted properties at a fair cost, rebuild and renovate, and hire you to list the resale.
Here are a few factors to consider as you research real estate investing:
- Strategy: For short-term investing, start with fix-and-flip properties. Distressed property in an up-and-coming location is an excellent place to start. Suppose you’d rather ‘invest’ risk-free, partner with Blueprint. We’ll make an offer on your pre-listing, so you’ll never have to invest your own money. We’ll also hire you to represent us on the initial purchase and the resale!
- Type of property: If you’re investing on your own, we recommend starting with single-family homes. Compared to multi-family properties, which might yield higher returns, single-family homes are a lower-risk investment since you only need a single buyer. However, working with Blueprint Homes will eliminate the risk and allow you to profit on properties of any size. For interested agents, we also do multi-family projects and can provide insight into how that process works.
- The number of properties: Of course, it’s okay to start slow, but the most successful investors have multiple investments. Expanding your portfolio will help give you a more consistent revenue stream and better contractor relations. Blueprint Homes is consistently purchasing and renovating properties. When you work with us, you’ll join our agent network. As we rebuild our investment properties, we call on members of our network to represent the listing. This way, you’ll earn commission on multiple sales at no cost to you.
If you’re ready to take on a new side of real estate and learn more about REI companies, set up a consultation with Blueprint Homes.