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Why Agents Aren't Investors (mostly)

October 12, 2016

Once upon a time, I ran into a recently foreclosed house that needed some sprucing up but was certainly livable and was way under market value. So, I got really excited and sent it to investors I had met through Bigger Pockets. In a secret chat that they invited me to, I sent a link to the RMLS sheet and some ARV comps in another link with a short explanation. After one of them reviewed the deal and confirmed that it was a good one, he immediately called me and said "Why don't you just buy this yourself?" 

 

It's true. More often than not, those who have their eye on the market all day every day (aka Realtors) decide to give away the deals they find instead of taking them all for themselves... but why!?

 

Reason #1: Service

I was shocked to realize that the thought of investing in this one hadn't even crossed my mind! I know exactly what to look for and I know the process step-by-step in all it's different forms but it's as if it wasn't my job to do that part of it because then I wouldn't feel like I'm providing for those who rely on me by doing stuff like this (this is the video I took of that same house):

 

There are product-based businesses and there are service-based businesses - realtors are definitely running service-based businesses. If they were to take these deals for themselves, they would go against the one thing that maintains a consistent flow of clients - TRUST.  Trust that they'll give these deals away instead of competing. Focusing on finding these deals for other people creates a successful Realtor.

 

Reason #2: Finance

Believe it or not, realtors aren't just automatically rich the moment they become realtors. The general idea is that realtors have money to throw around and this is why they have the fancy cars, they dress nicely and they hang out in fancy places. But, the truth is, that most of them are just trying to run a business-

It's much easier to find people who can afford a house if you hang out in places that cost money. Plus, people who are about to put a transaction of hundreds of thousands of dollars in someone else's hands want that person to play the part and understand the lifestyle - hence the fancy stuff.

 

Now that I've said that, I must say that this is certainly changing. The dude with jeans on and a flannel shirt holding a Starbucks cup is just as likely to have a slew of properties as the guy with the suit and the under-pored shot of smooth whiskey with an oversized cube in it. Considering all of the money spent on these items of attraction (not even mentioning the mass amount thrown into more practical marketing such as postcards, letters, signs, etc...) there isn't much saved for a healthy down payment, over and over and over again. Therefore, realtors can only afford so much if they want to continue running their business as Realtors.

 

Reason #3: Time

Then there's that wonderful, incalculable but always lingering resource - TIME. The amount of time spent on research for specific properties in slightly different areas for slightly different personalities that need particular approaches over months and months is more than enough to handle for a successful realtor without adding a plethora of tenants and renovations to make matters more complicated.

Each person plays his/her role in the rebirth of neighborhoods... It's not often one sees a company/person(s) do it all. And when it is seen, it's usually short lived and hopefully not half-assed.  Let the realtor be the realtor. 

 

In conclusion, I'll flip the table over by saying that I am a Realtor and I'll be purchasing several rental properties to secure passive income. Thankfully, the table has been flipped on us all as we grow as a culture so the stereotype image of a 'realtor' and 'investor' or even just 'home buyer' is so diverse that we can, finally, just be who we are without being so worried about loosing success in our industry because now it's more about what you know and how well you express it. At least I like to think so. 

 

 

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