How to take back America one home at a time.

Realtors and investors who work together are able to liquidate property more efficiently and in a timely manner. In this edition, we will be discussing how utilizing the realtors' inventory and investors list of buyers can jump-start the real estate economy for the better. This is the only way to make America better one home at a time quickly and efficiently by lowering the foreclosure rate through short sales, saving the owners credit from foreclosure or even bankruptcy and liquidation of REO inventory there by giving lending institutions the ability to lend without bailout money.

Of those people who choose to become realtors, it seems very few take the time to learn more than a few ways of transacting real estate deals. They stick to the one way or the ones they are taught or are familiar with. Fear of a lawsuit, fear of not being paid fairly for their work and fear of the unknown may be the reasons for hesitance. So doing business with real estate investors can be a scary proposition.

Why is that?

Let's take a closer look at the process of becoming a realtor and some of their specialties. In examining this process, other ways of doing business within real estate are not covered when going through the licensing process of becoming an agent. Within the real estate industry, there are numerous niches. Each niche may take many years to master. Becoming a realtor or real estate salesperson is not easy and also a niche with in the real estate industry.

The progression to becoming and gaining experience as a certified real estate agent and ultimately a real estate broker:

• 1. Take real estate courses in order to learn the laws, standard agreements, and rules of conduct for the basics of real estate.
• 2. Prepare to take the state certification exam to become a real estate salesperson.
• 3. Apprentice under a real estate broker with years of experience.
• 4. Find buyers for listings.
• 5. Find sellers who are willing to list their property.
• 6. Perhaps invest in or manage one's own rental property.
• 7. Work to find and list successively more expensive properties.
• 8. Possibly specialize in certain kinds of real estate, such as single family homes, condominiums, or vacant land.
• 9. In some cases, specialize in clients with special needs for example, the elderly or those with physical limitations.
• 10. Take a course to become a real estate broker.
• 11. Take the state certification exam to become a real estate broker.

Typically, the broker of a realty company is responsible to market the company and build a solid business foundation. This will hopefully attract the right agents and clients to buy and sell properties through the brokerage firm and in turn generate a profit on the transactions. The profit of the business is generated by a commission in the facilitation of a sale. The facilitation aspect of the transaction requires licensing and strict laws to abide by.

Investors on the other hand do not earn a commission but turn a profit by purchasing a property and reselling that property to their list of buyers. (buying and reselling) Depending on factors such as the property's condition, its financial situation and the owners who want to sell it, the investor tailors a profit-generating strategy suited for the individual need. Taking into consideration their costs of doing business as well and somehow generate a profit in between. Some of the major costs for an investor are:

• 1. Cost of cash (a short term/high interest loan, private investor ROI, bank loans, credit cards, option strategy, seller financing to end buyer and many, many other creative ways to get the transaction done).
• 2. Double closing costs
• 3. Holding costs
• 4. Insurance
• 5. Inspections
• 6. Improvements
• 7. Marketing
• 8. Keep a margin of profitability for their clients. Basically equity already built into the purchase of a property to keep their clientele of buyers loyal, who usually end up doing their real estate transactions exclusively though the investor. Finding value in the purchase and sale of their properties. Depending on the ability of the investor even trading in to trade up or down of homes.
• 9. There are many other misc expenses involved in taking this process though to the end.

The more complex a situation, the more flexible and able the investor must be to meet the special demands. Most savvy investors may be considered wholesalers because they make a small profit on the quantity of homes they are able to buy and resell. Please note that investors are not willing to make your problem home their problem home, but may be willing to help based on certain criteria.

Investors who have buyers must cater to them as with any business. These buyers are people with whom the investor has built a relationship with over a period of time. Retaining satisfied buyers is difficult and requires a great deal of credibility and trust.  Investors must be certain that they will be able to purchase viable homes. Otherwise, the investors' buyers will not continue to do business with them.

Investor's buyers list include but not limited to, other investors, rehabbers, individuals looking to buy a home, and companies. Each investor's business is built and structured differently and who they cater to dramatically change their abilities and flexibility.

Realtor and investors alike utilize a wide variety of marketing strategies to increase and enhance their businesses and cultivate clients who will buy homes as well as clients who sell homes. Marketing strategies to attract potential clients include:

• 1. Direct solicitations
• 2. Bandit signs (sign on the street or in front of homes that say "we buy houses", "will take your payments")
• 3. Classified newspaper or magazine ads
• 4. TV ads
• 5. Radio ads
• 6. Vanity license plates
• 7. Easy to remember telephone numbers or vanity numbers
• 8. Internet spots

You may be wondering by now: if realtors and investors market homes in similar ways and their prospective clients are similar, why can't they just work together?

Upon closer examination, we see that realtors are retailers and investors are wholesalers. What is the difference? Realtors sell homes at the appraised value and on values based on comparable prices of homes recently sold. They want to get the highest price for the home owner/client whereas investors may negotiate a discount to meet their criteria which may include leaving some equity in the home for resale value. The investor's strategy is to retain clients and have the client deal with them exclusively.

If realtor and investors work together, the best interest of the client becomes an issue for the realtor. A realtor has a fiduciary duty towards the client and is under legal contract to represent and protect the interest the client. In a perfect world, homes stay on the market until the perfect buyer and the perfect price is found. However, we do not live in a perfect world. Bills have to be paid, the interested party's financing may not go through, the 1031 exchange might hit a glitch, divorce, a job layoff, a surprise tax bill, law suit, a medical emergency, are some of a great number of factors that can quickly change the seller or buyer's situation and may result in an urgent need for the client to sell the home or the buyer to back out. Or in many cases today UPSIDE DOWN HOUSES where the amount owed is more than what it is worth and unable to liquidate. Based on any reason an owner is willing to take less for their home to quickly move on with their life. In many cases the owner does not know what options are available in order to do so. Unless an investor is able to speak with an owner and propose different options to help, a transaction that could take place, will not. A realtor is not familiar with and able to speak on an investors behalf and attempts in doing so ultimately fail due to the lack of knowledge and ways to negotiate on how to make a transaction work.

I believe that it is ethical for an agent to inform their client of the alternative options available to liquidate a property. However, these options are not generally known to the great majority of real estate agents. Other motivations such as fear of not getting paid or being seen as a professional who lacks proper resources may cause an agent to not investigate this possibility. The potential of liability also arises.

It is the duty of a realtor to find investors, with whom they can work with directly, expanding their ability to help sell a home based upon the needs of their client. Building a working relationship of trust and integrity with potential investor buyers is essential. Eventually, the right fit will be established as is true in any business collaboration. There are ways to accomplish a truly successful situation not only for the property owner and buyer but also for the realtor and investor. Until a working relationship is developed and negotiations for individual homes are done, understanding between the two industry niches will not be bridged. Realtors will find that doing business with investors are less intimidating once the lines of communication are open and with experience will begin to understand the investors point of view and way of doing business.

DISCLAIMER:
This article is solely for education and information purposes only, not legal advice. RE Private Investments LLC is not a law firm and does not practice law. The general information provided by the RE Private Investments LLC - via their newsletter, emails, blogs, articles and other correspondence, or through their website at www.reprivateinvestments.com - is not intended as nor as implied to constitute a substitute for professional legal advice. The information given here is for informational and educational purposes only RE Private Investments LLC suggests that members/readers conduct their own due diligence and investigation of all information and opinions provided. RE Private Investments LLC suggests the use of competent professional persons where legal or other expert advice is required.

RE Private Investments specialize in acquiring luxury homes and commercial property around the world for our established client list. If you want to sell now we can buy now as we use private funds to close transactions. We don't have to wait for approvals and are able to do multiple transactions at once.

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