7 Unfair Advantages Agents Have as Investors

There are approximately 2 million active licensed real estate agents in the U.S. Unfortunately for most, they don’t take advantage of investing in real estate.

I have yet to find any statistics about how many agents are investors. On BiggerPockets, I’m sure the percentage is much, much higher than average. But if I had to guess, I’d say agents who also actively invest make up about 5 to 10 percent of the whole universe of agents out there. That seems more than just a little low, doesn’t it?

Just 3 percent of U.S. investors are considered “active.” That means those individuals are actively seeking out deals and managing properties. There are actually quite a few more people who may have just one rental property, as sometimes people become “accidental” landlords when they can’t or don’t sell a property that was their primary residence.

This confuses me to no end. Why don’t more agents invest? Aren’t they aware of all the unfair advantages they have?

If you’re an agent, or looking to become one, and you have yet to acquire investment properties, here are several reasons you’re missing out on a huge source of income if you pass on investing in real estate.

The Advantages Real Estate Agents Have as Real Estate Investors

Unfair advantage #1: Market expert

If you plan to invest in your own real estate market, then you have the advantage of already being one of the most knowledgeable experts in the area. You know what properties sell for, which neighborhoods are best for investment, what the school districts are like, and what buyers and renters are looking for in a home.

You probably already know how many days on average a home stays on the market, where the most demand is, and what the price per square foot is for a typical property. That’s particularly helpful info if you’re flipping a house.

Knowledge is power. Use it!

Unfair advantage #2: Transaction knowledge

While real estate transactions happen somewhat frequently in an agent’s world, a typical consumer or someone on the “outside” might only experience a real estate transaction a few times in a lifetime.

I remember my first couple of transactions before I became an agent, and I could not have told you one coherent thing about how a real estate transaction is put together. I was just trying to keep my head above water with all the paperwork!

Knowing how transactions and processes work has its advantages. You know how long a typical inspection period is, what earnest money is for, how long standard financing takes, and much more. You can use all of this to your advantage—especially when it comes to negotiating offers.

Which leads us to our next point.

Unfair advantage #3: Negotiating pro

Not every agent is a negotiating pro, but even an average agent is going to be better than your average Joe. (Sorry, Joe!) The nice thing is, agents receive a considerable amount of training—much of it for free—and learn tips and tricks of the trade on how to best negotiate deals.

It’s certainly something valuable I learned. When you combine training with on-the-job experience, that can be a hard train to stop. Advantage: agents.

Unfair advantage #4: Commission hacking

There are a couple of ways you can hack commissions when it comes to investing. One way is to use your commission toward a purchase. Another way is to forgo your commission to give the seller what seems to them to be a better deal, after you’ve negotiated prices and terms like an expert.

Just make sure you check with your lender and/or broker when using these strategies.

Unfair advantage #5: Deal flow

Deal flow is critical for any investor. Since you’re already in the game, your next deal may be just a phone call away.

A few years ago I sold a couple a house. About a year later, I got a call from their neighbor across the street. He was the trustee for his sister’s estate and needed to sell the house quickly.

I ended up buying and flipping it. My client’s referral helped me net much more than an average commission on the sale.

As you go out on listing appointments, you may have opportunities to pick up properties before they ever even go to market.

Unfair advantage #6: Vendor relationships

If you’ve been an agent for any length of time, you probably have a list of go-to vendors you can rely on and trust. Title companies, attorneys, home inspectors, handymen, contractors, lenders, property managers—the list goes on.

If you’re not an agent and looking to start investing, making the right connections can seem like a daunting task. As an agent, you already have these contacts in place, reducing stress and uncertainty surrounding this part of the process.

Unfair advantage #7: Client value

If you’re an agent and investor, your experience is invaluable. When you have investor clients, or even run of the mill buyer/seller clients, your perspective, experience, and breadth of knowledge will wow them. Just try not to show off, OK?

One Last Thing to Consider

Finally, remember that your first duty is to your clients. Disclose everything that needs to be disclosed and act in an ethical way. What it comes down to is having empathy and solving problems for people.

Do this in an above-board way, and you may soon find yourself raking in business and financial opportunities. You’ll have happy buyers, happy sellers, and a bright future for your own investments, too. Happy investing!

What other areas of expertise give real estate agents investment advantages?

Share your thoughts in the comments below!

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.