Real Estate Investing Basics

7 Unfair Advantages Agents Have as Investors

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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.

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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!

Related: 7 Profitable Side Hustles in the Real Estate Field

real estate, 1031 exchange, investment property

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.

property, for sale, real estate, investment, reinvestment

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.

Related: How to Find (& Keep!) Good Contractors

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!

Nate Shields is a real estate investor and real estate investing coach. He started in real estate in 2013 part-time as an agent and quickly went full-time, enabling him to quit his 9-5. In just two...
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    Danny Hubbard from Macon, GA
    Replied 7 months ago
    Real good article. I have been on the fence on weather getting a real estate liscense would help me with investing and you had some great points.
    David A.
    Replied 7 months ago
    The license alone isn't going to give you much in the way of the advantages he is talking about. Most of what he lists comes from developing the networks and skills an experienced agent needs to perform their job well. You'll need the license plus experience.
    Nate Shields Rental Property Investor from Madison, WI
    Replied 6 months ago
    You've nailed it David!
    Ryan Kelly Realtor from Austin, TX
    Replied 7 months ago
    I recommend you get a real estate license if you actually want to be a real estate agent and work with clients. You don’t need a license to be an investor at all. What you do need is deal flow and potentially an agent to work you through the deal. I’m an investor and full-time agent, so the article does touch on advantages I have utilized. Just take action whether you have a license or not!
    Nate Shields Rental Property Investor from Madison, WI
    Replied 6 months ago
    Agreed Ryan!
    Nate Shields Rental Property Investor from Madison, WI
    Replied 7 months ago
    Thanks Danny! Check out some of the comments below. There are some other things to consider when it comes to getting your license.
    Catie Lawrence Flipper/Rehabber from Arvada
    Replied 7 months ago
    I agree with a lot of these points - I've done 6 flips in the past 6 years - and am JUST now getting my license. Of course, taking the classes are now 'easier' because of all the transactions I've been a part of. But the education I've gotten from taking the classes has been incredible! Definitely would recommend the classes at the very least to any investor!
    Nate Shields Rental Property Investor from Madison, WI
    Replied 7 months ago
    Sometimes there's no better education than being in the field!
    Tony Blanchard
    Replied 7 months ago
    I would add in that another advantage is being easily able to access the home. Instead of having to wait for an agent on any MLS listings you can view the home at your own schedule.
    Nate Shields Rental Property Investor from Madison, WI
    Replied 7 months ago
    Yes! If it's listed in the MLS, that's a huge advantage. Great point Tony!
    Ruth Lyons Realtor from Highland, MD
    Replied 7 months ago
    Good article; thanks for sharing. I would caution everyone from running out and getting your license without understanding there are annual fees involved in maintaining your real estate license. Fees add up fast: - local association membership dues (you must align with a local association in Maryland where I live), - NAR association membership dues, - MLS subscription fees, - broker fees (agents must have a broker and he takes a monthly and commission cut whether you decide to take a commission personally or not), - annual fees for CE classes required by state licensing board, - State licensing fees, - Showing service fees, etc. Do a cost/benefit analysis to make sure you plan to do enough deals to offset the financial obligations of being an agent.
    Nate Shields Rental Property Investor from Madison, WI
    Replied 7 months ago
    All good points Ruth! These were major considerations of mine when I became an agent.
    Kevin Polite Flipper/Rehabber from Decatur Atlanta, GA
    Replied 7 months ago
    Great article and all points are true. The commission hack on flips is the biggest advantage. Saving that 3% commission is a nice chuck of change to keep in your pocket. Pulling your own comps ranks up there as well. I would add make sure you hang your license with an investor friendly real estate agency. Many of the larger, well-known aren’t, especially if you are mainly using it just for your own deals. Check out your local large firms for this.
    Nate Shields Rental Property Investor from Madison, WI
    Replied 7 months ago
    Kevin, good insight. Some brokerages may not be that "investor friendly" when it comes to hanging your license. Some put a cap on personal transactions. Do your due diligence when interviewing brokerages!
    Shaun Kelly Realtor from Mooresville, NC
    Replied 7 months ago
    I agree with your points and there's even a few smaller ones not mentioned (such as getting to view MLS homes on your own schedule). Just last week I decided to leave my tech job to become a full time real estate broker as it will heavily compliment my real estate investing. Now committing 100% to this industry and your points are a large part of why.
    Nate Shields Rental Property Investor from Madison, WI
    Replied 6 months ago
    Good point Shaun! That's a nice benefit as well. Good luck in your transition!
    Michelle Bozarth
    Replied 7 months ago
    If these investors put in the time, costs and effort to become experienced agents.. I don’t see how the advantages are “unfair”. -from an accidental landlord
    Nate Shields Rental Property Investor from Madison, WI
    Replied 6 months ago
    Thanks for reading Michelle! From my experience as an agent, I certainly view these as advantages. I never would have invested in real estate if I hadn't been an agent first. Everyone's path is different though!
    Tushar P.
    Replied 7 months ago
    Unfair disadvantage 1: don't have downpayment, unfair disadvantage 2: Irregular income Those who are really good and successful agents, do they need to become investors? What I’ve seen is investors becoming agents rather than the other way round. And agents who are really good at being agents don’t delve into investing. Otherwise you can also write an article on why a GC should become investor too. Also, home inspector. Why not the title company staff too. Perhaps the lender has many unfair advantages and should become an investor too?
    Nate Shields Rental Property Investor from Madison, WI
    Replied 6 months ago
    Thanks for reading Tushar! Everyone has advantages and disadvantages. Based on my experience, going from agent to investor was the path for me. I would never have invested if I hadn't been an agent first.
    Katie Rogers from Santa Barbara, California
    Replied 7 months ago
    Nearly every big success story on BP involves some sort of advantage or the luck of being in the right place at the right time. Some people then find a way to systematize some sort of serendipity.
    Nate Shields Rental Property Investor from Madison, WI
    Replied 6 months ago
    Thanks for reading Katie! To be in the right place at the right time requires being in the game.
    Jim Young
    Replied 6 months ago
    My thoughts exactly! I bought a townhouse back in 1997 and became a landlord. I had mentioned to a friend that I was looking to get into real estate and his relative was in a financial jam and we worked out a deal that benefited us both. It was total serendipity. I sold it in 2004 when my wife and I moved to another state, and we never re-entered the Real estate game (until now). Fast forward to 2019 and me and my wife have a little more money and a lot less time before retirement. So we wanted to diversify our assets and get into real estate. I found a multi unit that cash-flows immediately; we just closed on it this month. And, now that I'm in the game I found out about our local KREI (Kentucky Real Estate Investors Association), where someone told me about BiggerPockets. I never heard of wholesaling, house-hacking, and other concepts until last month! But now that I'm in the game, I am having all kinds of luck, and I have a couple of houses I'm looking at; my problem now is picking the "best" deal for our situation right now. Thanks Nate for this article. I have been thinking about getting a Realtor's license one day. It's not my thing as a primary job, but you mentioned a couple of realtor-only advantages that might make me take the plunge sooner rather than later!
    Andrew Geiwitz Real Estate Agent from Green Bay, WI
    Replied 7 months ago
    Good read, thanks Nate!
    Nate Shields Rental Property Investor from Madison, WI
    Replied 6 months ago
    Thanks Andrew!