Why wouldn't your realtor take the investment for themselves?

Rental Property Investor · Morgan Hill, CA · Member since 2020 · 17 posts · 11 votes

Hello BP community! Cynical newbie investor question. If you're working with a realtor who is also an investor, and they find you a good investment property, what's to stop them from taking that opportunity for themselves?

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Wayne Brooks

Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes

They can’t buy them all. If you don’t work with them, you’ll never know what they find.

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Wayne Brooks
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
6y
They can’t buy them all. If you don’t work with them, you’ll never know what they find.
11 Reply
Darius Ogloza
Investor · Marin County California · Member since 2018 · 1k+ posts · 2k+ votes
6y
You are asking a good question. They may not have access to sufficient capital or they may be wedded to a different investment strategy than the opportunity presents.
4 Reply
Pamela Gondeck
Rental Property Investor · Destrehan, LA · Member since 2018 · 11 posts · 9 votes
6y
@Travis Gregory
Ours has specifically told us due to her husband’s health, she’s no longer growing her investments so she’s not competing with her clients. In fact, many of her clients are now waiting on her to start downsizing to buy from her portfolio.
1 Reply
Lien VuongBusiness Member
Real Estate Agent · Boston, MA · Member since 2018 · 2k+ posts · 1k+ votes
6y
You have your answer here, no way someone can acquire every good property out there. It's their fiduciary duty to make sure they take care of you and have your best interest for the purchase. When you find the right agent that aligns with your goals, you wont ever question that. Good luck out there!
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Frank Hinck
Rental Property Investor · Minneapolis, MN · Member since 2020 · 540 posts · 285 votes
6y
@Travis Gregory
They do occasionally, but selling real estate is their full time job so buying one is also not selling one / making the commission. “Stealing” a deal from their clients is also not a good look either, So if their did you might never see it happen.
1 Reply
Shiva Bhaskar
Investor · Los Angeles, CA · Member since 2017 · 523 posts · 476 votes
6y
There are always really good deals that get sold off market, or where the buyer knows it's coming to market. Perhaps it's because the realtor knows a major local investor, or their kids go to school together, or however. Perhaps the realtor buys it themselves, as you said. This is always a factor, and always will be. My view is that if you're clear on your criteria, i.e. (what a good deal looks like for you), and you're ready to jump on it when it comes your way, then you'll be fine.
There are always folks getting better deals than us, but I think the more deals you do, the better the chances that you'll be in a position to hear about those really good opportunities. Good luck!
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Steve K.
Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
6y
It's rare that I ever have a client looking for the same property type and in the same location that I am, but when it happens I make a pledge to give them the first chance to buy. I may lose a few deals this way, but I make more commission as well. Adjusted for risk and return on time invested, earning a commission isn't such a bad option compared to everything involved with taking on a new property. I also do value ad multifamily projects that take a lot of time, effort and capital on the front end, so I can only really handle 1-2 of those a year myself anyway, which is just a tiny fraction of the number of similar deals that will be sold in my market in that timeframe. I can't buy them all myself (unfortunately). It could also probably be considered a conflict of interest and possibly even an ethics violation for an agent to take down a deal before offering it to a client (assuming you have an exclusive buyer's agency agreement with the agent, otherwise you're still just a customer and not a client, at least in CO). Not every Realtor has an accurate moral compass, but you should work with one that you trust. I know some people don't like to sign exclusives, but this is one of the reasons I prefer to have buyer's agency, so that there's no question of full commitment on both sides.
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Russell BrazilBusiness Member
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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
6y
75,000 home sales per year in my metro area. 1 of those per year is my own, and about 35 or so are sales for my clients. I wish I could buy all 75,000.
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Account Closed
Specialist · OverTheRainbow · Member since 2020 · 607 posts · 909 votes
6y
Originally posted by @Travis Gregory:
Hello BP community! Cynical newbie investor question. If you're working with a realtor who is also an investor, and they find you a good investment property, what's to stop them from taking that opportunity for themselves?

If it's that good of a deal, you'll never hear about it. They have "pocket" listings that get shopped around to other agents and their best clients before they go on the MLS. Just a fact of life.

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Travis Gregory
OP
Rental Property Investor · Morgan Hill, CA · Member since 2020 · 17 posts · 11 votes
6y
Wow, really great perspectives. Thank you all.
1 Reply
Steve Morris
Real Estate Broker · Portland, OR · Member since 2019 · 4k+ posts · 2k+ votes
6y
"what's to stop them from taking that opportunity for themselves?"
Not enough money or (like me) too old to get more investments.
Odds are they'll show them to the guy most likely to close, so polish your resume.
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Tim H.
Real Estate Broker · Austin, TX · Member since 2019 · 32 posts · 18 votes
6y
@Travis Gregory The highest and best use for a property doesn’t necessarily mean it’s the right strategy for a Realtor or investor. For example: I’m looking at investment opportunities right now in opportunity zones because I’m trying to deploy capital from selling an asset in order to avoid capital gains tax. So I’m a realtor that is looking at deals that for anyone else would be terrible. I want new construction and I’ll overpay for land because the tax incentives are so good.
Also some realtors take listings knowing that they may not sell for the marketing value of the listing in terms of street and online signage.
There are often underlying reasons why a realtor might prefer to list and sell a property than to buy it themselves.
1 Reply
Mike CumbieBusiness Member
REALTOR® · Brockport, NY · Member since 2015 · 3k+ posts · 4k+ votes
6y
Ever gone fishing?
Ever caught them all?
:)
3 Reply
Travis Gregory
OP
Rental Property Investor · Morgan Hill, CA · Member since 2020 · 17 posts · 11 votes
6y
@Mike Cumbie Haha! 😂 Usually catch none! Good point though.
1 Reply
Tom Ott
Equity Raiser and Turnkey Provider · Cleveland, OH · Member since 2016 · 4k+ posts · 1k+ votes
6y
Originally posted by @Travis Gregory:
Hello BP community! Cynical newbie investor question. If you're working with a realtor who is also an investor, and they find you a good investment property, what's to stop them from taking that opportunity for themselves?

Believe it or not, not all agents are rich. I'm sure if they wanted to, they probably would buy a few here and there.
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Terrance ClarkPro Member
Real Estate Professional · Hickory, NC · Member since 2016 · 175 posts · 47 votes
6y
We market to a mass of people but we are really only looking for specific deals. The ones that don't fit our niche we pass off. It helps build relationships, allows me to still get a return. I have been building a buyers list just to be able to funnel deals to people who would like to have them, creating win-win situations for everyone.
2 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
6y
Originally posted by @Account Closed:
Originally posted by @Travis Gregory:
Hello BP community! Cynical newbie investor question. If you're working with a realtor who is also an investor, and they find you a good investment property, what's to stop them from taking that opportunity for themselves?

If it's that good of a deal, you'll never hear about it. They have "pocket" listings that get shopped around to other agents and their best clients before they go on the MLS. Just a fact of life.

Agreed you simply would never see it.. I have made offers or bought properties when my clients backed out though.. with their knowledge that I was doing so.

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Account Closed
Member since 2019 · 1k+ posts · 1k+ votes
6y
@Travis Gregory
Because as difficult as it is to find an agent who legitimately understands investment properties it’s equally difficult to find one ambitious enough to capitalize on the opportunity. The profession lends itself to a transactional mentality. You’ll see some absolute all star agents involved on BP and if you rad through their posts, the top 1% have a longer term outlook.
1 Reply
Tracy Cummins
Real Estate Agent · Charlotte, NC · Member since 2019 · 45 posts · 19 votes
6y
Hi @Travis Gregory , excellent question and one that I hear a lot since I am both an agent and investor myself. Agents abide by a code of ethics and have a fiduciary duty to their clients. If an agent were by chance interested in the same property you were investment or not, the ethical thing for that agent to do would be to notify you of their interest and refer you out to another agent to ensure objectivity and impartial treatment. That said, if an agent were to not follow this guideline and they were to somehow use the knowledge of your offer details to submit a more attractive offer that was accepted as a result, they would be risking their license. This would be a violation of license law.

No real estate agents that I know want to risk their license which offers them much of their income-generating opportunity to win a single investment property. And as others have said, we can't buy them all and our investment goals/strategies may vary drastically. You should feel your agent is trustworthy, if you don't, find another one. And if you find an agent truly does break the rules, you do have recourse by bringing it to the attention of your state's real estate commission. No agent wants a bad reputation either.

If you still feel concerned I would certainly ask your agent what their investment goals are, where they are looking, what type of budget they are working etc, which may help to ease your concerns about competing with them.
1 Reply
Donald Dooley
Real Estate Agent · Uxbridge, MA · Member since 2020 · 38 posts · 22 votes
6y
@Travis Gregory
Everyone has their own investment strategy and criteria. What appeals to you as an investor may not appeal to the realtor.
As also shared, we can’t buy every deal that we come across nor do we have enough capital to buy them all.
As a realtor it is my job to find my client an investment, even though I am an investor myself. I take that responsibility very seriously. Plus if I do find a good buy that will always be repeat business. And we can make money on both sides of it (purchase and sale).
Hope that helps
DD
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Henry Lazerow
Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes
6y
Realtors like myself are mainly in the business of brokering not investing. If your realtor is mainly an investor and just does realtor on the side that would be a red flag. Regardless, no one has money for every good deal.
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Jim K.
Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
6y
This is such a telling question in so many ways. I really don't care if a real estate agent holds back what he thinks his best deals are. I spend zero time worrying about this. He can have them. I just care about what he shows me. He wants to get his hands dirty with the kinds of properties he knows I'm after, more power to him.
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Will GastonPro Member
Rental Property Investor · Columbia, SC · Member since 2010 · 1k+ posts · 2k+ votes
6y
@Travis Gregory 98-99% of agents that I know/come across don't invest in real estate. Zero of my biggest 8-10 competitors are active real estate agents. They all have other jobs and/or are full time investors.
Maybe it's just anecdotal and my market but I've literally never worried about mine or any other RE agents taking my deals. Not one time.
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Samuel Caudle
Realtor · Pinellas County, FL · Member since 2020 · 14 posts · 4 votes
6y
I agree with a lot of the other agents here. Of course I can't buy them all, or most of them, or a lot of them. If I have entered into an agreement with an investor that I am searching for a specific criteria property for them, then it is my fiduciary duty to present it to them.
Also, with pure self-interest, it is best for me to present investors with the best deals so that they come back and tell their friends. This is how I make money to invest. "Worst case scenario" they buy everything that I find them and I never get to invest my own money. Sounds like an awesome worst case to me. A relationship between an agent and an investor is mutually beneficial.
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Tara S.Pro Member
Real Estate Agent · Mesa, AZ · Member since 2019 · 125 posts · 60 votes
6y
@Travis Gregory
I am personally a realtor & specialize in working with investors and I can give you my opinion. I find my own deals and I shuffle the deals I pass on to my clients. Also the deals my clients bring me are always off limits other wise I mine as well let me license expire because then my reputation would be trashed. Word of mouth is everything as an agent. Your business runs on referrals so you don’t want to go around stealing deals from other people.
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