Many real estate investors are reluctant to work with real estate agents because they don’t like the idea of paying a commission. But this can be a very shortsighted attitude. For the sake of saving a few thousand dollars, you may be losing the opportunity to make tens of thousands of dollars.
Real estate agents and brokers are in business to make a profit, too. Instead of looking at them as your competition, or a necessary evil, why not try a more creative approach? Why not make them your business partner?
You don’t need to set up a corporation or an LLC to work with a real estate agent as your partner. You can do it on a deal-by-deal basis. Here’s how it works.
The real estate agent obviously has expertise in finding buyers and sellers, and in marketing properties. You can bring other strengths Locate an individual to the table that complete the team: financing and remodeling (or contracting). Each new property constitutes one “partnership project”. This way, you can find out if you work well together without creating a long-term commitment. Think of it as business “dating”.
Your ideal situation would be to find a real estate agent who is experienced and talented in handling buyers and sellers, but doesn’t have access to investment financing or contracting. Yes, you’ll be giving up part of the profits, but if the partnership proves to be successful, you’ll actually be freeing up your time.
You’ll be able to increase your investment portfolio at a much faster rate than if you try to keep all of the profits for yourself. And you’ll have access to the “hidden” deals that successful real estate agents run across from time to time, but that never reach the multiple listing service.
Actually, you’ll be the first one that your “partner” calls when she comes across one of these gems. She’ll want to acquire it as fast as possible. And thanks to your financing expertise, you’ll both have a new property for your portfolio. It’s a win-win situation.
So, instead of spending your efforts and energy avoiding real estate agents, start making a point of getting to know them. As you’re talking to them, try to draw them out to see if they might make a good candidate for a partnership. Do the two of you communicate well? Do you have common investment goals? Do you have common business ethics? If so, you might be looking at your new future partner.