Investing in real estate can be a very lucrative business when done
correctly but, like most other things of significance, when it is done
incorrectly due to a lack of knowledge and/or experience and results in
too many missteps and miscalculations, real estate investing can be very
frustrating, stressful and hopelessly desperate. This often leads to
unmitigated losses in assets, time and other resources.
Real estate investors who have been successful conduct their business
in accordance with a few time-tested principles that guide them in every
transaction. One such principle is related to the relationships
developed with third-party real estate professionals, some of whom we
will refer to as specialists for the purpose of this article. Seldom is a
real estate transaction completed without one or more of these
specialists.
The realtor or agent is one of the most important
specialists in real estate transactions nationwide, except in those
instances when a home seller sells his or her own house (FSBO) to a home
buyer who is not represented by a real estate agent. In these instances
other specialists required to perform specific functions for the
transaction to close are appraisers, mortgage brokers & lenders,
abstract & title insurance companies, agents and closers, real
estate attorneys, surveyors, lenders’ attorneys, PMI (Private Mortgage
Insurance) companies in some cases and property insurance companies and
agents.
It is necessary for any real estate investor to
recognize the importance of each specialist required to complete a real
estate transaction and the degree to which that specialist can influence
the outcome. One poorly completed appraisal report or improperly
qualified buyer can shave weeks or even months off an investor’s profit
margin or otherwise result in the investor sustaining a loss where a
profit was projected and therefore anticipated.
By the very nature of the work s/he is engaged in on a daily basis, the
real estate agent must necessarily be knowledgeable about each step in a
real estate transaction and the specialists involved; and an
experienced real estate agent would have established and nurtured strong
relationships with those s/he deemed capable and reputable enough to
have a positive impact on the transactions in which they are involved.
And while the real estate investor’s objective is to close a given
transaction with the largest profit margin, a real estate broker is
entrusted with the responsibility of bringing multiple transactions to
closing on a continuous basis.
Based on the central role a real
estate agent plays in each sale s/he handles on a monthly basis, and the
influence s/he brings to bear on those transactions, it would behoove
any real estate investor to actively seek to establish a strong and
abiding relationship with a local real estate agent which could prove
beneficial to both parties but will greatly enhance the investor’s
business based on all that the realtor brings to the relationship. It is
only through such a relationship that an investor can tap into the
large reservoir of resources harnessed by the realtor.