The Difference Between Real Estate Investor & Real Estate Agent
Every seller's and buyer's dilemma is whether I should go for a real estate agent or a real estate investor? And if you are new to the real estate party, you are probably way too confused between these two real estate professionals, what they do, how they can help you, and how they function. In this article, we shall find answers to all your questions and compare a real estate investor and an agent.
Who are real estate agents?
A real estate agent is a real estate professional who has his foot in both the seller’s market and the buyer’s market. They are the matchmakers who will bring the most ideal buyer for selling your house. Real estate agents who are registered with NAR (National Association of Realtors) “realtors”. They do the same job as an agent, the only difference is the NAR registration.
A lot of us get confused between a real estate agent and a real estate broker. We almost think they are synonymous with each other, but they are not. Real estate agents work for a broker. A broker is an independent entity that has a lot of agents working for him. Agents are given full freedom to choose their style of working, so brokers don’t have real control over their way of doing things. Each agent is, therefore, completely different. This is why finding a good agent who is compatible with you becomes a difficult task.
In any case, a real estate agent can provide you with professional service. They can help you have the best deal for your house with the most ideal buyer.
Who are real estate investors?
A real estate investor is someone who is continuously trading real estate properties. They see properties as an investment. They buy houses with good market value, fix them or invest in upgrades, and then sell them or rent them out for a better ROI. A home buying company works in the same manner. There are three things they do with the property they buy.
Rent them out
The property they bought can be rented for as long as they own it. The investor then becomes a landlord and carries out all the necessary duties of being one.
Selling a home to investor is rather easy because these real estate investors may buy a shabby house with major repairs for a cheaper purchase price. Then they give that house a complete makeover and then sell it at the right time for a higher price. A good thing here is that sellers get to sell the house without doing any repairs and buyers get a house that is in perfect condition.
Sell at the right time
Another approach for investors to make money is to buy and sell properties in a market that is growing. The time difference between when they bought the property vs. when they are selling helps them make a lot of profit because the market value keeps changing.
Real Estate Investor vs. Agent
Now that you have some clarity regarding how these two professionals work let us understand some of the differences between them. These differences shall help you choose the one that is most suitable for you and your property.
Investors are completely independent. An investor makes his own decision. On the other hand, an agent is someone who works under a broker. They do get a considerable amount of freedom to work in their own way, but at the end of the day, they are not the real owner of the business, it is their broker's business.
The agent has to meet the service standards of their broker but this lack of control creates differences. With each agent, you may have a completely different experience. This is why some people have a good time selling their home with an agent and others don’t.
For a real estate investor making his business big is his top priority and they will make sure to provide delightful and consistent service to all customers.
Are they both licensed?
No. Real estate agents are licensed. Investors are not. Investors don’t need licensing. Since agents represent a real estate firm or a broker, they employ agents with valid licenses only to have credibility in their service. Investors are businessmen and they do not need to have licenses for buying and selling houses.
So does this mean they lack credibility? Not at all. To run their business effectively, they take all necessary measures, they even take help from professional home inspectors and contractors to sell the property in its best form. So, whether you take help from a licensed agent or an investor, they both will make sure that you get all the right aid and assistance.
How are their services different?
If you are a seller, a real estate agent can help you with the home inspection, listings, finding qualified buyers and proposing an asking amount that gives you more profit. Agents have a huge network and they can manage to get you a good deal within a month or two. Throughout the process, they will also guide you through all nitty-gritty of the real estate world.
An agent’s service is designed to help both, sellers and buyers. In return for this help, they will take a percentage of the deal as their commission.
A real estate investor's service is designed to give you what you want. If you want to buy a house that they selling they can give it to you. It is almost like buying a commodity from a seller. Investors might have a team to help you understand the real estate market and clarify any doubts you may have.
One thing to mention here is that investors don’t ask for commission. Well, they can’t. They are not the middlemen between the buyer and seller like an agent. They are selling a property to make a profit. Whatever profit they make is their earning. You also don’t have to pay any closing costs to an investor. They usually take care of it.
Who is faster?
When it comes to the speed of buying or selling a property, investors take the cake. With an agent by your side, you sure are rewarded with a whole bunch of benefits, but it will easily take you a month or two to seal a deal. This is because you will look through a bunch of options to select the best one for you and it takes time to do so. Moreover, it is very normal that you like a property on the listings but it fails to impress you during the house tour.
For sellers, finding a qualified buyer takes time. Also, your agent will be assisting you to host open houses. Buying or selling through an agent is time-consuming, but still worth it.
Investors are rather fast with real estate transactions. Considering the time required for the paperwork, it should not take you more than a week to complete the transaction with the investor. Investors put a property on sale after taking care of all the minor and major repairs. They might even improve the interiors so what you are getting, is a totally refined property.
If you are selling your property, the investor will provide you with cash and your real estate transaction is complete. It is that fast.
Who makes more money?
They both make ample money. It is just the time they require to do so. Agents might require 4-5 commissions to match the money an investor makes in a single transaction. Agents earn money via the commission that they get which is around 3-4%. Investors use the property to sell at a profitable price and earn more money.
How much money they make isn’t a point you should be concerned about as a seller or a buyer. You are getting more or less the same amount of money whether you sell it to the investor or to a buyer via an agent. With an agent, you might have to spend some extra money on the closing cost and commission, other than that, there isn’t much difference.
Whom should I choose?
There are some solid differences between agents and investors. They also have their own set of benefits and drawbacks. Therefore, which one to choose is completely dependent on your need. If you want to sell your house for cash, an investor is a good choice. Agents are ideal if you are seeking someone to guide you through and help you get a good deal.
Whether you are a buyer or a seller, it is important to invest some time to think about your real estate needs and then decide.
Real estate investors are buyers, but they buy and sell a lot of properties to earn profits. Real estate agents will help you out with any real estate need you may have. There are major differences in the way they function in the real estate industry, as we saw, but in the end, they will both help you get your house sold or buy your dream house. We hope this article added some value to your real estate journey by breaking down the differences between a real estate investor and an agent.