Real estate investors face a lot of challenges, even in Texas markets that are showing a strong ROI for flips and sales. Some of the dominant challenges in the recent real estate market are financing or upfront capital requirements, deciding on a liquidation strategy, and dealing with market fluctuations. Many real estate investors who don’t want to pay an agent to represent them deal with even more issues, ranging from lack of access to industry resources to paying for services they don’t really need.
The role a brokerage plays in the process of buying and selling real estate winds through most of these challenges. For investors who want to grow their business without wasting money or opportunities, finding the right brokerage is one of the most important strategic choices you can make.
Real estate brokerages facilitate property transactions in a legal, business, and insured capacity, and they provide resources to buyers, sellers, and agents under the brokerage’s umbrella.
While most brokerages focus on the conventional residential real estate market involving buyers and sellers, some brokerages specialize in serving real estate investors who treat the process as a business. Knowing exactly which challenges a brokerage can help with and then finding one with the right solutions can make your next investment significantly more successful.
4 Challenges for Real Estate Investors in the Traditional Real Estate Market
For most real estate transactions, brokerages operate invisibly behind the scenes. But when you’re an investor, you need to have transparency in every part of the process. Consider these recurring challenges real estate investors face—and what they have to do with a brokerage.
Challenge #1: Managing Finances
When you’re buying an investment property, financing is a major hurdle. All-cash investors can streamline the process because they don’t have to deal with loans. There’s no lengthy approval process, which can be even more stringent for real estate investors with multiple properties or who are working through commercial lenders. You don’t need a property appraisal, which can sink a deal or lengthen the closing process. These factors will make your offer more tempting to sellers who want a deal done.
If you’re using the proceeds from another sale to fund a new investment, it’s important to have that transaction happen quickly and at the right price point. It affects your cash flow when dealing with brokerages that have delays, slow-moving agents, or disconnected title services. The ideal is to have a brokerage that can provide enough market resources to check the value of a potential investment before you move forward.
Challenge #2: Getting Access to Homes on the Market
With both buying and selling real estate, investors have restricted access to market information. If you don’t have a real estate license, you can’t access the Multiple Listing Service (MLS) and get real-time information about properties on the market or about to be active. Most consumers face the same barrier. But you can work around it by having a real estate agent—which can be incredibly cost-prohibitive—or using digital platforms to access real estate information for your region.
Access is vital for buyers who want to quickly snatch up properties that fit their criteria. But it’s just as important for sellers who want to understand market pricing and make sure they’re negotiating well without leaving any money on the table.
Some brokerages offer flat-fee access to the MLS for posting listings or running personalized searches to find new properties. However, most focus on serving clients by providing agents as an intermediary. Opt for the former if you want access without an agent.
Challenge #3: Paying Real Estate Agent Commissions
Whenever you close on a transaction, there are extensive closing costs. On the seller’s side of the equation, closing costs traditionally include the real estate agent commissions for both the buyer’s and seller’s agents. That comes to approximately 5–6% of the property’s value for agent fees alone.
If you’re a full-time investor with several transactions, that 6% cut will be incredibly detrimental to your cash flow. While you might generally find yourself paying half to the buyer’s agent, you can save the other 3% by representing yourself and selling the property as For Sale By Owner (FSBO).
Brokerages that focus on investors and FSBO clients offer services that eliminate the need for an agent. They can provide flat-fee MLS listing services, consulting fees, contract and negotiation management tools, and more on an a la carte basis so you can more easily represent yourself.
Challenge #4: Marketing Your Home Without Direct Access to the MLS
If you are a new investor, you might partner with an agent during your first transaction so you can learn more about the industry and negotiation techniques. However, once you feel comfortable operating on your own, you won’t need most of an agent’s services. But there is one thing they offer that is hard to replicate: listing and marketing your property.
Only licensed agents and brokers can use the MLS, post new listings, and change the status of properties. However, this database is the most popular resource for buyers looking for properties. Agents use it to create custom searches for clients, consumer-facing real estate sites like Zillow and Realtor.com get details from the MLS, and it drowns out most listings from other non-MLS sources. If you want to reach most of the market easily, posting your listing on the MLS is the way to go.
Just as some brokerages focus on serving investors and FSBO clients through a wide array of services, specialty brokerages offer flat-fee listing services as their core offering. You can fill in all the details of the property for yourself—including facts, photos, offer instructions, and the listing price—and they’ll post it. Quality services will also facilitate communication between you and agents who find it on MLS.
The Right Brokerage Makes All the Difference
The connection between some of the most common challenges you’ll face as an investor and the role a brokerage plays throughout every real estate transaction is clear. Working with the right brokerage to get market insights, list your property on the MLS, and manage all aspects of negotiating and accepting offers can significantly improve your cash flow, efficiency, and productivity. Start searching for the right brokerage by focusing on these essential criteria.
Access Smart Pricing Tools and Market Insights
Brokerages have access to a wealth of information and data about your local market, both in terms of historical performance and real-time activity. Shop around for a brokerage that shares this information with you through:
- Market searches and property evaluation tools so you can buy a solid investment
- Smart pricing tools that can suggest the right price for a property you want to sell or lease out
- Information about comparable properties near your investment so you know what types of improvements are a good fit, what budget to anticipate to make it market-ready, and what profit margins to anticipate
Brokerages that freely offer information or have smart tools can save you a lot of time and money you would otherwise spend independently researching.
Get Marketing Resources, Open House and Showing Tools, and Negotiation Management Tools
Many investors choose to work entirely without an agent to save that commission fee. However, that means taking on the realtor’s tasks for yourself, including marketing the property, taking high-quality photographs, negotiating with buyers’ agents, and checking over the legal documents involved in the offer and sale.
Look for a brokerage that offers services and tools for all of these tasks, and make sure they offer them a la carte instead of pricy, bulky packages you may not really need.
Connect With a Title Company That’s Reliable and Cost-Effective
In Texas, the seller generally decides the title company that will manage the title search and insurance obligations. In some negotiations that involve title fees, however, the decision often comes down to whoever is paying. To streamline the process, look for brokerages that partner with a title company or even have a sister title company built into their organizational structure. This tight-knit partnership often means you can get faster title work and more cost-effective services.
List Your Property on MLS Without High Commission Fees
Most importantly, search for a brokerage that offers flat-fee MLS listing services. Marketing your property through the MLS in your region is one of the single most effective ways to make sure the greatest number of buyers see your property. Because it’s a flat-fee service, you can easily forecast the costs and factor them into your calculations.
Choose the Best Brokerage for Your Next Investment Property
Lots of factors can impact the success of your real estate investments, such as the market, the specific conditions of a new investment, and even how you market the property. All of these elements have a clear and measurable effect on your business. But many investors don’t always see the financial and operational benefits of selecting the right brokerage to work with. At ListingSpark, we serve investors and property sellers who don’t want to hire a conventional agent. We provide flat-fee MLS listing services, supplemental real estate analysis and marketing services, and access to cost-effective title services through SparkTitle. Reach out today to see how our brokerage can streamline your investment process and eliminate many of the barriers to your next sale.
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