As a licensed real estate agent and real estate investor, I have more options for closing deals than a typical agent. This means your income is more stable because you’re not as dependent on buyers.
This also helps my way of thinking. I tend to be less stressed than most people because I know I have a plan B, C, D, and beyond. This will help you stay more focused and make better decisions.
If you want to avoid the income roller coaster that most agents currently face, you need to learn how to close more types of deals.
That doesn’t necessarily mean you need to become an investor, but it certainly helps. There are many other ways to close deals as an agent, and while they don’t fit into the traditional box, they do give you the opportunity to earn income from deals that would otherwise be out of reach.
So in this article, we’ll introduce some non-traditional methods you can use to close deals and earn a more stable income. This is especially important today when over 80% of agents don’t close a single deal. That’s up from 71% last year.
Learn creative finance
In some cases, the circumstances of a transaction may preclude traditional financing, but that does not necessarily mean the transaction is invalid. Creative financing, familiar to most investors but unfamiliar to most agents, can rescue deals that would otherwise be impossible.
There are several tactics you can use, but the strategies are similar. Use short-term creative financing to close deals. Brokerage fees are paid by the buyer at closing. Rather than the traditional 15 or 30 year term, the loan is typically paid in balloons over a period of several years. The buyer will later repay the loan by refinancing the property.
The key is to structure a win-win deal for everyone involved, and each deal is unique.
You need to understand how this works in order to explain it in a way that is clearly understandable to both buyers and sellers. This is easier said than done, so be prepared for some pushback in most cases.
Operated as a leasing agent
Perhaps due to pricing, market conditions, or other factors beyond your control, selling your property may be out of the question. (Or client flexibility.) This obviously means that you don’t get a commission for selling real estate, but it doesn’t mean that there aren’t ways to make money from real estate. This is especially important if you’re already putting a lot of effort into marketing your property.
Although you may not be able to sell the property, in some circumstances you may be able to rent the property to a suitable tenant and earn a small commission on the monthly rental income. This won’t match the amount you’ll get from a sale, but it will give you a steady monthly income to help pay your bills. More importantly, it helps maintain closer relationships with owners. This increases the likelihood that the owner will list the stock again when market conditions change.
Become a licensed mortgage broker
As a licensed mortgage broker, you also have the opportunity to earn commissions on the financing of every transaction you are involved with. Most agents do not have this capability, so it may happen on one side of the table, but more often on both sides.
They also make money as mortgage brokers for tight numbers transactions, giving you more flexibility in setting your commissions as an agent. This will help you win the more difficult trades to the end.
Additionally, there is synergy between the two roles, as people talking about one role are likely to also need the other role. Prospects who approach you to list or search properties are likely in need of financing. Additionally, prospects who approach you for financing likely need help finding a property, selling a property, or both. And perhaps you’re already providing mortgage advice to your customers.
When speaking to clients, you need to be clear about which role you are advising them from. For example, you could say, “As a real estate agent, here’s what I think and what I think is best for you. And, as a mortgage broker, here are the implications of those choices.” This allows you to remain compliant with all regulations applicable to each part of your transaction.
Should I buy it and keep it as is, or refurbish it and turn it over?
In most cases, this is not recommended, as it is easy to overdo it unless you have significant investing experience. If you don’t really know what you’re looking for, there are a lot of landmines lurking beneath the surface of what looks like a great deal. If you step on a landmine, you can quickly lose a lot of money.
Don’t think that your experience as a real estate agent will automatically lead to investing.
But if you take the time to learn the world of investing, find a mentor you trust, and carefully evaluate each trade with extreme bias, you may be able to find a real gem that can add significant income to your balance sheet.
When it comes to investing, we recommend buying and holding real estate as a rental. This is usually the easiest, but the benefits are small. Alternatively, fixing the property and flipping it is difficult but yields greater profits. Rezoning and ground-up development are much riskier and more complex.
The key here is to truly understand your expertise, financial situation, and market conditions. When you buy and hold, you need to be able to transport the property even if you can’t rent it right away. If you’re doing a repair and flip, you need to maintain a roster of contractors who understand construction and can be trusted.
A successful career in real estate requires evolution
Some people have a misconception that the real estate industry is old and boring, but in reality it is constantly evolving.
Those who resist the evolution that comes along with it will struggle and ultimately be forced out of the industry, while professionals who stay on top of industry trends and proactively evolve to stay ahead of the game will not only survive, but thrive.
And the choice is completely up to you.
So my question is: Do you stagnate and move on to something else, or do you continue to evolve and rise to the top of your industry?
Tatyana Zagorovsky specializes in helping people with damaged credit achieve their dreams of homeownership through her St. Louis-based Trio Realty Partners. Connect with her on LinkedIn and Instagram.
