Real Estate Brokers And Fiduciary Duty

Real estate brokers and sales people are not all created equal. The glaring difference between the two is the difference in licensing. A broker is licensed to negotiate the sale of real property and represents the principal (seller or buyer). A sales person works solely for the broker, representing the respective principal under the guidance and license of the broker. But even aside form the technical licensing issues, it’s important to realize who’s representing you.In our article titled, Real Estate Agents Must Have These Qualities, we pointed out many of the characteristics of a good real estate agent. In this article, we’re showcasing the real estate broker’s legal fiduciary duties. Many real estate investors talk about “finding a good real estate agent,” or one who is familiar with investment properties. That’s certainly recommended within real estate investing circles, as it should be.However, there’s one thing that many real estate investors or even regular home buyers do not take into account and that is the fiduciary responsibilities of the real estate broker. Most real estate brokers generally represent sellers because that’s where the majority of the money lies. Sellers own the real property and want to sell, most buyers have many hurdles to overcome and don’t own anything.So when we look at “finding a real estate agent” to locate properties, do “comps”, etc., where do we stand, as the investor/buyer? Unless you have a Buyers Agency with the real estate broker, no matter what they tell you or what type of information they obtain, the most important question remains, “where do their fiduciary responsibilities lie?”Let’s take that one step further and use “comps” as an example. As a broker or sales person who represents sellers, even other agents listings, their loyalty always remains with the sellers. If you’re working with a sales person and they’re pulling comps for you, they will present information and it is up to you, the investor, to make the final judgments about what to buy and not to buy. No one is forcing you to buy a property. So, the real estate sales person you’re working with shows you comps, but unless their a buyers agent, at the end of the day, they work for the seller.So you ask them a question like, “Can you find out how much the sellers owe on the property?” This sort of question will depend on the agents fiduciary responsibilities, or it should. As a real estate sales agent, they cannot lie to either party or misrepresent or hide information from either party in the transaction if it would be detrimental. However, a real estate agents loyalties will certainly play a part when it comes to a question like this. If they have an agency with the seller, if the seller does not wish to have this information known to buyers, then the real estate agent will not obtain this information.Many real estate investors will work with buyers agents, meaning that a real estate broker will work directly with or will have one of his/her sales agents work with a buyer. In this case, a buyers agency means that the broker or sales agent working under the broker has a principal relationship with the buyer, rather than the seller. This situation does represent some stickiness for the broker because how can a broker represent both sellers and buyers? Many brokers avoid this exact situation for this reason. However, there are many brokers that work to represent buyers.Communicating with the real estate agent is essential. Know where you stand and match that to the relationship you want with a real estate broker/sales agent and remember that not all real estate agents are created equal.

Learning The Real Estate Language – Talk With Confidence

Every profession has its distinct language, from doctors to lawyers to rocket scientists, the use of which in thought and in speech separates the insiders from everyone else– and professional real estate investors are no exception. When taken in small bites it is easy to learn the real estate language.Anyone can buy or sell their own home without knowing what a writ of restitution is or how to calculate the Gross Rent Multiplier, but if you want to step into the real estate investing arena as a serious investor one of the first things you need to do is grasp a firm understanding of the insider language.When you can comfortably use the lingo familiar to others in the business, they will listen that much more closely to your ideas and proposals because they know they are dealing with a seasoned insider. Plus, those that don’t know will respect you that much more that you do.And bottom line, you’ll put yourself in more positions to get paid.If my company were to provide a textbook copy of the real estate investing glossary terms and definitions in the free modules on our website it would amount to well over 250 pages and growing. For some people, that’d be an overwhelming undertaking, to sit and read end-to-end, regardless of the fantastic benefits. But that wouldn’t be the best way to learn in our opinion, as retention in “cramming” is little.That’s why we’ve broken the undertaking of learning to speak, and most importantly to think, like a real estate insider down to a manageable task you can complete over time– or get the information you need immediately at your fingertips in one convenient place.I advise that new investors take 15 minutes 1-2 times a week to learn a couple dozen terms and definitions and you’ll be taking a pivotal step to mastery of the real estate investing game– a step that those who are destined to remain on the sidelines watching never have the discipline to take.Our top students “bookmark” the module links on their computer’s internet browser and return to it at least once a week each week at a specific recurring time (i.e. a planned consistent ‘time block’), to study for 15 minutes or so as time allows, using a calendar on their phone or computer to remind them until it becomes a habit.I can’t stress how important it is to have the right lingo down. One can tell the difference from a newbie and someone who is more seasoned. My observation has been that there is a different respect and willingness of a contact to tune in when they perceive that you know what you are talking about.Part of branding, especially when you are the ‘brand’, is how you present yourself. Within 40 seconds, how you look and the energy, pitch, tone, and rate of speech at which you speak, impacts the perception one forms about you to the greatest degree. However, what you say is still very relevant to success. First impressions are exceptionally hard to shift.Dr. Robert Cialdini calls it the “halo effect”. This is why I enjoy that many of our investors now first have their impression of me or our company from content marketing which is designed to portray our company and me for instance in the best light– that of a credible authority and trusted advisor. Much better than if I had met someone initially sitting at home in my boxer shorts, and said “hey bud, got a hundred grand? Let’s invest it!”I believe so much in this activity as a great catalyst for new investors, that our office has been given strict instructions to pass along for free the 4 module interactive online glossary we created for in-house training purposes to anyone who visits one of our websites and contacts us asking for the investor glossary.Should you want it, just ask for it. Create a weekly reminder in your calendar to spend 15 minutes studying this glossary. Take something as daunting as learning all the terms in a very large glossary and turn it into a very doable activity in bite sizes over time.I say all that to say this. Your mind is an amazing tool. It will serve you as you stretch it.Learn the lingo of real estate.It will pay off when you can “talk the talk” with confidence and multiply the effectiveness of your conversations in your real estate business with buyers, sellers, lenders, investors and tenants.

Probate Real Estate Investing and Agent Opportunities

Investing in Real Estate for flips, long term holding or just for tax benefits is nothing new. I have been doing this for 30 years. We all know you can leverage with Real Estate and earn fantastic returns along with tax benefits. The difference and what I want to talk about is investing in a special niche of Real Estate which most stay away from. This niche is Probate Real Estate Investing.I have been Probate Investing since 1987. Let me explain the process and why it has been so lucrative but for so few. When a person passes, if they don’t have a living trust then their estate must be probated in order to pay off creditors and transfer the assets to the rightful heirs. This is a time consuming process which is very hard on the family and on average runs for 4 months plus.Now, the real estate in an estate is usually the biggest asset and is going to be sold to settle the estate and disburse the net dollars to the heirs according to the will of the decease. Sounds simple doesn’t it but in reality this process is the most stressful and time consuming event in most people’s lives when they are the Executor of an Estate. The responsibility the Executor has is almost unbelievable especially when this person most likely has never had to do anything like this. There are time lines and requirements they must adhere to, assets to first find, then appraise, manage and finally disburse to the heirs. There is limited help from the Estate Attorney representing the family as most tasks are handled by the Attorneys Para-legal and the Executor is usually kept in the dark. I have seen this predicament a common denominator with Executors in probate.There are two processes in Calif one may probate under. The old law is a dinosaur and basically handcuffs the Estate as far as the Real Estate to be sold is concerned from attracting only Wholesale buyers. The other process is the done under the Independent Administration of Estate Act which allows the Executor to treat the real estate to be sold like a regular home sale with a few exceptions. A much easier process and also enables retail buyers who have interest in the Probate Investing to bid. I could go on and on regarding this process but I think you can understand. States other than Calif will have a process equal to or less than Calif’s Probate process so once you understand Calif’s Probate process, it’s usually just a small adjustment for a different State. During the 90’s most estates where processed under the old probate process in my area and in my opinion it was to keep any liability off the attorneys for allowing a property to sell to cheap with a possible complaint later on form the heirs. There is really no other reason to go through the old court confirmation process when selling a home in probate other than this. In today’s Probate world, probably 50% are going through the I.A.E.A which is where we want to be but many are still being probated under the old process.For those in the know, you can purchase probate property early in the process and control the sale. I can dictate which probate process the sale will conducted under in my offer and I’m usually the only one approaching the Estate. I’m there the week the probate file is opened at court which is before most tasks have been completed. This has produced many wholesale buys for my investors and I over the years and here is the reason why I love Probate Investing.Executors want the probate RE off their plate. They are worried about a vacant property being vandalized, maintenance to be performed, and in many cases they have moved into the home during this process. What we bring to them is peace of mind by buying the probate real estate and taking the biggest head ache off their shoulders. Also, this is Free money and even though they are selling to me at a discount, the proceeds look mighty good to them and the heirs not to mention the biggest asset now in cash. Buying probate property with the right game plan and know how can mean $50K profits (90 days) if you know what you’re doing. Plus many don’t understand the Probate process or options so stay away. Unlike foreclosures there are no lists which tell you which properties to approach.I also love Probate Investing because we don’t purchase blind like many foreclosures plus the properties are usually in great shape as it’s not a distress sale. For 20 years I have enjoyed probate investing and it still amazes me today that most of my fellow agents and investors shy away. I’m not complaining…In my opinion Probate Investing is the best opportunity to purchase single family and 2-4 unit real estate at wholesale prices and flip. This can also be a great way to accumulate rental properties buying with a 15-25% equity position the day you close for long term investing.For you Real Estate agents Probate Real Estate is a great way to increase your yearly commissions just listing and selling probates and providing help to the Executor in selling. I have kept busy from an investor and agent standpoint working probates. In fact through the 90’s I worked about 10-15 hrs per week and earned more than my real estate practice paid me working 60hrs per week.Anyone interested in Probate Investing should research this real estate niche.