When you’re entering the real estate industry as a first-time seller or buyer, it’s easy to get confused between a real estate investor and a realtor. While they both seem similar, they’re entirely different in terms of how they operate and what they actually do.
Here are some ways you can differentiate between the two.
Do they both need professional qualifications and a license?
Real estate investors don’t need a license
One of the most crucial differences between the two is that real estate investors don’t require licenses to purchase and sell properties independently. On the other hand, realtors need a license since they represent others during the sale and purchase process.
How do they earn money?
Realtors earn commissions
Both real estate investors and realtors earn an income by dealing with properties, but in entirely different ways. A realtor makes money solely off the commissions they get when they sell properties. This can be anywhere between 1-5% off the property they sell, so the higher the sale, the more money they make.
Investors make money by finding the best deal for themselves and getting the lowest price on the property they want to buy. Then depending on the type of property, they secured they can utilize any of the following options to increase their cash flow steadily:
- Sell the property for cash at its market value
- Invest finances in the property for a buyer
- Fix and flip the property, so it sells faster
- Include the property with others and sell it to an interested investor and make a more significant sale.
How do they help you?
Real estate agents help you sell the property, and the more money you make on the sale, the higher their commission. Hence they ensure that they provide a complete range of services that benefits you both. This includes marketing, and staging your home and also showing it to others as well. They make the process as easy and seamless as possible.
Investors are more interested in buying property from you hence they’re more interested in negotiating for the lowest possible price. They’re more interested in making a profit off you as opposed to with you.
What are their processes like?
Realtors work for brokers or independently, and investors work independently or in a team. However, the former have to undergo more regulation since they’re working with a license.