Please allow me to offer two recommendations to consider when you decided to make passive real estate investing:

1) Don’t try going it alone.


The first mistake some consumers make is trying to navigate the home-buying process alone. Resist the temptation!

Passive Real Estate Investing

The home-buying process can be an exceptionally complex and dynamic experience, even under the best of circumstances. There are a number of factors involved in any real estate transaction that require decisions in disparate subject matters (financial, legal, technical). Most consumers don’t have the training or experience to acquire all of the information they need, assess the information they receive, and make an informed decision. You will undoubtedly need guidance throughout the process… and your REALTOR can be an invaluable resource.


2) Use a Buyer’s Agent

The second mistake some consumers make is believing they will save money by dealing directly with the listing agent. In the vast majority of cases, you won’t. And, by going it alone, you will be placing yourself at a decided disadvantage throughout the process.


The listing agent is experienced in every aspect of the home-buying process. The listing agent has a fiduciary responsibility to their client, the SELLER, which legally obligates them to get the best deal possible for their client. The best interests of the Buyer do not enter into that equation.

Furthermore, compensation is established when the listing agreement is signed: the listing brokerage receives X as compensation. The listing agent will receive the entire amount of compensation if you (the Buyer) do not have a broker… they will share their compensation with the Buyer’s Agent when you have one. So, there is tremendous incentive to contracting with a Buyer’s Agent: 1) you will have someone representing you who is legally obligated to get YOU the best deal possible, and 2) that representative will be paid by the Listing Agent.

Real estate licensees (in this instance, your Buyer’s Agent) lend assistance in a variety of areas at the outset of the home-buying process:

  • Help identify the right home and select the right mortgage broker.
  • Conduct showings
  • Review property disclosures, and other pertinent information with you.
  • Negotiate an advantageous purchase price, as well as other “terms of sale”, based on the information available to them (much of which is not available to the general public).

Once the house is under contract, your REALTOR will ensure the parties comply with an intricate maze of real estate laws, which differ from state to state, and that all of the legal contracts (and other required documents and forms) are properly completed and timely executed throughout the process.

Many REALTORS can provide guidance in choosing the right contractors (ie, attorneys, title companies, home inspectors) to assist you at appropriate times during the transaction.

And a few REALTORS will even have an in-depth understanding of how local planning and tax laws may impact your property.

Not to be redundant, but purchasing your home will be one of the largest investments you will ever make… quite likely, THE largest. With all of the potential pitfalls that could arise throughout the process, hiring the right REALTOR is critical.

So, invest the time to interview your prospective REALTOR(S).

Passive Real Estate Investing

Ask yourself what you need from your REALTOR: how familiar are you with the real estate process and how much guidance are you going to require? Then, do your due diligence to ascertain whether the prospective REALTOR meets your needs!

  • Does the REALTOR have the proper experience with contract negotiations, legal issues, municipal planning / zoning regulations, etc, to provide the appropriate advice and guidance you will need?
  • Does the REALTOR endeavor to ensure that your priorities are their priorities?
  • What have previous clients had to say about them?
  • Do they make themselves available at YOUR convenience? Do they communicate well, and in a manner you are comfortable with (email, phone, text messaging)?
  • Is the REALTOR prepared to show you ten… or twenty… or more properties to help you find the home you want to purchase? Once under contract, will the REALTOR attend all of your inspections and the appraisal (you would be surprised to learn how many agents do not regularly attend these appointments)?

Ask for references. Ask about their availability at the times when you will need them (will they make themselves available at night and on weekends?). Ask about their credentials and education (do they work to improve their skill sets and gain additional knowledge? What professional designations do they have?)

C. Use a full time professional REALTOR

According to the National Association of REALTORS, consumers know an average of 3.2 real estate licensees. Some are full-time and others are part-time. Some have a wealth of experience while others are relatively new to the profession. Some have chosen to engage in real estate as a profession, while others acquired their license because they have a few family members and friends who need to buy or sell a home.

So, who should you use?

This is a very personal decision. Different people will choose a different real estate agent for a variety of different reasons. But here’s the thing:

You are about to embark on a process that will culminate in your buying and/or selling the largest investment you may ever make. Who do you want spearheading that effort?

Currently, we are in a Seller’s market. Inventory levels are frequently very low. Well-priced new listing will have 10-20 showings and often go under contract in the matter of a day or two. When a home you may want to buy gets listed, you want to be in that home as soon as possible. Your REALTOR needs to be available NOW – to call the listing broker and schedule a showing. And assuming it IS the home of your dreams, your REALTOR needs to be able to properly analyze the market to give you the best advice on how to get that house under contract.

Ask yourself a question: can someone who is inexperienced or works full-time in another job best represent your interests? Not to put too fine of a point on it, but do you want to lose out on the chance to buy the house of your dreams because your realtor cannot do what needs to be done when it needs to be done… or because they don’t have enough experience to adequately assess the marketplace?

This is about finding your dream home. It is serious business. Treat it as such.

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