Maximizing Value: Roles of the Property Dealer and Real Estate Agent
The world of real estate is a fascinating universe that offers a multitude of facets and different roles. Today, we will look at a specific figure in this vast landscape: the real estate agent as a property dealer. Let's dive into this exploration!
A Property Dealer: Who are they and what do they do?
A property dealer is an individual or a company that specializes in buying real estate properties to resell them later, aiming to make a profit. They are an independent operator who invests their own funds, or borrowed funds for which they are personally liable. Thus, they take on substantial financial risks. The objective is to buy a property at a price below market value and then resell it at its market value.
According to ethical principles, it is preferable to be transparent about one's role when dealing with a client, especially if they are a private individual. And the main goal of this activity? To make a profit.
A property dealer can also take on the role of a real estate developer. They might buy land or a building to demolish, construct something new there, and then resell it.
From a tax perspective, the property dealer is subject to the commercial profits regime and to VAT. They must comply with certain legal obligations regarding the declaration of existence and accounting, the declaration of income, invoicing, and other specific obligations linked to real estate transactions.
Ethics and transparency
It is crucial to note that it would be inappropriate, from an ethical standpoint, for a property dealer to take on a sales mandate while leading the seller to believe they will strive to sell the property at the highest possible price, only to subsequently offer a lower price. They must therefore be transparent and clearly tell the seller: "I cannot tell you how much this is worth, but I can tell you how much I am offering you for it."
An advantage for the seller is being able to sell without commission to a professional who can quickly prove their solvency.
Definition of Market Value
Market value is the price that multiple buyers would be willing to pay for a property within a reasonable timeframe.
The Real Estate Agent as an Intermediary
As an intermediary, the real estate agent works on the basis of intermediation commissions. Their income is derived from facilitating the sales transaction by bringing a seller and a buyer together and settling all the details of the sale so that it takes place under the best possible conditions. To justify their commission, it is essential to be able to explain the added value of their intervention.
An effective real estate agent will screen calls from potential buyers and have a large number of properties for sale, meaning many mandates. After all, the one who holds the mandates controls the market and, consequently, the transaction.
The Path to Commission
To earn commissions, an agent must follow a process that includes several steps: marketing to find a buyer, signing a preliminary sales agreement, and concluding the deeds at the notary's office. And all of this requires having properties to sell, meaning mandates. To obtain these mandates, it is necessary to establish contacts through appointments, which also requires marketing.
The Price Gap: The Reality of Things
Currently, there is a significant gap between asking prices and the reality of recorded prices, often between 15 and 20%. There are three main reasons why a property might not sell:
- The property's location
- The property's condition
- The property's price
The real estate agent plays the role of advisor for both the seller and the buyer. They must exercise caution when accepting overly expensive mandates, which risk being unsalable, taking too long to sell, and having a high absorption rate. The solution is truth, transparency, and a fair price.
Stand-up Marketing: The Winning Strategy
Finally, a good "stand-up marketing" strategy involves an increased presence of the property on the market, prospecting, and creating opportunities. Asking open-ended questions and, above all, listening carefully are essential. For a complete understanding, it is always useful to review the entire course.
There you go! We hope this deep dive into the role of the real estate agent as a property dealer has been useful to you. We look forward to continuing to explore the exciting world of real estate with you. See you soon!