Buyers, Sellers, Investor Perspectives of Real Estate Investment

Buyer Perspective

A real estate transaction can be a complex series of steps. It is slightly different depending on whether you’re a buyer, seller, or an investor.

A real estate transaction can be a complex series of steps. It is slightly different depending on whether you’re a buyer, seller, or an investor.

Following is a synopsis of a real estate transaction from a buyer’s perspective: -

1. Decide to purchase a house. Look at different areas and decide on one particular area.
2. Locate a buyer’s real estate agent, usually through referrals or simply driving to the nearest real estate office.
3. Agent qualifies the buyer through one of their lender contacts. Agent then gets some basic information on the type of property the buyers are looking for.
4. Agent drives buyer to houses in the buyers’ price range.
5. Eventually buyer picks a house, and an offer is made by the agent. After going back and forth finally the seller and buyer agree on a price.
6. Agent opens escrow and orders an appraisal. The buyer deposits earnest money into escrow.
7. Loan is approved by the lender. Real estate agent completes all legal paperwork.
8. A final walkthrough is conducted with the buyer. Seller takes care of all reasonable repair requests.
9. Transaction closes and buyer moves in.

Seller Perspective

Selling a home is really not that different from buying. Here is a summary of what may happen: -

1. Sellers find an agent through referral or looking at for sale signs around their neighborhood. The seller may also drive to the nearest real estate office and find a reasonably good real estate agent.
2. Seller signs 6 month listing agreement with the real estate agent.
3. The waiting period starts. Everybody just waits and waits.
4. Eventually a buyer comes along, likes the house and makes an offer. A price is finally agreed.
5. Agent opens escrow and orders an appraisal. The buyer deposits earnest money into escrow.
6. Buyer’s loan is approved by the lender. Real estate agent completes all legal paperwork.
7. A final walkthrough is conducted with the buyer. Seller takes care of all reasonable repair requests.
8. Transaction closes, seller moves out, and buyer moves in.

Investor Perspective

As investors we will be working with real estate agents also, but in a different way than regular buyers or sellers.

We will get property information from real estate agents and we will train real estate agents to become an integral part of some our acquisition strategies.

We want to leverage our time by making good use of the services of real estate agents. We do not want them driving us around to see properties, and they will appreciate this fact!

I have simplified the process of real estate investing by “life-cycle” of a real estate investment property. This lifecycle is universal and will work for any real estate investment strategy: -

For more information on the steps in each of the above categories, please see 6 steps to Real Estate Investing Framework.