Real Estate Investor vs. Real Estate Agent: Which Option Is Better for You?

So, you have decided to move into the real estate industry to take a share of its huge worth. In that case, do you want to be a real estate agent or a real estate investor? Even more, how do you choose between the two? This article will help you to understand the different aspects that come along with each role.

Real Estate Agents Need a License

A real estate agent needs a license to work in the state in which he or she lives and operates, but a real estate investor does not need a license. So, what is the difference?

Well, a real estate agent is someone who represents another individual or company and performs negotiations on their behalf. In order to ensure that the agent is honest, he or she has to follow a certain set of guidelines that the license mandates.

In contrast, a real estate investor is someone who buys and sells properties for himself or herself; the investor does not represent anyone else. So, there is no such licensing requirement.

Real Estate Investors Do Not Earn a Commission

Real estate agents earn commissions on their deals. This can vary from 1% to 5%, or sometimes even more, depending on the property.

However, a real estate investor earns no commission; rather, the investor benefits from the difference between the purchase price and sale price of a property. Besides, a real estate investor can get money from a property by selling, flipping, and implementing rent to own options. The investor can even pledge the property with a bank to get some extra cash. None of these options are possible for a real estate agent.

Employment Status

The two roles have different employment models. These models determine the day-to-day tasks.

Agents work for someone else. Even when an agent is self-employed, the negotiations are done for someone else; in these cases, a buyer might hire the real estate agent for a period of time.

On the other hand, real estate investors are not employed by anyone. They work for themselves.