The real estate market was always considered one of the safest options for first-time and inexperienced investors. This shouldn’t come off as too big of a surprise.
Investing in properties provides passive income (short-term and long-term capital gains), gives you the ownership over the tangible assets that can be sold at any time, opens the doors to certain tax benefits, features very low risk, and presents an excellent hedge against inflation.
As a matter of fact, the properties are probably the closest you get to perfect investment. All the negatives, in this case, come from the fact that the real estate market often presents a convoluted mess.
For instance, when you want to invest in some property, the real estate agents and property managers are your go-to experts to reach out to. But, if there’s any difference between the two and if so, what are they? A lot of people out there are doing both jobs at the same time.
Also, does fulfilling both these duties at the same time create a potential conflict of interest that can threaten your investment?
All these are important questions we will try to answer in the article below.
The Responsibilities Of A Real Estate Agent
In order to do that, however, we will first need to break down these two professions, see do they overlap in some potentially harmful manner and finally see what law has to say about the whole matter.
This time, we will start with the professionals the up and coming investors will probably reach out to first, and those are real estate agents. So, where do they stand in the great real estate market puzzle, and what are their actual responsibilities?
Speaking in the simplest of terms, the job of a real estate agent is to oversee the sale or the acquisition of a property in a manner that best represents the interests of a client. They spend their work hours touring homes, marketing or researching properties, providing listing information to the clients, and setting up meetings.
Of course, these are only broad strokes. If we are to be more specific, we could break these tasks down in a number of bullet points:
- Scheduling showings and organizing follow-ups
- Marketing listings on behalf of the sellers
- Generating leads for buyers and sellers as well
- Informing sellers about disclosure policies
- Presenting suitable homes to the buyers
- Holding up open houses
- Helping buyers to identify different types of mortgage loans (check our article considering can real estate agents also double down as loan officers)
- Reviewing inspection results (also check are these professionals allowed to work as property inspectors)
- Attending closings on behalf of buyers and sellers
- Working closely with all involved parties to ensure a smooth transfer of ownership
- Negotiating prices on behalf of buyers and sellers
When we look at all these duties, we can see that real estate agents are quite busy people. However, due to the nature of their business (helping the clients close the real estate transaction), the relationship the clients have with the real estate agency usually terminates once the purchase and sale are over. This will be important for our following discussion.
How Much The Real Estate Agents Earn?
- This is yet another question that will prove to be important when we come to the heart of this topic and our closing thoughts.
- With that in mind, it is worth mentioning that in the grand scheme of average salaries, the real estate agents are considered to be very well paid professionals. Namely, the average real estate commissions in the United States range from 5% to 6% of the property sale price.
- To put this into context, the average price of the stateside house ranges somewhere between $360,000 and $400,000. That means the capable real estate agents can expect to get $18,000 – $24,000 per closed transaction. These figures are undoubtedly pretty sweet and help real estate agents put a strong focus on the interests of their clients.
- However, we have to observe that we are living in a very competitive economy, and the whole COVID-19 situation hasn’t made things any easier for real estate professionals. So, it is not that uncommon for real estate agents and realtors (members of the NAR) to take a second job to ensure sufficient income.
The Responsibilities Of A Property Manager
Now that we had an excellent opportunity to examine all the specifics regarding the responsibilities and salaries of real estate agents, let’s move to the other side of this coin. Let’s see where do we stand with our good old property managers.
So, what are the essential duties of these real estate professionals?
The simplest explanation would be that property managers are tasked by investors and landlords to manage the day-to-day activities of running a building or a property. And by running a property, we mean the activities like:
- Investigating and resolving tenant complaints and rental violations
- Arranging contracts for garbage removal, maintenance, security, landscaping, and other property-related services
- Resolving the disputes with service providers
- Collecting property fees from tenants and individual owners
- Reporting the property’s occupancy, expiring leases, and financial status
- Managing potential tenants, showing them properties, and assessing their applications
- Inspecting properties and arranging necessary repairs
- Advertising properties for rent and hiring leasing agents to help with finding the tenants
When we take a look at all these responsible tasks, we can observe two important things.
First, working as a property manager leaves very little time to focus on other duties. Sure, things are more than manageable if we are talking about a singular house or apartment. But, these professionals are usually hired by professional property management agencies, and their duties most certainly cover several properties and dozens of tenants.
So, the salaries of property managers are formed not so much based on the number of houses, buildings, and apartments they are running, but rather their type. Let’s take a quick look at some of the national averages:
- Residential/Multi-family properties – $68,000 per year
- Retail properties/Flex spaces – $97,000 per year
- Commercial/Industrial – $109,600
The second thing we want to point out is that the duties of a property manager do not involve assistance with buying or selling the properties. Their job is to work exclusively on maintenance for owners, investors, and landlords.
Typically, the relationship between the owner and property manager is pretty long – often as long as the ownership over the said property.
Hiring The Same Person As A Real Estate Agent And Property Management – What Law Has To Say?
So, we finally have a good insight into the duties of real estate agents and property managers. As we can see from everything we mentioned above, the specifics of these two professions do not overlap, not even to the slightest extent.
We could even say that the job of property managers starts where the duties of real estate agents end. Because of that, federal and state laws don’t prevent the same person from representing the same client in both these roles before and after the property transaction is closed.
The situation is similar when it comes to professional organizations like the National Association of Realtors (NAR) and the National Association of Residential Property Managers (NARPM).
So, it is perfectly legal for the same person to hold both these titles. As a matter of fact, since the training is so similar and both jobs require the same sets of skills, many real estate professionals choose to do so.
Since we weren’t able to find any legal obstacles and conflicts of interest, the decision whether you are going to hire the same person as a real estate agent and property manager boils down to some practical considerations.
Let’s quickly look at some of the pros and cons.
Real estate agents have a great knowledge of the property they are selling. If you hire them as property managers, they will be able to utilize that knowledge to your advantage. Also, the job of one realtor demands sharp marketing skills. All these skills can be later used to find new tenants. Last but not least, real estate agents have great connections across the industry. This helps a lot when arranging services and forming the price of the rents.
Both schedules of real estate agents and property managers (especially the latter) have tight schedules. The chances are they won’t be able to perform both these duties with 100% efficiency. And then, there are some shady situations you will want to avoid. For instance, the real estate agent may lure you into buying the property he or she is currently managing to get some benefits with the current owner or cut the vacancy time. However, situations like this are infrequent.
As we can see, out of the real estate conflicts we have covered in the previous articles, this one leaves the smallest number of things in the shadow. First and foremost, the duties of real estate agents and property managers do not overlap in any of the instances. The job of the latter professionals starts when realtors hand over the keys to the new owners.
Also, the number of situations that would give birth to a potential conflict of interest is surprisingly low. So, the quality of the service you will get will, to no small extent, depend on the people you are going to hire. Seasoned professionals will be able to perform all these tasks without any hiccup.