What Does a Real Estate Consultant Do?
February 28, 2017
You may be wondering if the title of real estate consultant is a meaningful one, and if it indicates anything different from the same old licensed real estate brokers with a vested interest in the fate of a property. While it is true that anyone can call himself or herself a consultant, the term is not meaningless window dressing. For those who take their real estate consulting business seriously, it represents a different model, a different approach to real estate practice.
The first and most important difference is objectivity. Whereas a real estate broker typically is paid contingent on an outcome-in other words, they receive a commission-a real estate consultant is paid solely for their expertise. They have no stake in the outcome. Salespeople are paid only for getting a result-a sale. Real estate consultants are paid for their expert advice only, and by design have no stake in achieving a particular outcome to a particular transaction. This gives them the capacity to be more objective and inherently more trustworthy than a traditional real estate salesperson. Think about it-even the most honest salesperson will unconsciously try to steer you toward a sale. After all, that’s where their pay comes from-from selling! The consultant is paid the way other professional advisors or service professionals like CPAs are, with a retainer regardless of outcome.
Consulting can involve a variety of skills and areas of expertise. You can hire a consultant for legal advice, market research, or to locate possible properties to invest in, among other things. Since they are paid as much for their time if they advise you that there are no properties in an area worth investing in as if they advise you of dozens of viable properties, they have no stake in anything except giving you the best advice possible. After all, their future business depends on word-of-mouth endorsements from investors like you.
If you are looking for properties to invest in, a real estate consultant can tip you off to developer closeouts and bulk opportunities, equity partnerships, joint ventures, and possibly even some very unique and profitable turnkey investment opportunities. The consultant is selling information and expertise, and therefore can provide you with a layer of insulation between you and the people selling the properties. They can work out a lot of the details and business prospects of a property before you have to talk to a salesperson. Once you face the salesperson, you can approach the negotiation fully armed with an array of appropriate information, and thus avoid being bamboozled and negotiate from a position of strength.
If, on the other hand, you are selling properties, especially if you have a lot of properties to sell, a real estate consultant can help you create a strategy to sell the units before you get involved with actual salespeople, which can have many advantages. For example, you can sell a lot of properties in a relatively short time without creating the appearance of a bulk sale by having a real estate consultant distribute the properties among several different sellers.