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The Real Estate Reality Show

At GowerCrowd, we take a realistic view of commercial real estate investing, providing pragmatic insights for passive investors who are looking for sponsors they can trust and opportunities they can invest in. You’ll find no quick fixes or easy money ideas here, no sales pitches, big egos or hype. Real estate investing for passive (accredited) investors is turning messy with vast swathes of loan maturities approaching which is going to send many sponsors into default causing their investors to lose capital. While this is nothing to be celebrated, it will also bring in a period of wealth transfer and opportunistic investments. We’re here to guide you by looking at the harsh realities of real estate investing, examining the risks and the rewards in conversations with some of the world’s top experts so you can make informed decisions. You’ll learn how to build your wealth while protecting your capital investing as a limited partner in commercial real estate investments, even and especially during an economic downturn. Each week we add new episodes that provide you with access to the foremost specialists in commercial real estate investing with a focus on discounted distressed real estate and the associated market dynamics. We provide interviews and explainer videos that dive deep into the trends driving today's real estate industry, how the economy impacts returns, how to access and invest in distressed real estate deals, and how to protect your capital by mitigating downside risks. There’s no doubt that it is a very challenging time right now for the average investor. With the impact of COVID still being felt and the era of record low interest rates behind us, commercial real estate is experiencing severe headwinds. This creates financial distress for many CRE owners who did not include contingencies in their original business plans and who now face dramatically increased debt costs, increased construction and maintenance costs due to inflation, and reduced revenues from rents as the economy slows down. Is the commercial real estate world on the cusp of a major correction? Is it 2007 or 1989 all over again? Will passive investors (limited partners) who have invested in syndications (through crowdfunding or otherwise) see losses they had not predicted? How can you access discounted real estate opportunities this time around that were only available to a select few during prior downturns? Let us help you prepare your real estate portfolio no matter what the future holds, whether it be business as usual for real estate investors or a period of wealth transfer where those less prudent during the good times, lose their assets to those who have sat on the sidelines, patiently waiting for a correction. Be among the first to know of discounted investment opportunities as the market cycle plays out by subscribing to the GowerCrowd newsletter at https://gowercrowd.com/subscribe Subscribe to our YouTube channel: ⁠⁠⁠ https://www.youtube.com/gowercrowd?sub_confirmation=1 Follow Adam on Twitter: ⁠⁠⁠ https://twitter.com/GowerCrowd Join the conversation on LinkedIn: https://www.linkedin.com/in/gowercrowd/ Follow us on Facebook: ⁠⁠⁠ https://www.facebook.com/GowerCrowd/ *** IMPORTANT NOTICE: This audio/video content is for informational purposes only and should not be regarded as a recommendation, an offer to sell, or a solicitation of an offer to buy any security. Any investment information contained herein is strictly for educational purposes and GowerCrowd makes no representations or warranties as to the accuracy of such information and accepts no liability therefor. Real estate syndication investment opportunities are speculative and involve substantial risk. You should not invest unless you can sustain the risk of loss of capital, including the risk of total loss of capital. Past performance is not necessarily indicative of future results. GowerCrowd is not a registered broker-dealer, investment adviser or crowdfunding portal. We recommend that you consult with a financial advisor, attorney, accountant, and any other professional that can help you to understand and assess the risks associated with any investment opportunity. Unless otherwise indicated, all images, content, designs, and recordings © 2023 GowerCrowd. All rights reserved.
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Now displaying: Page 1
Sep 4, 2017

The finding that agents sell their homes for more than they do when they sell for clients has been established in multiple studies.  While it may not be entirely surprising to see a professional outperform in their own industry, the issue for agents is the fiduciary responsibility that they owe to their clients to act in their best interest.  If agents are performing better on their own account than they are when acting for themselves, there appears to be an inherent conflict of interest when representing clients. 

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The study being discussed in today’s podcast examines the ability of agents to negotiate when buying a home, rather than when selling their own home.  When selling their own home, the agent is control of the process, but when buying they are competing against the entire corpus of other agents.  If agents are truly representing themselves with greater discipline than they do when they represent their clients, we would expect them to perform better when buying for their own account and, indeed, this is what is found in this study. 

Taking the examination of this issue beyond simply the role of the agent and looking also at how other actors in the real estate market perform, such as companies, or trusts, or the government for example, it is found that while agents outperform when acting on their own behalf, companies demonstrate even stronger bargaining skills than the individual agents.

Approaching the problem from a different angle and applying an additional layer of statistical analysis to around 200,000 home sale transactions in Dallas from 2002 to 2013, the study adds a degree of refinement to this idea that agents have unique expertise that is not shared when applied to their clients.  Specifically, agents sell their homes for 1.7% more than they do when selling for their clients and also buy for a 1.7% discount relative to how they perform when representing clients.  This equates to an overall bargaining advantage of 3.4% that they use on their own account but not for clients.

The study also found that companies, when acting to buy or to sell, outperform agents by about 3.4% on both the buy and the sell side for a total bargaining advantage of 6.8% over agents.    Companies are tending to purchase properties that are lower priced, however, than the average purchased by individuals or by agents.

That said, those agents that have extensive experience in a market and are highly knowledgeable about a specific market can and do bring value to clients.  They might notice an error in a listing that can bring tremendous value to a client, such as seeing a basement wrongly categorized, or the total square footage of a property incorrectly calculated.  These errors might only be picked up by an agent with the expertise to recognize them and in those circumstances, they may justify a higher share of their commission.  That said, for every error picked up by an experienced agent and passed on in savings to a client, there is a seller who was badly represented and who lost money as a result of an agent getting a fundamental fact wrong on the listing.

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