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Three Questions Realtors Should Ask Every Client

Realtors should look at their clients, not just in terms of buying and selling their personal residences, but also in terms of being real estate investors. You think your clients do not have enough cash to invest in real estate? Think again.

By: Catherine Wynne

IRA Insights

Did you know that you could invest IRA, Roth and 401(k) accounts in real estate? Your clients probably do not know this either.

To generate more business, consider asking your clients these questions:

1. Are you interested in buying real estate as an investment?
2. Did you know that you could invest your IRA in real estate using a self-directed IRA account?
3. Do you want me to forward information to you on investment properties?
   

Before I became a commercial realtor and before I became an IRA administrator I asked my stockbroker and my accountant, “Can I invest my IRA in real estate?” Answers ranged from “no” to “it’s possible but incredibly difficult”. Being a real estate investor for years, I was always unhappy with these answers but was not willing to give up. After years of searching I discovered that yes, you can invest your IRA in real estate and soon was investing my own, and my clients’ accounts, in various real property purchases in Denver.

Being the bearer of good news is always a good thing. Letting people know that this is possible is bound to raise interest in your services and increase your client contact. This is such good news, I’ve discovered, that people cannot wait to tell their friends about the possibility of investing IRAs in real property as opposed to the stock market. Dissatisfaction with securities due to market instability, mutual fund indiscretions and unscrupulous CEOs has caused everyone to look for alternatives and leaves the door open for you to bring other investment choices to your clients.

How does investing IRAs in real estate work?

IRA accounts can be transferred from traditional IRA custodians to self-directed IRA custodians and invested in all kinds of real estate as well as notes, private placements and more. The IRA funds stay in an IRA account and there are no tax consequences if investments are done correctly.

Is it legal? Has the IRS changed the IRA law? Why hasn’t anyone told me about it before?

Yes, investing in what you decide to is legal. Consult the IRS IRA FAQs to see what they have to say about real estate in IRAs (www.IRS.gov). The law has not changed, the IRS does not recommend or endorse any type of investment. The investment of IRAs in real estate has been allowed from the very beginning of the IRA.

You probably don’t know about this because stockbrokers make their living selling/buying stock and earning commissions on the trades. Why would they want people to know they could invest in real estate?

How can this information be useful to me?

Would the opportunity to tap into commissions based on IRA investments in addition to your standard transactions appeal to you? There is almost $3 trillion in buying power currently held in IRAs, the majority of which is held by customers who don’t know they can invest it in real estate, at least not until you tell them! As a real estate broker you can also benefit in terms of your own retirement because of your access to properties at wholesale. Also, consider how many more people you can market your listings to.

How can I learn more about investing IRAs in real estate?

Your first stop should be visiting www.IRAPlus.com and finding the Entrust Group self-directed administrator in your area. Your local Entrust affiliate can direct you to continuing education classes as well as publications that can help you learn more.

Increase your commissions by increasing the scope of your business. Include clients’ IRAs as part of your business. Use the three questions in newsletters, your website, ads and whenever you meet a client. Be the bearer of good news and your clients will love you for it.

Catherine Wynne is the Vice President of Entrust New Direction IRA, Inc ., the Colorado-based affiliate of the Entrust Group. Based in Boulder Colorado, she teaches continuing education classes to brokers and CPAs and tax attorneys.

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