Does my brokerage need to be involved? Owner Finance Deal

Question

Hey everyone! Quick question to my agents and brokers out there. I am currently working out an FSBO owner financing deal with an investor friend of mine. As an agent, does my brokerage need to be involved? I've heard of brokerages wanting their cut of their agent's FSBO home purchases, and honestly think that to be ridiculous.

(By the way, if this deal goes through, my LLC would technically be purchasing the property. Not sure if that adds to anything in this scenario)

Hoa Nguyen · Answer

I did end up having a conversation with my managing broker and she said as long as I don't use my local realtor association's forms and don't request any kind of commission on the sale, I am good to go!

Shawn Mcenteer · Answer

@Hoa Nguyen as long as you are making the proper disclosures you should be good. At the end of the day anyone can sell a home as they see fit for you as an agent you just need to make sure you are not doing anything that will jeopardize your license.

Bruce Lynn · Answer

These kinds of deals are ripe for lawsuits....FSBO/Owner Finance/somehow your private LLC is involved even though it is a FSBO and your investor friend is buying it. Sound like brokerage activity to me. E&O insurance likely doesn't cover you or your brokerage if something goes south.

I would say 100% yes....you need to discuss with your broker and follow their directions.

Steve K. · Answer

Talk to your managing broker on this but the most likely answer is that yes, every deal you are involved in must go through your brokerage. You should get a certain number of personal deals a year without having to pay too much beyond a processing fee to your brokerage. Most brokerages allow for this but they don't want you doing any deals out on your own because ultimately they are responsible for all of your real estate activities.

Marian Huish · Answer

Any sale as an agent shows in your ‘portfolio’ as evidence of your sales experience whether it’s a personal purchase or not and whether you represent the seller or buyer, which would be yourself in this case. You can always advertise a closed sale on the buyer side… unless it doesn’t go through your brokerage. Best of luck with it @Hoa Nguyen.

Hoa Nguyen · Answer

@Marian Huish well considering I would be adding two rentals to my personal portfolio and the deal doesnt add to my marketing profile as an agent, I don't think it will really be relevant. Remember, I am the buyer in the situation.

Marian Huish · Answer

Another consideration @Hoa Nguyen is not being able to advertise the sale after the closing in order to attract more clients. How much is the lost opportunity of future business worth?

Hoa Nguyen · Answer

Talked to my managing broker, and she said as long as I don't use the local realtor association forms and charge a commission, it does not have to be run through the brokerage. I do have to disclose I am licensed.

Hoa Nguyen · Answer

@Bruce Lynn sorry shouldve have worded differently. I am the buyer, so the brokerage will want to get a cut from my connections sale if Im not wrong

Marian Huish · Answer

Why not work for a brokerage that gives you 100% commission on your private deals @Hoa Nguyen? That way you’re covered from a liability standpoint but still get to keep the entire share of the commission!

Does my brokerage need to be involved? Owner Finance Deal

Does my brokerage need to be involved? Owner Finance Deal

Most Popular Reply

10 Replies