Risks of doing deals for yourself as an agent
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Real Estate Broker · DC MD, VA & NV · Member since 2014 · 512 posts · 292 votes
8mo@R S, I'm sure you're aware that as a Realtor, you'll be required to affiliate with a brokerage for at least 3 years, depending on your state, before you're able to be your own broker. This is largely due to liability risks of not only being a new licensee but also because of a higher risk of doing your own deals. In fact, many brokerages don't even permit agents to represent themselves for this reason and, of course they will expect you to serve the public so that they can make $$ for providing you the trailing, tech, and oversight that will be necessary. And yes, there was a huge lawsuit recently but not for the reason you stated- that lawsuit was related to sellers being required to pay a buyers agent co-op commission. And, while most Sellers do still pay that, it is now negotiated as part of the offer process rather than when the listing is taken. Many changes in the last 2 years related to this and have been made as to how agents conduct business and you will need to thoroughly understand this. As licensees, Agents are also held to a higher standard which, in addition to the fees involved, may not be worth it. I see many agents get their license just to save on commission but end up giving up their license. My advice would be to find a good agent who will work on your behalf while you focus on your flips. If you do end up getting your license, find a brokerage that allows you to keep your commission on your personal deals. exp Realty allows agents to transact up to 3 personal deals a year at no commission to the brokerage... less a nominal Broker review & EEO fee as well as a 20% Mentor fee on your first 3 deals- Hope this helps- all the best
14 Replies
- 8moMichael K GallagherBusiness MemberReal Estate Agent · Columbus OH · Member since 2018 · 1k+ posts · 1k+ votes
why would a seller sue a buyer that acted as their own agent? I can't even fathom where a seller would have a case unless it was for some kind of non performance, but again I can't really see a case where they'd have a case at all.
In general if you are looking to do flips and rep yourself as the agent, as long as you disclose you are licensed and put yourself on the Agency disclosure I don't see why there would be an issue.
I've run into plenty of agents in my market that literally do not help outside clients, all they do is list their own flips or new builds.
as a random thought, I'm not a huge fan of taking your buy side commission and applying it as a credit, just from a business cashflow standpoint having that revenue as actual revenue not "paper credit" would be more advantageous than any "better deal" you'd get in the transaction. again I may be wrong but just a personal opinion.
- 8moJaron WallingPro MemberRental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
@Michael K Gallagher Are you licensed and working under a broker in Columbus or working solo deals like mentioned above? I'm considering getting my license and leveraging it for future deals. I don't want to work for an agency long term though. My wife and I have established careers outside of REI. I'm trying to justify the value of a license given my experience with distressed properties.
- Real Estate Broker · DC MD, VA & NV · Member since 2014 · 512 posts · 292 votes8mo
@R S, I'm sure you're aware that as a Realtor, you'll be required to affiliate with a brokerage for at least 3 years, depending on your state, before you're able to be your own broker. This is largely due to liability risks of not only being a new licensee but also because of a higher risk of doing your own deals. In fact, many brokerages don't even permit agents to represent themselves for this reason and, of course they will expect you to serve the public so that they can make $$ for providing you the trailing, tech, and oversight that will be necessary. And yes, there was a huge lawsuit recently but not for the reason you stated- that lawsuit was related to sellers being required to pay a buyers agent co-op commission. And, while most Sellers do still pay that, it is now negotiated as part of the offer process rather than when the listing is taken. Many changes in the last 2 years related to this and have been made as to how agents conduct business and you will need to thoroughly understand this. As licensees, Agents are also held to a higher standard which, in addition to the fees involved, may not be worth it. I see many agents get their license just to save on commission but end up giving up their license. My advice would be to find a good agent who will work on your behalf while you focus on your flips. If you do end up getting your license, find a brokerage that allows you to keep your commission on your personal deals. exp Realty allows agents to transact up to 3 personal deals a year at no commission to the brokerage... less a nominal Broker review & EEO fee as well as a 20% Mentor fee on your first 3 deals- Hope this helps- all the best
- 8moJaron WallingPro MemberRental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
@Marian Huish That's some good information. Hopefully the OP is reading this. The profile looks a little off.
I have a working relationship with a smaller agency and know about exp Realty (which is LIV Indy) here locally.
- Real Estate Broker · DC MD, VA & NV · Member since 2014 · 512 posts · 292 votes8mo
@Jaron Walling happy you found it useful- it's a tough time to be a Realtor- good luck!
- 8moRemington LymanBusiness MemberReal Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
Quote from @R S:
I'm a real estate investor and I'm looking into getting my agent license. A big reason for getting licensed is to act as agent for my own flips. I'd like to control the buying/selling process and also save the commission when buying and selling (applying my buyer's agent commission as a credit when buying).
However, I've read that there are some risks when doing this. There was a discussion on Twitter where people mentioned that seller's have later sued buyers acting as their own agents.
Rather than relying on Twitter, I thought I'd kick it over to the experts here. What are the risks and how can I mitigate them?
I would not get your license unless you plan to actively use it to rep buyers and sellers to make a commission. It is not worth the fees and the CE to get it just to save on the commissions. You also will not be as good of an agent as someone who does it full time. If you do get on the level of being a good agent then you should just focus on that and not on your flips
- 8moLisa OliverPro MemberMember since 2024 · 9 posts · 8 votes
Whether or not you should get your license really depends on if you are in a non-disclosure state. I'm in Texas and could not get any information for comps without having access to the MLS because you can't see what properties actually sold for. Because I really wanted to access to the data anytime I want and not have to ask someone else for it, I got my license and have affiliated myself with a broker that specializes in agents who are investors. They have a 70/30 commission split when working with buyers and sellers, but when I'm buying or selling my own property, I only have to pay a flat fee of $600.It has worked out beautifully and I can download and mash and mix the data any way and anytime I want to see all kinds of scenarios. In addition to that, the broker has all kinds of training and classes and meet ups and networking, and it has been great to bounce ideas off other agents and get to know others in the community outside of the Meetup world.So it has been absolutely great. Yes it does cost money to have access to the MLS and have your license, but in the end, the money you save and having access to the information is worth every penny. I think the question is, can you get the data without being a licensed realtor in your state, and how frequently do you want the data so that you don't feel like you're bothering an agent for information over and over?
- 8moR SFort Lauderdale, FL · Member since 2012 · 19 posts · 10 votesOP
Quote from @Lisa Oliver:
Whether or not you should get your license really depends on if you are in a non-disclosure state. I'm in Texas and could not get any information for comps without having access to the MLS because you can't see what properties actually sold for. Because I really wanted to access to the data anytime I want and not have to ask someone else for it, I got my license and have affiliated myself with a broker that specializes in agents who are investors. They have a 70/30 commission split when working with buyers and sellers, but when I'm buying or selling my own property, I only have to pay a flat fee of $600.It has worked out beautifully and I can download and mash and mix the data any way and anytime I want to see all kinds of scenarios. In addition to that, the broker has all kinds of training and classes and meet ups and networking, and it has been great to bounce ideas off other agents and get to know others in the community outside of the Meetup world.So it has been absolutely great. Yes it does cost money to have access to the MLS and have your license, but in the end, the money you save and having access to the information is worth every penny. I think the question is, can you get the data without being a licensed realtor in your state, and how frequently do you want the data so that you don't feel like you're bothering an agent for information over and over?
Thanks, this is a great point. I can get the data in my state, but having access to the MLS will make it easier to get that data in a more usable format.
I'd also like to be able to see listings and make offers without needing to a buyer's agent. As investors, we know that sometimes you need to make a lot of fairly low offers to get a good deal, and understandably many buyer's agents don't want to do that for good reason.
I'm not really worried about the cost because one purchase or sale for myself each year would more than pay for the fees. Additionally, there are a number of "flat fee" brokerages around here that seem to charge $500-700 per transaction in lieu of a split.
- 8moJaron WallingPro MemberRental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
@Lisa Oliver Are you FT or PT as a real estate agent?
What you described where I want to position myself. Do you ever feel like a burden to the brokerage when buying or selling your own property? It's this grey area of "hanging a license" to get MLS access that makes me think I don't need a license. At the same time the higher level for networking, training, continuing education (done that for 8 years) seems like a win-win. We want to continue buying 1-2 properties per year for the next 10 years. - 8moLisa OliverPro MemberMember since 2024 · 9 posts · 8 votes
That’s what I love about the brokerage that I’m at, being only an investor is not a burden to them. I’m actively involved in their Agent communities so that I’m not a drag on their resources. I don’t have personal experience with other brokerages like the large well-known names, but I got the impression from many different people that they are very focused on you working with buyers and sellers and making money for them. So I knew that was not a fit for me. The other thing you can look for is a 100% commission broker where they give you less training and less resources, but they leave you alone to do what you want. I didn’t even know that existed until I was finishing my training for my license and it was mentioned in the class.
- 8moLisa OliverPro MemberMember since 2024 · 9 posts · 8 votes
The other cool thing about having a license is you can take yourself to see a property anytime you want without having to have an agent meet you there. You just have to schedule the request through the MLS or text the listing agent to get the code and you're good to go. Yesterday I went and looked at four properties on my own time and I didn't have to have anybody with me. Also, I'm doing this full-time.
- 8moJaron WallingPro MemberRental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
@Lisa Oliver That's pretty amazing.
Are you single, married, working another job, or living on commissions and cash-flow? I'm not in a position to jump ship into FT real estate. It's still a side-hustle for us. In about 2-3 years that could be a change; call it a mid-life crisis. I'm trying to align my goals with realistic expectations if I work for a brokerage. Sorry for all the questions.
- Los Angeles, CA · Member since 2026 · 24 posts · 7 votes8mo
Great topic!
I'm an agent and investor/developer in Los Angeles so I really understand this pretty well!
I wouldn't necessarily advocate for getting your license just to represent yourself. In California where I am, you can absolutely represent yourself, but you have to make sure that's fully disclosed, and agreed by, all parties. It's rarely an issue in practice and from my perspective, there's really no reason why you wouldn't do that, if you can.
However it's still a lot of work, and some cost too, so if you only want it for the MLS access, I would say it's probably not worth it, honestly. People think sometimes that the MLS is infinitely more powerful and capable than zillow or redfin. It's true that there is functionality in there which gives you more - access to records, owner details, detailed history etc, but really honestly for most investors, using zillow/redfin and working with a great agent is going to all you need. There's also a learning curve with some of the MLS functionality, and it's a pretty ugly system in general, so don't think that it's going to change your investing life, necessarily.
For me personally, I wanted to work as an active agent certainly to support my investment/development work, but also largely to be an active agent too. Being an agent gives me access to the market, to transactions, to buyers and sellers, to investors and can generate (especially being in LA) excellent income, so the two things work really well in tandem in those cases.
Certainly no harm getting your license, but I just don't think there's a great need to, unless you plan to use it actively.
- Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes8mo
Things to consider:
1. You don't need a license to sell your own property, or represent yourself on the buy-side.
2. As an agent you will be bound by stricter legal and ethical standards than a non-licensed investor, especially disclosure. A lot of experienced agents will have a colleague list their own properties for sale for them due to not wanting the increased liability.
3. If you're not planning to put the time in to really learn the trade and become a good agent, then you'll be better off being represented by a good agent. Becoming a good agent takes time and experience, continuing education, lots of transactions, relationships, staying current with policy changes/ the rules, having deal flow, and knowing the market by working in it daily.
4. You will need to work under a managing broker for a few years and there are overhead costs: errors and omissions insurance, MLS dues, Realtor Association dues, monthly fees to your broker and commission splits to your broker, continuing education, income taxes (if you take your commission instead of discounting the price), marketing, staging, advertising your listings, etc.
I originally got my license just to do my own deals but ended up doing it full time, so be careful of that!
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