If agent is also investor, would there be a conflict of interest?

Question

I am working with an agent who mentioned to me that he, along with his partners, would be looking for investment properties for themselves. I am very sure that they would be looking for properties very similar to what I want. Would there be a conflict of interest, as they would obviously take the best deals out there for themselves?

Michael Noto · Answer

This is a potential issue that almost every one of my investor clients brings up during our initial meeting. I've been doing this a while and have never ran into a situation where me and a client were considering the same property at the same time.

David M. · Answer

@Jerry Poon

Depends / shouldn’t be.  If the agent is a Realtor, it would be against the Code of Ethics.  In my

mind it’s bad business.  I tell all my investor clients I don’t compete with my clients.  In most cases, we are looking for different things.  Some clients are outside my operating radius (over an hour away).  Some clients are looking for properties they can expand or are in way worse condition than I want to deal with.  Also, I’m a low volume flipper so it’s not like I just snatch up “anything” or very much.  Before covid-19 I was already busy with my own deals.

Oh, also depends on what kind of investing.  I don’t want anymore long term rentals.  Tired of being a landlord.  So, all those wanting rentals investments don’t have the opportunity for a conflict.

Hope that helps

Mason Hickman · Answer

@Jerry Poon

The realtor/investor may have different criteria from yours or may be in the middle of projects and can’t add one to his portfolio. As the others said, you want your agent to be actively involved in real estate investing because they’ll understand how you’re looking at deals.

Nathan Gesner · Answer

@Jerry Poon There's a good chance they would snatch up the best deals instead of presenting them to you first. I avoid this problem because I never snatch up a rental before showing it to my client first. In other words, if I am actively working with a client to find them a home or investment, I will always show them the deal first. If I'm not working directly with a buyer but have a list of potential buyers that have asked me to keep them updated, I'll look at the deal first and then pass it on.

Jonathan Greene · Answer

@Jerry Poon they can't take every deal and they aren't going to just leave you the scraps. They may take one here and there, but you want to work with investor/agents because they know where the deals are. There is not a shortage of off-market opportunities and if they have those and know wholesalers you won't be looking just on the market with them, thereby getting favorable access that you would get with a regular agent. If a client contacts me about a deal or gets in an auto and is interested, they always have first priority, but if I am looking for myself and find a deal that I like, I won't go and offer it out.

Chris Herrera · Answer

I think you have to change your perspective if you think your agent is bringing value to you.

If you want to be successful and always take action you have to believe there’s always opportunities for you no matter what. You might think he’s competition, but if you thought of him as a collaborator instead then you’ll be able to learn more

Wayne Brooks · Answer

Well, IF they were going to buy those deals anyway, you Not using him as an agent wouldn’t change that

Wayne Brooks · Answer

Less of a conflict with a wholesaler???

Ridiculous.....a wholesaler only has one or two properties probably they could sell you and make money on, they’re on a time restraint, and every extra dollar you pay for it goes 100% right into their pocket.

Tushar P. · Answer

There is always conflict of interest. They would want you to buy even if it is not a good investment. And if they are investors themselves, most likely they will put the agent hat only when they don’t want the property for themselves. Perhaps work with wholesalers rather than agents - the conflict of interest may not be completely eliminated but greatly reduced.

If agent is also investor, would there be a conflict of interest?

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