When making an offer on an off market property, as a licensed Realtor, do I have to give a fair offer? I understand I have to disclose my license. (IN TEXAS)
What is a fair offer? I am not aware of any law that dictates how much you can or can't offer.
@Jacob Sampson The thing is I'm not sure I know of a law that is regarding this, like you said. I only remember either reading somewhere or hearing from someone that since Realtors have a professional understanding regarding real estate and comps we need to give fair value offers? But then again, like you said, it seems to grey of an area for there to be a strict or definite law for. Thanks!
I’d say first talk with a TX licensed attorney before you write that contract. I’d never do it.
Based on my read of the TRLA, it says that in TX a licensee has a fiduciary duty to their client but you are also required to always deal fairly with the public. If you knowingly negotiate directly with an owner and buy a property at a price well below market, and the seller gets mad later (for any reason) and files a complaint, you can expect to lose your license. The state protects the public, not licensees.
But that’s not nearly the worst part because if the seller sues you and they win an award you can’t or won’t pay, they still can recover their entire award from the state’s “recovery fund”. If that happens, you can expect the state to come after you for the money they paid out and they won’t stop until you leave TX or die.
I’ve seen this situation with several agents/brokers over the years. IMO, the simple solution is to hire that lawyer and let them offer and negotiate the deal with the owner for you.
@John Franklin thank you for the heads up! I believe what you mentioned is what was tugging at my memory. To be clear:
-if I was to go with a lawyer to write up the contracts, does this mean that the transaction would be done without my brokerage?
-if they're negotiating for me, does this mean that I can not be part of any of the contact with the owner if it's regarding purchase price?
I'm not sure how much it would cost to go with a lawyer, but maybe it would be better to just not do business with my license?
I realize a lot of excited new RE investors first go out and get licensed but what they fail to realize is that In TX, as far as the state is concerned, you are now considered a RE expert when you deal with the public and you can no longer be a simple member of the public/investor. This is why I believe TX RE investors should not get licensed
To your original question, it doesn’t really matter whether your offer is “fair” what matters is whether the seller walks away happy, without ever filing a complaint.
That’s too much risk for me so as a broker, so I started hiring a different broker or attorney to represent my interests when I transact personal RE deals directly with the public, still noting I’m licensed in any ads/contracts.
I recommend any TX licensed Investor actually read through the entire Texas Real Estate License Act (TRELA). It addresses many of these issues. I can also refer you to attorneys I know who have defended agents in cases like this and there are also some excellent TX RE attorneys on BP who can give you true legal advice, of which mine is not.
You can always offer what ever purchase price you want. You must disclose you have a license in real estate. For more information, go through TREC and your broker.
@John Franklin I have to agree with you. Although I don't regret getting my license, I definitely do agree that it just complicates things. I'm going to read through the entire TRELA to get a much better understanding. Thank you John.
@Jerel Ehlert Getting info from my broker at the moment, thanks.