Representing Myself as a Buyer's Agent??

9 Replies

I am recently licensed and bit confused about how it works to purchase property with a real estate license. I know that if its a FSBO we can just do the sale unrepresented and simply disclose to the seller that I am licensed, and nothing needs to go through the broker. But right now we are looking at a property that is already listed on the MLS. The listing says 2.5% commission to cooperating broker, (although our brokerage recently told us we really should fight for 3% if we are representing the buyer ... not sure how that part works either ...)


So does that mean I would have to represent myself, through my brokerage? And then we pay the full closing costs and later I'll get back a commission check for my part in the sale?? I have seen MANY posts where people say to waive the buyer's commission and put in a lower offer instead. And they also say "your income is taxed and you have to give part of that to your brokerage anyway, so just waive the buyers' agent commission instead and lower the offer" ... but doesn't the seller have to pay the seller's agent the agreed-upon price no matter what?? Isn't that typically what the listing agreement would stipulate? That doesn't seem like it would be an attractive offer to the seller if that's the case, because they have to pay the same amount either way, but they're getting a lower offer .... and then their agent just makes more money. I really feel like I must be missing something ...

@Leilah Davis ,

Congrats on getting your license!  

I'd advise you to keep it simple and as uncomplicated as possible, especially at the start of your career.  Disclose on your offer/contract you are a licensed real estate salesperson, buying for your own account.  

Represent yourself, take the brokerage fee after the split with your broker, and move on. You will get credit for the sale on your MLS, gain experience, see the process from the inside-out, receive some (taxable) income, and be more prepared for the next deal.

Also, discuss this with your broker before you make your offer--sometimes a broker will reduce their end of the split when an agent is buying on their own behalf.

Good luck and let us know how this works out for you!

Great advice @Marc Winter thank you!! That was what my gut was telling me to do, so I appreciate the encouragement. I want to keep my brokerage happy too, not trying to cut them out of a deal for no reason. Great advice to contact them pre-offer too!! Thanks!

Hey @Leilah Davis !  I too think it makes sense to go about this on the up and up with your broker.  But since it is a personal transaction, your broker should be willing to give you 100% commission on the transaction.  It's something you should definitely bring up and ask about... I get three personals at 100% a year including investments.  There's really no reason you shouldn't.  That way you get experience and a kickback at closing!  Think about it, if you structure the deal right (like asking for money toward closing), not only could you pay lower (or no) costs to close but you'll get a check from your broker for 2.5% (or whatever it is for that particular listing)!  

Also, I'm a newer agent, but I don't think you can have any say on the buyer's agent commission percentage.  You could have an agreement with the buyer for your own minimum fee (which could be 3% for example), at which point your buyer would come out of pocket at closing to pay the difference if your buyer agent commission is closer on that listing.  I know agents that do this, but they are bigger producers than I am.  I prefer to ask for a minimum $ amount on low priced properties to make my time worth it but then not worry about the actual commission percentage when the commission is going to be my own personal "worth it" amount... hopefully that made as much sense as it did in my head!

The commission belongs to your broker.  Your independent contractor agreement will dictate how much of that commission the broker will pay to you.

And on a FSBO, it still runs through your broker. Once you become licensed, you cease to be a member of the general public and ALL of your real estate activities are subject to your brokers supervision.

Also keep in mind, transactions where you are a principal are typically excluded from your e&o covereage. Due to this, some agents will actually have other agents represent them, and they then return the favor for them at another time.

@Russell Brazil hmm ... that's not what I was told by the real estate commission. Maybe it's different in your state? I called them to ask how to proceed with a cash offer on a FSBO property and they said I just had to disclose my licensure status, but that it did not have to go through my brokerage. Not sure why my brokerage would even want to be involved in an FSBO purchase like that ... since they'd get nothing out of it.

@Leilah Davis

If the fsbo is offering a cooperating commission then it should be run through your broker

The issues with yourself not being covered by your E&O policy is generally somewhat misunderstood. You don't really need another agent to represent you for E&O purposes. When you are both the client and the agent, the policy has an exclusion because it's a conflict of interest from their point of view. If you the client claim that you the agent made an error, then the insurance company would be paying out to you ... wait for it.. you. Oh, so just representing yourself, make clerical errors, make a claim against yourself, and keep having the insurance company payout damages to you. Hmmmmmmmm..... you see how that works, now?

Unless there is something else in your policy, there really isn’t a need to have another agent represent you. It’s generally a misunderstanding of how insurance works and how the “voided” part of the coverage is moot — you really are going to sue yourself??

Oh, and back to your question. Yes, just take the commission to yourself. It’s just like any other deal except you are both the buyer/seller and the agent. One way to look at it since it helps generate income for your broker, you might be able to inflate your production and get a better split. It’s can be fun at closing because you get a “refund” check. The first time I did a closing like this my attorney was wondering why I was getting a check (I was the buyer) until he remembered I was an agent then...

I think all that stuff of getting your buyer’s commission put in as credit to the purchase is all too complicated — yeah, I’m a wuss on some things. Ask your broker if he will discount your own listings at least for the non-cooperating side. If he or she is nice, they will support you doing your own deals.

Good luck.

Sorry, but no way do I buy that there is a state real estate commission that says real estate transactions dont have to go through your broker. I think its far more likely that you misunderstood what you were told or that the person who relayed that information was a low level employee that was not correct. 

Originally posted by @David M. :

@Leilah Davis

If the fsbo is offering a cooperating commission then it should be run through your broker

The issues with yourself not being covered by your E&O policy is generally somewhat misunderstood. You don't really need another agent to represent you for E&O purposes. When you are both the client and the agent, the policy has an exclusion because it's a conflict of interest from their point of view. If you the client claim that you the agent made an error, then the insurance company would be paying out to you ... wait for it.. you. Oh, so just representing yourself, make clerical errors, make a claim against yourself, and keep having the insurance company payout damages to you. Hmmmmmmmm..... you see how that works, now?

Unless there is something else in your policy, there really isn’t a need to have another agent represent you. It’s generally a misunderstanding of how insurance works and how the “voided” part of the coverage is moot — you really are going to sue yourself??

Oh, and back to your question. Yes, just take the commission to yourself. It’s just like any other deal except you are both the buyer/seller and the agent. One way to look at it since it helps generate income for your broker, you might be able to inflate your production and get a better split. It’s can be fun at closing because you get a “refund” check. The first time I did a closing like this my attorney was wondering why I was getting a check (I was the buyer) until he remembered I was an agent then...

I think all that stuff of getting your buyer’s commission put in as credit to the purchase is all too complicated — yeah, I’m a wuss on some things. Ask your broker if he will discount your own listings at least for the non-cooperating side. If he or she is nice, they will support you doing your own deals.

Good luck.

 The threat isnt from you sueing yourself, its from the opposite side party sueing you, or filing an ethics claim, or commission claim against you. The probability of suit rises when you are a principal in the transaction. 

@Russell Brazil

Well, of course.  My discussions with insurance agents is that the "mumbo jumbo" about the exclusion on self-representation applies between "yourself and yourself."  My understanding is you are still covered if the other side files suit.  I think I mentioned before, please check your own policy as they may differ.  Thanks, and good luck.