Do You Self-Represent in Real Estate Transactions?
Real Estate Broker · CA · Member since 2024 · 60 posts · 42 votes
Do You Self-Represent in Real Estate Transactions?
Most Popular Reply
Stuart UdisPro Member
Attorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votesThere's no right or wrong answer. I have a broker license and for me, its circumstantial. I do not want sales agents in my market to believe I am expecting a fee each time I purchase a property and go out of my way to make it known to the broker community that they will represent me and collect their fee if they bring me a deal. I've found this to help with deal flow.
If I find a property on my own that's listed I generally feel out who the listing agent is. In some instances it becomes apparent I will be awarded a better contract price if the listing agent dual represents the transaction. At the end of the day, 5% of $80 is more than 2.5% of $100 and the fee models used in the industry will sometimes lead the listing agent's to go from being the seller's advocate to the buyers. Not always the case, but it happens and I've benefited from this on a number of transactions over the years.
In the limited instances where I do collect a fee on the purchase I often roll it into the deal and take price reduction. Rather the equity than the taxable gain. The instances where I do take the fee are often off market heavy entitlement transactions where I incur significant out of pocket pre-development expenses and use the fee to help with reimbursements.
On the sale side of the equation I rely on 3rd party sales agents for my housing geared towards owner occupants. It's not my area of expertise and believe those who focus on this line of work on a day to day basis will attract buyers and achieve a 2.5-3% better result than if I were to do this on my own. Not to mention, these agents provide incredible valuable by providing me real time market intel on buyers tendencies, want's and needs which is important, especially when you are developing for-sale housing. Additionally, E&O will become problematic when you sell your own real estate and view it as a conflict, especially when you are involved with the development team.
6 Replies
- Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes1y
I don't and I'm a licensed broker. I have a good agent I've worked with for years and letting him represent me not only gives me the advantage of additional counsel, it also gives me someone else to do the heavy lifting so I can concentrate on the deals themselves rather than the intricacies of the actual contract, the process of moving everything through closing and all the hiccups that often come with investment properties. It also makes me one step removed from the offer, as a lot of sellers are suspicious of offers from brokers representing themselves. We still have to disclose that I'm a licensed broker but the offer coming through another agent puts a layer of insulation between us that makes sellers a little more comfortable.
Finally, I like seeing my agent get paid. We've done a lot of deals together over the years and I appreciate all the work he's put in over the years especially when we were doing really lean deals and there wasn't a whole lot of profit there for him relative to the work he was doing.
Skyline Properties - Real Estate Broker · CA · Member since 2024 · 60 posts · 42 votes1y
Interesting perspective - I have always represented myself in deals in the state where I am licensed. Mainly because I'm particular about certain details in the transaction.
- Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes1y
Quote from @Lorraine Hadden:
Interesting perspective - I have always represented myself in deals in the state where I am licensed. Mainly because I'm particular about certain details in the transaction.
I figured as much since you had a bunch of question marks and exclamation marks in there and a few incredulous capital letters :) . There's no right or wrong way here. If it works for you, that's great. My way works for me. I don't see how you couldn't be particular about details using an agent; I'm particular about things all the time. Most of the time brokers who want to represent themselves do so because they want to save money, bottom line. I'm not saying I won't ever represent myself, but the commissions aren't relevant in the grand scheme of things to me because there's plenty of money to go around everywhere if you're doing this right.
Skyline Properties - 1yStuart UdisPro MemberAttorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes
There's no right or wrong answer. I have a broker license and for me, its circumstantial. I do not want sales agents in my market to believe I am expecting a fee each time I purchase a property and go out of my way to make it known to the broker community that they will represent me and collect their fee if they bring me a deal. I've found this to help with deal flow.
If I find a property on my own that's listed I generally feel out who the listing agent is. In some instances it becomes apparent I will be awarded a better contract price if the listing agent dual represents the transaction. At the end of the day, 5% of $80 is more than 2.5% of $100 and the fee models used in the industry will sometimes lead the listing agent's to go from being the seller's advocate to the buyers. Not always the case, but it happens and I've benefited from this on a number of transactions over the years.
In the limited instances where I do collect a fee on the purchase I often roll it into the deal and take price reduction. Rather the equity than the taxable gain. The instances where I do take the fee are often off market heavy entitlement transactions where I incur significant out of pocket pre-development expenses and use the fee to help with reimbursements.
On the sale side of the equation I rely on 3rd party sales agents for my housing geared towards owner occupants. It's not my area of expertise and believe those who focus on this line of work on a day to day basis will attract buyers and achieve a 2.5-3% better result than if I were to do this on my own. Not to mention, these agents provide incredible valuable by providing me real time market intel on buyers tendencies, want's and needs which is important, especially when you are developing for-sale housing. Additionally, E&O will become problematic when you sell your own real estate and view it as a conflict, especially when you are involved with the development team.
- Specialist · Long Beach, CA · Member since 2011 · 877 posts · 398 votes1y
Many people have a license, yet they know nothing about the process. They have no clue about disclosures etc. They have a very high risk of ending up in a lawsuit if you ask me. Just because you have a real estate license does not make you an expert. And if you want to represent yourself, you must be licensed in the state where you are buying/selling.
- 1yDennis McNeelyPro MemberInvestor · Gibraltar, MI · Member since 2017 · 108 posts · 103 votesI've been an independent broker for 38 years now, and I've always represented myself in real estate transactions - even for out of state transactions where I won't be paid. There are too many places where a closing can go sideways!
I know there are a ton of great brokers out there, but there are also some duds - to put it mildly. I've had HUD forms filled out billing me for pro-rations that were the seller's responsibility, agents who have lost track of contingency removal dates, ... the list goes on and on.
If I'm the seller in an out of state transaction, I'll just have the title company or an attorney close the transaction. Done deal, and much less likely to cause an ulcer.
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