Hi All -- Specifically in New Jersey, does a licensed agent need to disclose to a seller that they are licensed when purchasing a property directly from them. The purpose is not to make a commission but to act as a principal in the transaction.
Also, how does this apply to wholesaling?
Furthermore, if you do have to disclose, when should you do so? During the initial negotiation or should it be a line item in your contract once you've agreed on price?
@Michael Elfant I'm pretty sure it's a requirement to disclose it right off the bat no matter what state you are in. That is one of the downfalls of being licensed and being an investor at the same time.
Thanks @Jeremy Taggart . Has it affected any of your deals?
@Michael Elfant No the only off market property I bought was from another realtor who was a friend, so that doesn't really count. I'm still relatively new been investing for about 3 years now so I don't have quite much of a sample size yet. I'm sure it might come into play at some point though, especially since the market is starting to tighten up here. Getting much tougher to find good deals on the market. I could see it being a negative if you are dealing with an ignorant or elderly seller and having to disclose you are an agent basically means that you are held to a higher standard and it could be seen as taking advantage of them if you try and tell them their house is worth way less than it actually is.
A real estate instructor and investor told me that you need to show the seller comps that are sold in the area, and have them initial on each. Seller needs to know that you are a licensed real estate agent, that they know the value of their property, and is willing to sell it to you for less.
@Michael Lee That's absurd..
@Michael Lee I see that you are an investor/wholesaler/rehabber as well as agent. Do you practice what you preach?
For purposes of disclosure (whether you are the buyer, seller, landlord, wholesaler, etc.) you must disclose that you are licensed real estate salesperson.
Things like these is only an issue when you get sued.
Its good to have a partner, so I dont have to give offers :)
I always disclose and state in the contract that I am buying Under market value with a profit motive.
I remember my real estate instructor talking about a case in Little Silver NJ where agent bought property for half market value from older couple under an LLC sold for double the purchase price got sued had to settle.
You absolutely 100% must disclose you are a licensed agent up front. It is a part of the code of ethics and opens you upto many legal issues if you do not.
Article 4 (Case Interpretations for Article 4)
REALTORS® shall not acquire an interest in or buy or present offers from themselves, any member of their immediate families, their firms or any member thereof, or any entities in which they have any ownership interest, any real property without making their true position known to the owner or the owner’s agent or broker. In selling property they own, or in which they have any interest, REALTORS® shall reveal their ownership or interest in writing to the purchaser or the purchaser’s representative. (Amended 1/00) [listen]
- Standard of Practice 4-1
For the protection of all parties, the disclosures required by Article 4 shall be in writing and provided by REALTORS® prior to the signing of any contract. (Adopted 2/86)
Article 5 (Case Interpretations for Article 5)
REALTORS® shall not undertake to provide professional services concerning a property or its value where they have a present or contemplated interest unless such interest is specifically disclosed to all affected parties. [listen]
@Michael Elfant Yes, it's section 32 of the standard nj sales contract. You should disclose at the earliest opportunity.