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Can Agents Ethically Operate as Real Estate Investors?

By
Real Estate Agent with Group 46:10 Network @ eXp Realty AZ Lic# SA663942000

Considering the fact that real estate agents generally represent sellers, it can get tricky when agents want to purchase homes at a discount from a seller.  I heard a story of an agent who in the middle of a listing presentation low balled a seller, who got pretty upset and "let him go".  The best course of action, I believe, would have been for the agent to contact the seller and just flat out discuss buying the property.  If that fialed, perhaps then he could have offered his services to help the seller sell the property.

If a real estate agent is interested in buying a property listed by another agent, well that's a different story. As long as they disclose in writing (in the contract) in most states they have at least covered themselves.  If the seller has an agent, then it shouldn't be an issue as the seller has some representation. If they are selling FSBO, then perhaps if the seller feels taken, they could try and make a deal about it with the agent's broker or licensing board.

Years ago when I was working as an agent, I was seeking to buy a house and had it under contract with an addendum allowing me to offer the home for sale while I was in my study period.  The seller freaked out when he saw a sign in front of the house because he didn't want his neighbors to know he was selling it. I had every right to put the sign up because it was spelled out in the contract that I could offer the home for sale. I even pointed it out to him, but he just wouldn't listen.  In the end, he threatened to make a big stink out of it if I didn't take the sign down, so I did.  It was a learning experience and had I stuck to my guns, I may have made a hefty profit.  Sometimes, it's just not about the money.

What are some of your experiences in similar situations?

 

Comments(3)

Tony & Darcy Cannon
Aubrey and Associates Realty - Layton, UT
The C Team

Anthony, I just went to a CE class on ethics and staying out of jail and the instructor is a Realtor with over 40 years experience.  He said that it is a great thing to practice what you preach, meaning to invest in Real Estate, he also said NEVER BUY YOUR OWN LISTINGS!!!!!!  He said that if you found a deal to buy, have another agent list it, or disclose that it is a great deal and offer to buy it FSBO, but never buy something that you have listed.  I don't know if that helps or not.

Jul 18, 2008 06:07 PM
Anthony Kirlew
Group 46:10 Network @ eXp Realty - Gilbert, AZ
Helping You Make Fiscally Sound Real Estate Deals!

I agree.  I probably could have titled the blog post better because I didn't want it to seem like I was implying that agents shouldn't invest.  It's hard to see what you don't know. I recall back in my early days of selling when I didn't own a house (I was only 22).  Must of what I "spoke" was book knowledge, and I am sure it showed.  I am thankful for those who trusted me with thier transactions regardless.

Jul 18, 2008 06:13 PM
Chip Jefferson
Gibbs Realty and Auction Company - Columbia, SC

There are many ways to capitalize o investments while you are an agent and do it ethically. We buy flips but we rent them first.

Jul 18, 2008 11:57 PM