Question for people who flip and are licensed

[JOAN DICKIE]

Regardless of state law (most of which require lots of disclosure), as a real estate agent or broker, do you disclose what you plan to do with the property after you purchase from a non bank or government owned property.  Someone asked me last weekend if I could get sued if a person gets mad if they find out I resold a property for more than I purchased it for.  As a realtor, I have to disclose everything.  I wonder if I should have the seller sign a statement saying I'm going to resell this property after I rehab and the seller understands that they could do the same but they are agreeing to sell as is.

Maybe I'm over thinking because I'm studying for my broker's license and getting hit over the head with all the things I shouldn't do and the consequences for screwing up.

[Karl Krentzel]

Originally posted by @JOAN DICKIE:

Regardless of state law (most of which require lots of disclosure), as a real estate agent or broker, do you disclose what you plan to do with the property after you purchase from a non bank or government owned property.  Someone asked me last weekend if I could get sued if a person gets mad if they find out I resold a property for more than I purchased it for.  As a realtor, I have to disclose everything.  I wonder if I should have the seller sign a statement saying I'm going to resell this property after I rehab and the seller understands that they could do the same but they are agreeing to sell as is.

Maybe I'm over thinking because I'm studying for my broker's license and getting hit over the head with all the things I shouldn't do and the consequences for screwing up.

Joan, that is an AWESOME question!

I wrote about that on my blog one time, "Real Estate Agency for Realtors® who Wholesale!".  Things ARE different for Realtors® who Invest than the unlicensed!  For example, in my home State of AZ, a licensee who improperly discloses could result in treble damages of your gain.  

For example, if you wholesale a property, and make 10k, and improperly disclose, the damages CAN be 30k!!  Ouch!

Fortunately, the NAR Code of Ethics is pretty clear on the advantages of the Wholesaling Realtor®. As a matter of fact, Article 4 is a blueprint on how Investing Realtors® can act. 

If I were you I would pay particular attention to Article 1 (Treat all parties honestly); Let them know you are acting as a principal in the transaction; this is obvious.   However, what is lesser thought of is Article 2 of the Code.  (Avoid exaggeration or misrepresentation of the facts)  which means that we need to be honest about the values, and stop padding the CMA or facts with irresponsible comparables.

Finally, Article 4 of the Code of Ethics is a very specific "How to" for agents when it comes to the issue of "Flipping" or Wholesaling real estate for the Realtor®. Not only did my article cover it in specifics for Wholesaling; but the National Association of Realtors® did write a very good article on the issue of Investing for Realtors®.

Anyway, thanks for asking that great question!  We need to talk more about that as professionals!!