Buying FSBO Property as an Agent in Atlanta, Georgia
Real Estate Agent · Atlanta, GA · Member since 2016 · 23 posts · 9 votes
I ran into my potential first deal this weekend and some questions came up regarding how to handle transaction.
I'm an active agent, and I would like to purchase a FSBO property. (the seller specifically said they didn't want an agent)
Would I just represent myself and the FSBO seller go without representation? Or would they NEED representation because I'm an agent? My broker does not allow dual agency, so I can't represent both of us.
I want to use the GAR contracts for my protection, and go through my broker (flat fee broker - I'll pay the transaction fee). I can simply waive all commission, thats not a problem. But I'm unsure of the GREC rules on this type of transaction. I know I need to disclose I'm an agent in all paper work and in writing to my broker, also not a problem.
I've asked around and the rules are not clear for this scenario. I want to make sure I'm not breaking any Laws.
thanks for any help anyone can provide.
See the agents BiggerPockets members work with in Atlanta, GA.
See agentsExactly why I "used" to be an agent. Sometimes...it's hard to be an investor who wants to make money investing along with an ethical and compliant agent who works for commission at the same time. I became a realtor in WA State thinking that being an agent would give me the inside scoop on properties. I was so wrong. All it did was stand in my way of being able to buy at a wholesale price. If I purchased anything, it had to be off the MLS - and you know what the MLS stands for? My Listing S*cks. (LOL) In other words, if it's a deal...by the time it gets to the MLS...everyone and their brother who is an investor has seen it and doesn't want it! Yeah...it's a deal alright...a deal ONLY a foolish investor would invest in...because, honestly, as an investor - off market is where the REAL deals are...and we all know it!
Meanwhile...you have your license. That's all fine and dandy if it's paying your bills plus some. I know the gig though...and it's a tough one!
So what do you do now? I would start getting into the REO market to find deals...or look at purchasing raw land and developing it. There's lots of good money to be made in that.
For this deal right now...you have to be very very careful here. For one...if this FSBO had a price set, then you negotiated it lower (to make it a great deal for you) (thus buying at a discounted/wholesale price from this owner) and your plan is to turn around and "flip" it with little to no out of pocket improvement, you might find yourself in hot water later. For starters, the seller may be able to come back and say that you ripped him off and took advantage of him by low balling him...knowing, by your expertise over his, that you could easily get more for the property - and did.
My advice would be, if you can't get someone you trust to buy this property for you, then I would tread lightly. I would talk to your broker or a good real estate attorney just to make sure you are in compliance and stay in compliance. Your broker doesn't like dual agencies for a reason. Hot potatoes is what they are!
Wow, thanks so much the responses.
@Sandy Suschana, exactly what I'm worry about. Thanks for sharing
@Nick Fitzpatrick, thanks for the tips. Do you think thats enough to cover me?
I'm not out to scam anyone, but I will be negotiating to get a deal. My goal if for seller to be happy and eliminate any conflict.
I also want to add that it would be a cash deal, no banks or appraisals involved. Does that help me?
If you are flipping it (with little to no out of pocket improvements prior to flipping)...I would disclose that to him. Just to be safe.
I plan on rehabbing and renting.
But I'll make sure I remember this if I come across a flip.
I don't understand the tone of caution here! You're an agent - under your own free will and business decision. The seller owns a property. Decided to sell on his own- under his own free will. He chose to offer for sale to anybody willing to pay his price. Period.
The fact that you're an agent - great! You know real estate - according to the law- you must disclose this fact - that you are licensed, and held to a higher standard, and chose to use state approved forms to buy a house. What's the problem here? Signing approved forms...or disclosing that you know real estate?!!! I don't even use GREC forms - which is approved by my broker (when deals are off FMLS) and my attorney. No issues whatsoever.
As long as you follow the state approved rules, GREC disclosure, and your broker knows about the transaction- great! The fact that the seller chose to be ignorant in that he decided to not be represented, didn't try to sell his home on a service that represents over 90% of all house sales - good for him/her. They chose this "business decision".
Always in business ( and this includes real estate) - the stronger survive. That's how business is run- competing. You chose one route, the seller another route. Has nothing to do with whether you are licensed or not. A quick check box on a form with a stipulation that you are an agent? Sounds like a tough set of standards to live with!!!!
BTW - I do not pay any commissions when buying and selling wholesale "off market" homes. No reason to - they're "off market". Commissions are for both sides to complete a transaction using the "market" - known as GAMLS, FMLS, etc. Also- no commissions for my lease options or owner financed homes, etc- since not using the FMLS or GAMLS systems. Yes- I disclose everything. I only pay full commissions to the selling side when I list my homes for sale on FMLS, like every other home seller.
Joe-
I am an agent, also, with a transactional brokerage. A good number of my investment deals are procured off-MLS, direct to the seller or through wholesalers. Everything as stated above, per GREC rules (disclose, disclose, disclose). However, I make sure that the brokerage fee is on the HUD every time... even if I am paying it myself... just to keep everything straight with my broker. Since Richard is his own broker, he doesn't have to pay himself. Since I do quite a number of these, I think that my broker would feel pretty cheated. It's not like the $300 is going to kill the deal. If that's the case, it probably isn't much of a deal to begin with. Plus, I feel it totally evens out in the wash on the other MLS deals we buy and I am paid well over my brokers transaction fee. My suggestion would be for you to have a conversation with your broker and double check how they would prefer you handle it.
-Jennifer
@Jennifer Butler @Joe Fernandez Actually, I am just an agent here in Georgia (I hold a Broker inactive status license in Florida - in case I ever do any more deal there in the future).
I have my license with a small flat fee brokerage in Roswell - I pay a small monthly fee, and $275 per closed deal - when using anything on FMLS, GaMLS, etc. Like my broker said to me: If I am doing off market deals, not involving him or the company, what is the fee for? There isn't any. The brokerage is not involved when I buy a car, a boat, RV, etc- why would they be involved when I buy a non-listed, house that will most likely not appraise, and not pass inspection? Of course- they are not involved!
Now- when it comes time to selling the house -being licensed, I know better. I will use FMLS and get as much exposure as possible, and gladly pay the flat fee - and 3% commission to the selling office using the services of a traditional brokerage. When I lease option an off market house that I bought and upgraded- there is no fee for the buy, no fee for the lease option ( I use my own paperwork- not GREC - which does not protect any landlord at all) - so completely off market. Same thing when I owner finance - I am transferring ownership to someone not using FMLS at all, no banks, etc - but I still have the underlying mortgage ( a wrap transaction) - not a straight sell as mentioned above. Yes- I use an attorney - but anyone can use an attorney to close- FSBO, investor, etc.
To answer your question about should you pay a flat fee or use the GREC forms - the flat fee is not supposed to be for services not used. I assume you pay a monthly fee anyway? The Realtor forms you get through GREC - you paid for with your annual Realtor membership ( assuming you area Realtor). You have a right to use it if you want. I am NOT a "Realtor" on purpose, and do not use their forms, although I am thinking of paying to use the forms only, since I like them better than the free forms on FMLS.
There really isn't any downside to being licensed, that I am even aware of, and in no way is there any situation where a FSBO or any motivated seller will refuse to sell you a home due to you having a license - unless they really dislike agents and don't care if they "shoot themselves in the foot" -so to speak. Besides, a few disclosures - are a lot faster than calling an investor agent, and getting them to stop everything and look up information you need! I would rather be in charge of looking up the comps, tax data etc - than someone that only gets a commission if I buy or sell through them. My money is at risk- so I want to be in charge of the research data.
If your broker still expects a commission for an off market investment - I would seriously look elsewhere. Otherwise - good luck with your upcoming purchase!