Do You Self-Represent in Real Estate Transactions?

[Lorraine Hadden]

QUESTION for the BP community - do you represent yourself on deals where you are buying in the state where you hold your license? If not, WHY NOT?

Recently I had a conversation with a friend and real estate agent who wanted to purchase a home.

At the time, they were looking for an agent to represent their family on the transaction. I suggested that the agent represent themselves --- that suggestion started a lively discussion on the subject of self-representation on real estate deals.

Do you self-represent on real estate deals where you are the buyer/seller? If not and you are licensed in the state where the property is located - Why not self-represent?!?!?!

[Stuart Udis]

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.