While cold calling, when do you have to tell a prospect you’re licensed?

Question

If you’re an investor looking for a property and you’re a licensed real estate agent, when do you have to tell the prospect? At the time the contract is signed (if it gets to that point)? When they pick the phone up? Just wondering how agents do it.

I’m guessing agents can get sued easily (Accidentally not taking someone off the list, for example. Or inaccurate information saying the prospect is not on the DNC when they are.)

Jeff Copeland · Answer

This will be defined by your State's licensing laws.

Here in Florida, it's at the "first significant point of negotiations" or something to that effect.

The National Association of REALTORS Code of ethics also requires you to disclose your license when acting as principal.

Account Closed · Answer

@Michael K Gallagher:Ethics are no different as an agent or not being an agent. Everybody is held to the same ethics or the authorities get involved. In a dispute between two equals that are not real estate agents, the court weighs the testimonies equally. However, when one is an agent and the other isn't, the court assumes that the agent had the upper hand and which works against the agent. In some states, it's especially treacherous like, Washington, Oregon, California, New York, Illinois any state that is "tenant oriented" is also out to protect the non professionals. So, understand the risks in your state for being a licensed agent investor. It isn't all rainbows & lollipops when disputes arise. Or, just stay out of disputes. That means walking away from some deals. That's the price to pay.

Account Closed · Answer

@Nathan Brown:I buy Subject To, from distressed sellers, off market. No agents involved.

It takes precious time to take the courses and pass the exam. Time & money I can spend buying houses instead. There is a yearly cost for a license.  I don't need the MLS. There are Realtor, Redfin, Zillow as sources and Propstream and others as well. I'm not driven by ego or thinking I need approval of others or of the state. I can tell funny jokes and not get fired. Some agents have to pay a monthly desk fee whether they are productive or not.

I don't have to get a broker's permission to do an odd transaction. In court, the fact that you have a license makes you more at risk. The seller/buyer can always claim you tricked them and had superior experience and knowledge.

Some real estate agents waste a lot of time in the office yakking to other agents about how tough the market is. I don't need the negative chatter.

Having a license doesn't teach you how to sell or buy. It teaches you how to keep the broker (and you) from getting sued. I don't care about pocket listings, it isn't my "buy box".

If an agent presents me with an outstanding opportunity, I'll pay their fee.

If I was selling a house and you came in and said "I'd like to buy your house and I'm a real estate agent" I'd immediately believe my house is worth more than you are offering. It must be a good deal for you and you aren't being "fair". I'd wonder why you aren't putting it on the MLS to get me the best offer and I'd put my defenses up.

Since I say "I'm not an agent, let's figure out what works for you and save you the 6% which is $18,000 on a $300,000 house, you think I am saving you money, which I am. We become friends instead of adversaries.

And on, and on, and on.

What is it that you are thinking you gain by being an agent as an investor?

Russell Brazil · Answer

Most states laws state something to the effect that your license status must be disclosed at the "first significant contact".

Eliott Elias · Answer

In my contract.

Account Closed · Answer

Isn't that like announcing "HI, we've never met, I tow over parked cars for a living" or "I have a multi level opportunity I'd like to get you involved in"?

Just kidding, if you ARE an agent you Should let everyone know. That's called marketing.

I'm just saying it can work against you in the INVESTOR mode.

Not all agents invest, not all investors are agents. Each should be done appropriately for their personality and goals.

Lydia R. · Answer

Great question. I think most states offer guidance when it comes to when to disclose that you are a licensed agent. Depending on which is the hat you primarily wear (investor or agent) you can convert prospects who want to sell but want a retail price into listings. I have met agents that made an 'If I can't sell it, I'll buy it' option to their prospects and were able to secure deals after listing a property and having no offers after a given amount of time. Obviously this depends on whether or not the seller is willing to be reasonable, but it never hurts to offer them something they aren't being offered by the competition.

Brandon Vukelich · Answer

Yes! I clearly state right off the bat, "I'm an investor but in total transparency, I am also licensed real estate broker."  I would do it even if our state did not require it at any point as well.

Nathan Brown · Answer

Totally understandable line of reasoning. Thanks for your thoughtful response. I was licensed before I discovered investing for myself, so it wasn't much of a choice for me. Now, as a broker, I avoid most of the downsides you've pointed out. More power to you, mate.