So you are a real estate agent, and there is a house in your listing that you really like. The listing has captured your dream property, either for rental or your own family. Then you find yourself asking the big question, “Can a real estate agent buy or sell their own listing?”
This might present a dilemma, as a real estate agent is required to represent their clients in the best way possible. In this case, you are both the buyer and the listing agent.
A listing agent buying their own listing is not uncommon. In the world of real estate, you will always find agents buying their listings, which does not complicate the principle of representing your client in the best possible way.
But even as you ponder on how to go about buying your own listing, there are things you need to be aware of. Some of the few things you need to remember include the following:
What to remember as you buy your own listing
Check your brokerage's policy
The first thing you should do is check your brokerage’s policy on the issue. If they say no, then you have to explain why you would like to buy the listing and how it will benefit everyone involved. Then make sure to get written permission from your brokerage as some rules may vary from one company to another.
Seek client's approval
Once your brokerage agrees on this, you need to make sure that your clients also agree with it as well as give their approval for you buying or selling the property on their behalf. Of course, there is nothing wrong with showing them around their own property before asking for their permission, making them feel included in the process and comfortable with any decisions they come up with.
Get the best price for your clients
Remember that as the listing agent, you are still working in the best interest of your clients. This means getting them the best possible deal, whether it is buying or selling their dream home.
Reasons why agents choose to handle their own buy-sell transactions
So the quick and simple answer to whether real estate agents can buy or sell their own listing is YES! But this will be subjected to some restrictions mentioned above, among them being seeking permission from clients, negotiating the best price for clients, as well as ensuring that the whole transaction does not go against the policies of the brokerage firm.
What makes a real estate agent choose to buy or sell their own listings? There are many reasons for this, as we shall see below.
1. To get the property under their own name
This is one of the most obvious reasons for buying or selling a listing. An agent may want to buy a listing in order to put it under their own name and then flip it for a quick profit.
2. Control over the process
When agents handle their own buy-sell transactions, they have more control over the entire process and are less likely to be influenced by others. This can be especially beneficial when getting a property sold quickly or when negotiating prices with buyers or sellers.
3. The opportunity to earn more money
By handling their own transactions, agents have the opportunity to earn more money as they pocket more of the commission. So in effect, though they buy or sell their own listings, the same rules still apply when bringing in potential buyers and taking them around.
4. Experience in negotiations
Perhaps one of the reasons why real estate agents choose to handle their own listing is because they are experienced with negotiation skills. So not only do they know how to achieve quick sales but also get house prices that are most beneficial for both parties involved.
5. To expand their real estate business
A good reason for an agent buying or selling a listing is that it could be part of the building process that will eventually see them get more listings and bring in more customers. This means handling your own transactions also serves as a form of advertisement, especially when the word gets out that you are buying listings under your name.
Real Estate Ethics and Dual Agency
One topic that is often debated when it comes to real estate agents buying or selling their own listings is the concept of dual agency.
In a nutshell, dual agency refers to when one agent represents both the buyer and seller in a transaction. Though it is legal in most states, many argue that this creates a conflict of interest and could lead to unethical behavior on the part of the agent.
When it comes to handling your own buy-sell transactions, you should be very careful not to cross any lines when it comes to dual agency.
Remember that even though you may be representing the seller and buyer at the same time, your allegiance should still lie with your clients and not with either party involved in the transaction.
So always keep in mind that any decisions you make should be in the best interest of your clients, even if it means walking away from a potential sale or purchase.
The concept of dual agency in real estate can be addressed by three critical questions:
- Can you get the seller of the property the best price if you are also acting as the buyer’s agent?
- Can you negotiate well for the buyer if you are also acting on behalf of the seller?
- Are you able to pressure the buyer or seller to complete the transaction faster?
The responses to these questions will determine whether your involvement in a dual agency relationship is ethical or not.
When it comes to handling your own transactions, you should be especially careful in how you deal with buyers.
As the dual agent involved in a buy/sell transaction, your primary responsibility is to protect the interests of the client who hired you as their agent.
So when buying or selling listings under your own name, make sure that you are not putting yourself in a situation where you will be forced to represent both parties simultaneously.
If you are buying or selling your own listings, then finding an independent buyer’s agent or seller’s agent should be one of your primary goals.
This way, while you may still benefit from having another real estate agent working on your behalf, there is no conflict of interest involved and can ensure that your clients’ best interests are always taken into account.
Can a real estate agent buy or sell their own listing through another agent?
We have looked at the restrictions surrounding dual agency situations, where agents can buy or sell their own listing.
But what if your brokerage firm’s policy does not allow one to buy or sell their own listing? This is where the concept of buying your own listing through another agent comes in.
If you go through another agent to purchase or sell a listing, you are not technically involved in a dual agency relationship.
You are still representing the buyer and seller, but it is through the other agent acting as the middleman. This can be an advantageous way to get around any restrictions your brokerage may have when it comes to buying or selling listings.
When going this route, the key thing to remember is that you should always be upfront with both clients about who you are representing.
Let them know that you are working with another agent and that they should contact them if they have any questions or concerns about the transaction.
By being transparent with both parties, you can avoid any potential conflicts down the road.
How to protect your client when buying their listing
Now that you have learned how to get around the brokerage policy about buying or selling your own listing, it is time to learn how to protect your clients when going through with the purchase.
Disclose everything to your client
When you are buying the listing, make sure that you disclose everything to your client. As mentioned in the previous section about dual agency, your allegiance is always with them and not with yourself or the other party involved in the transaction.
Being transparent with your client is the best way to ensure that they are comfortable with the process and are aware of what is going on.
Let them know who you represent, what your role in the transaction is, and any other pertinent information that they need to know.
Get a written agreement
To protect yourself and your clients further, it is always a good idea to get a written agreement from both parties involved in the transaction. This will outline the expectations of everyone involved, as well as what will happen if the deal falls through.
By having a written agreement in place, you can alleviate any concerns that either party may have and help to ensure that the deal goes through as smoothly as possible.
Don't skip any step in the process
Remember, when buying or selling your own listing through another agent, you should not skip any step in the process. Even though you may technically represent both parties at once, it is still important for everyone to know what is going on to protect everyone’s best interests.
Be earnest about trying to sell their property or buy a new one
Nothing is more disappointing than having an agent who isn’t doing all they can to help sell your property or get you a new one. By being earnest about selling their property or buying a new one, agents can show how serious they are about helping their clients meet their goals.
Be willing to let the property go
If a property is not going to sell or be bought, it may be for the best to let it go. In order to help your client get the best deal out of their property, you need to be willing to let it go when the right buyer comes along.
In most cases, letting a listing go is difficult for anyone who has been working on selling or buying a property for an extended period of time. However, doing so can ultimately lead to bigger and better opportunities down the road in either case.
Talk to your broker early enough
If you are thinking of buying or selling your own listing, it is important to talk to your broker early on in the process. This will allow them enough time to review the situation and see if there are any restrictions in place that may prevent you from doing so.
Your broker can also give you some tips on how to best protect your clients when going through with this type of transaction. By talking to your broker early on, you can avoid any potential problems down the road.
Frequently Asked Questions
There may be some brokerage fees associated with buying your own listing, depending on the situation and the brokerages involved. It is always best to talk to your broker to get more information.
Brokerage fees are one of many expenses associated with real estate transactions. They cover all of the administrative costs of buying or selling a property. These include things like credit checks, taxes, and more.
Yes, you can represent both the buyer and seller in a transaction as long as you disclose your dual agency to them. Remember, your allegiance is always with the client and not with yourself or the other party involved in the deal.
If the property doesn’t sell, then you may need to let it go. To help your client get the best deal out of their property, you need to be willing to let it go when the right buyer comes along.
Final Thoughts
While buying or selling your own listing can be a daunting task, remember that you can protect your clients’ best interests by following the proper steps. By being honest and upfront with everyone involved in the transaction, you can help ensure a smooth and successful deal.
