I would agree with you on a special designation for those that are using their license for their own personal business.

Agents, themselves can not represent buyers or sellers, they are agents under a brokerage. An agent can hang their license with a brokerage as inactive. They can also have it listed as inactive with the state.

This allows them to qualify for a referral fee on properties they sell or buy. For example, if an person with a license sells their own home using a listing agent, it is possible they have never represented a buyer or a seller. They have passed their license requirements by the state and keep their license in effect by taking their 24 hrs. of CE every 2 years.

When they sell or buy a home, they are entitled to a 25% referral fee. We are involved in these kinds of transactions all the time.

But, I certainly agree with you, there should be a special designation for a person who falls into this category and those also only representing themselves in real estate transactions.

It would help a great deal to have this level of transparency and provide a better understanding of the many facets of being an “agent”.

Thanks Bruce. Glad you dropped by this morning.

Dave

Thanks again and keep up the good work with your blog. Bruce

Here is what might be a missing part of the puzzle for you. There are some agents, that don’t represent anyone but themselves. The tax laws provide special provisions for real estate agents who buy, sell, rent, and flip properties.

Therefore, some people get their license so they can buy and sell properties without having to pay an commission for their side of the transaction.

And the law requires that they disclose the fact the property is owned and sold by an agent.

This would be like someone getting a CPA so they could do their own taxes. No one would do that, at least I don’t think so, but in RE there is this “class” of agents that only represent themselves. And honestly, that is probably most of what you are seeing.

There are times when an agent is selling their own home and have the same disclosure requirements. In our brokerage no agent selling their own home acts as the listing agent. We are required to get someone to represent us as our “Listing Agent” This is for the very conflict of interest issues as well as disclosure issues.

I hope this provides more information on the “agents buying distressed homes and then flipping them to homebuyers”.

Most of us that are actively representing buyers and sellers don’t have the time or the inclination to get involved in flipping homes.

You have given me a good idea for a post on this topic of those involved in flipping in this current market and economy. Under the new lending and ownership guidelines the old days of slap some paint and drop some carpet are gone.

Taking a distressed property that is a blight on the home values of an entire neighborhood and doing a remodel and getting it sold to a family that will make it their home is a service not only to the new home owners but to every home owner in the neighborhood.

But that is an other post.

Thanks for your input Bruce, it is helpful, well thought out, and contributes greatly to the discussion.

Have a great day.

Dave

What are your thoughts on agents buying distressed homes and then flipping them to homebuyers? Do you think this is ethical? Should it be legal?

I have noticed listings where the home was purchased recently for a reduced price then soon thereafter shows up for sale “by agent” at substantially more. Of course it’s possible that the agent spent a considerable amount rehabing the property but at first appearance I immediately think ‘flip’.

CPAs are subject to 2 types of “independence” in the audit of financials…real independence and apparent independence. A CPA can be really independent but appear to outsiders as conflicted. This is a CPA no-no.

I think it should be the same for realtors if you have any claim on a “profession”.

Just my two cents which is exactly what my opinion is worth.

Thanks again.

Bruce

I hope you feel better The post is a joke. You really think there are agents with money. The point is, those homes don’t exist, yet every day we see buyers wanting them.

If there was that kind of bargain, ever, the seller would already have found someone to buy it.

The really good deals that do come on the market, they aren’t $500,000 for $135,000 either, are bought in a day or two, but not my agents.

There are thousands of people setup on automatic search in the MLS system. As soon as a listing meeting their criteria is entered in the system and email with all the details of the listing go out to them. They get the real first information, and they get it before all the agents in town.

As to the self-serving, unethical, conflict of interest group, honestly, most aren’t in real estate any longer. They were just aa big a pain in the A$$ to those of us ethically in this profession as they were to the public in general.

That said, I’ve never seen anyone forced to buy a house.

Hey, I’m at least glad the post caught your attention. Believe me, none of us ethically representing our clients miss those days of over-priced, over-mortgaged properties. And if you look back at the posts from the past here you will find I was a voice in the wilderness railing against the no-docs, “Fog a spoon get a loan” system of the past.

Hey Bruce,

Have a great day.

Dave

Maybe that’s why, as you point out, agents are not trusted. This self-serving, unethical, conflict-of-interest alone makes your chosen career less than a profession. Instead of representing clients, RE agents are out searching for homes for sale by unemployed, down-on-their-luck homeowners who you previously sold them an over-priced, over-mortgaged McMansion so that you can flip it to new clients.

Sorry for the tirade. Your blog posting just happened to catch my attention this morning.