Real Estate Agent and Investor, How To Avoid Lawsuits?
Copyright (c) 2011 Paul Evans
Several real estate investors are thinking of getting a real estate license to get better access to MLS and FMLS listings Furthermore, these licenses will add more income through purchasing and selling properties for other people. On the other hand, many real estate agents are now engaging in real estate investing to earn additional cash flow and to take advantage of the better deals they get in the field of listing and selling.
Indeed, more people are looking at becoming a real estate agent and investor at the same time. However, their primary concern is how they can invest in real estate without losing their real estate licenses. Apart from that, most real estate agent-investors face a common problem; that being, how do they avoid getting lawsuits?
There are two major issues involved when agents invest in real estate and vice versa. These are the disclosure and the agency. Disclosure refers to the information you reveal to your interested parties whilst agency refers to who you choose to stand for in these transactions. If agents-investors follow the rules in these areas, they would likely to avoid any troubles in the future.
Licensed agents are held more liable in court than non-agents. This means that any irregularities found in any of your transactions between unhappy buyers or sellers are likely to see you facing jail time. This is why it is important to draw the lines of how to act and think as an agent (and not as an investor); whilst also ensuring you know how to act as an investor (and not as an agent).
As an agent, your work is to promote customers to buy, sell or lease houses. On the other hand, as an investor, you buy and sell your own houses. There are also a lot of differences when it comes to your roles and function as an agent and investor.
Whenever you are an agent in any of your transactions, it is important that you disclose to your prospective customers that you are a licensed real estate agent. But, you do make sure that you also tell them that you purchase properties for your own investment. You can put this in your profile portfolio or your ads/flyers. It is important that you disclose to your potential customers that you are a licensee upon your initial contact. Any means of initial contact like phone calls should abide by this pattern.
Some professionals in the field believe that customers do not want to work with investors or agents who work as both. But the truth is they will be more interested in working with you if you tell them the truth at the beginning. As an agent, let them know that you are a licensed real estate agent but explain that you are not interested in listing their property.
Once you know that your client has understood these terms, you need to let them sign an Agency Disclosure form prepared by your state. This will ensure that your customer understands that you are an agent with no plans to put them in the listing. One of the main reasons why agents get sued is because clients misunderstood who they are representing. In every offer and agreement you make, you should let all parties involved sign the agency disclosure. Also, do not let other people make the offers. This can greatly implicate you if the case goes to court.
If you are unsure what to do, just follow and learn the letter of license law. This will not cost you anything in terms of money and deals. Instead, it will save you a lot of the money and stress you would experience being involved in a lawsuit.
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