Questions from attorney representing myself as buyer's agent. (commissions, contracts, agreement)

[hendog]

Originally Posted by chaz longue

In my State (VT) there's simply more to it than you've outlined above. A lot more.

I was shocked at how easy the waiver requirements are in Mass for an attorney to become a broker. I looked at other states and it was far more difficult. This from the FAQ at the Mass.Gov website (http://tinyurl.com/2y65t9): (broken link)

"I am an Attorney, How do I become licensed?

"If you are a Massachusetts attorney in good standing, Massachusetts law provides that the Board may issue you a Broker license without examination, experience as a Salesperson or pre-license education. You do, however, have to file an application. To obtain an application you must first be qualified. Therefore, to start the process, submit an original certified record of good standing issued by the Massachusetts Supreme Judicial Court together with a check or money order payable to Comm. of MA in the amount of $45.00 and a cover letter that includes your mailing address and date of birth. After the Board reviews your standing an application will be sent. Attorneys from other jurisdictions must follow the regular course for licensure.


"I am an attorney, must I complete the continuing education requirement?

"Licensed Real Estate Brokers who are Massachusetts attorneys in good standing with the Bar are exempt from the continuing education requirement. This exemption is only for Massachusetts attorneys. Massachusetts Real Estate Brokers who are attorneys in another state or jurisdiction must complete the continuing education."


Thanks for the response!

[TXprincess]

The only caveat I could see you already addressed it. Letting the seller's agent know you are representing yourself and addressing the commission up front.
Have you thought about taking the commission off the sales price? Therefore it is not income. It does not matter to the seller how the money is distributed and might be more beneficial to you. Also here in Texas it would help on your future property taxes.

[momof2dfw]

Originally Posted by TXprincess

The only caveat I could see you already addressed it. Letting the seller's agent know you are representing yourself and addressing the commission up front.
Have you thought about taking the commission off the sales price? Therefore it is not income. It does not matter to the seller how the money is distributed and might be more beneficial to you. Also here in Texas it would help on your future property taxes.

Exactly. That is how most realtors do it when purchasing their own home. They take their portion of the commission OFF the sales price. As you said you then do not have to count it as income. Something that was left off when this lawyer turned real estate broker forgot about. Oh, and that icky self employment tax you will have to claim. Yep, realtors are self employed. You may very well also be self employed as a lawyer if you do not work for a firm and their practices but if not you better hold on cause every bit of money you saved on doing it yourself could cost you more.

Sure am glad I'm not in that state if it is THAT easy for anyone to get a brokers license. YIKES!!! No continuing real estate classes either for them so they have no way of keeping up w/ what changes are done as far as real estate and the laws in their state. Double YIKES!!! Note to self - if EVER buying property in Mass. be sure to ask realtor/broker if they are also an attorney. If they are, RUN!!! I want someone that is required to keep up w/ real estate law, transactions, etc to represent me.

[Twinkle Toes]

It's a brutal forum in here!!!

[DocGSD]

Originally Posted by hendog

I'm an attorney (not a real estate attorney) in Massachusetts and I'm looking to buy a home for myself. Recently, an attorney friend mentioned that he was able to get his broker's license by waiver (ie., paying a fee, getting bonded, joining MLS, etc.). I got the forms and sure enough, it's an easy process.

What I would like to do is to get my broker's license and become my own buyer's agent and get ½ of the commission on the purchase (I realize that I have to report this as income for tax purposes). I've worked with an attorney in the past and I will hire him for this purchase as well but this cost is a drop in the bucket compared to what I will save getting the commission.

Because I have never done this before, my question is have any of you brokers out there represented yourself in a home purchase? Perhaps you could shed light on some of the caveats of this idea. I want to make sure that things are crystal clear with the listing agents to avoid problems down the line with the commission.


Thanks.

I dabble in properties... I dont use a realtor, nor a broker. I just purchased and sold a 6-plex and it was a NIGHTMARE!!! Just to understand, are you wanting the house for yourself or to sell and make money? If you are buying for yourself then you dont need to be or use a broker. I have found some loop holes, PERFECTLY LEGAL loop holes for being the selling agent. Let me know what your plan is and Ill help as best I can. Most states have a % maximum for earnings.

[DocGSD]

Originally Posted by momof2dfw

Double YIKES!!! Note to self - if EVER buying property in Mass. be sure to ask realtor/broker if they are also an attorney. If they are, RUN!!! I want someone that is required to keep up w/ real estate law, transactions, etc to represent me.

OR, You could not ever ever use a realtor, use a lender and Title Company, not pay a worthless realtor 7% to do NOTHING and save yourself some major cash or as the seller, make yourself a much larger "source of income" (that does not need to be reported if re-invested) on the property that you have owned / maintained.
I own several rental properties. I very very very very seldom ever use a realtor. I have never had a problem. The lender will not let you make an investment mistake, because they want the payment on the purchase that they have invested in.

[Apple Annie]

Sorry, but you must know I mean to say: the buyer does not pay the commission.

Probably just my angst at a lawyer losing credibility in my world for trying to take advantage of a seller and/or an agent. Most of us know that lawyers don't care for Realtors because they don't like the commission figures they see on the closing statements. However, 90% of the time, it's the Realtor that sends the clients to you.

That law degree is not a license to put your hands in the pockets of others, or is it.

For 3% or less, you will lose credibility with the public and confirm what a lot of folks think about lawyers. Must be worth it for you.

Originally Posted by hendog

Ummm... was I unclear?

What part of "become my own buyer's agent and get ½ of the commission on the purchase," implies that I thought an agent pays the commission? I know all too well that the seller pays 5% or 6% off their end and I'm looking to get half of that.

2.5% of a $500,000 house is $12,500. Subtract the license, bond, MLS and hired real estate attorney shark (who will supply, review and help negotiate my purchase and sale, go to the closing for me, etc.) and I still make $11,000 (FYI that's 44 billable hours). Even after taxes, I still make out for work that I basically would have done on my own anyway. Also, as a broker, I'll have full access to the MLS, which always seems well guarded by realtors. Quite frankly, my attorney did a heck of a lot more for me on my last 2 home purchases than my buyer's agent who gave me crappy advice. One buyer's agent urged me not to make an offer well below asking price because I would "insult the sellers." I ignored his advice and the sellers accepted my offer.

Can someone give me some practical reasons why this is a bad idea rather than just poo pooing it?

I would really like a broker to explain to me why they would not act on their own behalf for the purchase of their own primary residence.

Thanks!!!!!!!

[hendog]

Originally Posted by Apple Annie

Probably just my angst at a lawyer losing credibility in my world for trying to take advantage of a seller and/or an agent.

Now this is some logic that I simply cannot understand. First, how does this possibly "take advantage" of a seller who will pay the 5% whether part of it goes to a broker or to me?

Second, how does this "take advantage" of the listing agent who would have to pay out the exact same amount to their brother buyer's agent if I hired one as you ardently recommend? Explain again why I am somehow less deserving of this commission than a "buyer's agent" after doing all the work on the buyer's end legally on my own and bearing all the liability?

[sunsprit]

It's an unfortunate reality that you seek logical and rational answers from a group of "professionals" whose biggest task to perform is to justify the value of their services to their clientele.

Much of what a licensed agent does is not "rocket science" and doesn't require a huge amount of technical competency. It's really more about salesmanship and applying the marketing tools of the trade, such as the MLS. The proof of this is that so many people without degrees, agent/broker licenses, or specialized training can and do buy/sell real estate successfully without legal problems and dire adverse consequences.

Your legal training is more than adequate to be able to negotiate a price, properly fill out paperwork, and know where to obtain reasonably priced information and supporting services for the little areas you may not fully know about. But there's no hocus-pocus about a simple real estate transaction. The only mystery is how agents manage to make it sound like they're endowed with special powers to negotiate with people, navigate though the landmines of a deal, and bring the process to a good conclusion.

As you've observed, the likely savings in a deal can represent a good return on your time.

The shrill voices of a few agents on this site is proof to me of how desperate they are to establish some credibility with you about the unique value of their services. It's a pretty unfounded position, especially in light of the candid (rare) admission by many pro agents that they do invest for themselves to an advantage because of their position ... but will counsel you not to do so for various vague reasons.

Go for it. If an average guy like me can successfully invest in residential, farm, ranch, commercial, and resort properties without using realtors any more than minimally needed (and sometimes, not at all) .... so can you.

[Gretchen B]

Well, I'm probably going to really get shot down on this, but . . .
I know alot of real estate agents that get into the business just to do their own personal stuff. I know builders of spec homes that get their license so they can sell their own stuff and market it on the MLS. I really don't see how your situation would be any different. You just have to be sure to disclose the fact that you're a real estate agent to all parties at the very outset.

As far as your expertise with real estate, only you would know your own situation. Obviously, being an attorney, you should have excellent negotiation skills. It takes alot of time to stay abreast of local market trends, but if it's been a hobby of yours to do so then you might be quite knowledgeable about that, too.

I certainly wouldn't discourage you from getting your broker's license. The first transaction or two should tell you whether or not you're coming out ahead on the deals by more than the commission amount. If you close a deal and later find out that you could have actually purchased the property for much less, then maybe you'd be better off hiring a buyer's agent.