So I have officially been a NY licensed real estate salesperson for ~3 weeks now and this next topic I want to talk to you about has already presented itself as “a thing” in my life. As many of you know, I got into real estate as an investor, and becoming a licensed real estate salesperson was the next part of the business I wanted to learn, but that does not mean I was going to stop investing! So anyways, we found a new rental we wanted to buy up in Binghamton, BUT now that I am a licensed real estate agent I MUST disclose that to the seller. Which got me thinking, in what other instances must I disclose that I am a licensed real estate salesperson?
So, as we do, let’s talk Real Estate, let’s talk DON’T HIDE THE TRUTH…
Full disclosure is important no matter what aspect of real estate you might work in but sometimes not providing the full story can actually cost you thousands of dollars, and worse, affect those you work with (I will tell you about that at the end).
IN WHAT SITUATIONS MUST I DISCLOSE THAT I AM A REALTOR?
When you are a realtor, it seems as though it almost always best to just tell everyone you meet about what you do BUT if that is too much for you (it seems like it would be for me), then just remember to tell them anytime you are engaging in a transaction in which you have a personal interest. That means, when you are buying or selling a home that you have any personal financial interest in, you should absolutely notify the other realtor (if there is one) and the buyer or seller. Some suggest that you ALSO disclose if you self manage properties and are showing a vacant unit to potential tenants, which I will absolutely start doing.
SO EXACTLY WHEN IS THE APPROPRIATE TIME TO NOTIFY THE BUYER/SELLER/AGENT?
Some say it is at the first point of contact, others argue it is when it comes time to make an offer, some say just add it as a line in the written contract. I am going to air on the side of caution and say I plan to disclose it at my first point of contact. After that, when it is time to make an offer, I will absolutely put it in writing there as well.
WHY IS THIS IMPORTANT?
Well, first and foremost, because it is more often than not the law in most states. Secondly, if it is not a law in your state, it is monitored by the NAR (National Association of Realtors) Code of Ethics – Article 4. Finally, it is important to do so just so that everyone in the transaction is aware that you do know the industry and are potentially privy to detailed market and property information.
WHAT HAPPENS IF YOU DO NOT DISCLOSE THIS FACT?
It all depends! If you DO NOT disclose, you leave yourself open to the possibility of a fine – I am talking in the $10,000 range AND you leave YOUR BROKERAGE open to the possibility of a shut down. Oh yeah, that’s right, the entire office could be shut down depending on the circumstance – it recently happened to an office in NY. Imagine being responsible for not only your own financial loss but also that of thousands of others. That last part alone scares the crap out of me.
So MORAL OF THE STORY IS, disclose, disclose, disclose. Do NOT be ashamed or forget to mention that you ARE a realtor. You spent the time, money and energy to become a realtor anyways – why hide it?! On the other side of the transaction, if you are a realtor and you are buying or selling one of your own properties – what have you got to hide?! Be prideful the you have the opportunity to buy or sell that property for yourself!
Have any of you ever run into a scenario where an agent that they had personal interest in a property?! Did anything ever come of it?! Am I being too naive about this? Would love to hear your stories!
Feel free to comment on the blog post HEREand let us know what YOU think!
p.s. we are getting more PERSONAL this year and now have a new Instagram handle – check us out at @erin.home.and.realestate
Me! This is based off of my own personal experience