I can’t tell you how many times I’ve heard investors say they have not become licensed agents because of the “conflict of interest.” As an investor who is a licensed agent, I have never one time felt as if my license jeopardized a FSBO purchase, or that I was crossing any ethical lines. Sellers who don’t want to “deal with Agents”, are avoiding the process, not the person. Those of us who are licensed have to disclose that fact to our Buyers and Sellers. I explain that as a licensed agent in the state of VA, I am held to a higher standard than a non-licensed investor. This means that if I do anything illegal or unscrupulous, there is a regulatory board the seller can go to for restitution in addition to the regular court of law. I think it is this “higher standard” that scares most investors from getting licensed. The reality is that, licensed or not, most of the disclosures and laws agents must follow are required to be followed to anyone selling a home, regardless of whether or not they are licensed. Below are some of the common mistakes I’ve seen non-licensed investors make.
Using the Copy Written Forms– The forms created by the agent associations are copyrighted and only paid members are authorized to use them. Personally, I only use the standard copy written contract when I’m purchasing through MLS and the listing broker requires it. My own contract is easier for a seller to understand and is customized to provide me maximum protection. If you don’t have your own contract, any local real estate attorney can provide you with one.
Not Providing the Required Disclosures – Each state has a list of items Sellers are required to disclose to a potential Buyer. A few disclosures are federally mandated, such as the Lead Paint Disclosure for any property built prior to 1978 and ASCUZ Military Crash and Noise Zone Disclosure for any properties located within a city that contains a military air base. These disclosures are required of any Seller, whether or not they are represented by a licensed agent, and they actually protect the Seller.
The risk of not providing the required disclosures can be great. For instance, failure to provide a potential Buyer with the Lead Paint Disclosure for a property built prior to 1978 prior to ratifying the contract can allow your buyer to cancel the transaction. If you live in an area that contains a Military Air Installation, most people know that sellers are required to provide the noise and crash zone information about a property. Most don’t know though, that if you accidently classify the noise zone of the property you are selling in a lower zone, and the property is in a noise zone higher than 65, the buyer has one year to seek recourse. And case history shows the courts are likely to rule in favor of the buyer!
As you can see, licensed agent or not, all residential real estate sellers are bound to the Real Estate Code in your state and the federal government, and it actually protects you as a seller to follow the guidelines. Be careful that you become educated about the legal requirements in your state as a real estate seller, regardless of whether or not you ever become a licensed agent.
HomeVestors Franchisee and Agent with CoastalVA Realty, Inc.
Virginia Beach, VA