Saturday, July 19, 2008

Q & A with your Chicago Real Estate Expert

A loyal reader writes and asks:

Brokers, have you ever bought a property (as an investment, to rehab and flip) for yourself from someone who came to list with you or company you work for?  Do you consider yourself to be to an advantage then others, since you get to it first? Is it fair, ethical and legal? If a client comes in to list their property and you want to buy it from them, who interested are you looking out for? Or if you don't buy it for yourself, did you have a preferred buyer who was counting on you to notify them of hot properties?

Here in Illinois, according to my Real Estate Broker Class Instructor at the Real Estate Education Company, it is ILLEGAL to buy your own listing.  A conflict of interest is created that Illinois License Law will not accommodate any resolution of this conflict.

So, Realtors, if you want to buy a piece of property that you go and see on a listing presentation, it is imperative under the law that you decide whether you want to try to purchase this property before taking the listing.  In fact, during the listing presentation process, it is frequently customary for a seller and the prospective agent to discuss the situation that has brought about the sale.  It can be interpreted under Illinois License Law that the use of this information by the agent in negotiating on the home would also be illegal.

Of course, I am always out there looking for prospective properties to purchase.  Lots of agents do this.  But my first source of property information is usually the Multiple Listing Service (MLS) and then popular websites that contain lots of For Sale By Owners (FSBO's.)

It's best to wear only one hat when out conducting business.  When I am on a listing appointment, I am wearing the hat of Marketing Specialist and Real Estate Agent for my company. 

When I am looking at investment properties, I make my phone calls and I introduce myself as a prospective buyer WHO ALSO IS A REAL ESTATE AGENT.  It's best to let people know right away that you are a Realtor when calling on properties that you might be interested in buying.  I have been in court accompanying other close friends who were sued for not disclosing that they were Real Estate Agents at the first point of contact, even though Illinois License Law states that you must list your licensee status on a contract on a piece of property.

And yes, if I go out and list a property that is perfect for one of my clients, I usually call them from the car in front of the house as I leave with the signed listing agreement.  I think that's good service to both the seller and the buyer.