Marketing A House Under Contract - Illegal?
I was just told by a realtor that I could not market a house that I have under contract. I am the buyer. He said it is illegal. He did say that I have the right to assign the contract but I could not market the property for a higher price. He also said that I could have a double closing but again I could not market the property. I am not using an agent , I just put an ad in the paper. He said they(realtor) could take another contract on the house and use as a back up in case our deal falls through. Is there a statue saying that a buyer cannot market a house that he/she has put under contract. Can the realtor take other contracts on the property once you have come out of attorney review and are just waiting for the temp. C.O from the city before you close. Is this realtor full of it or am I missing something?
Thanks for your help,
Kecia
Once you have the P&S signed, you control the property. You can market it if you like. The only thing he can do, is take back up offers, he cannont put other contracts on the house. Thats conflict of interest.
[addsig]
But then if you market the property, but not FSBO since you cannot say you are the owner, wouldn't that mean you are basically brokering the transfer of the property, basically being an unlicensed realtor? I see you have legal interest, but you still are not the owner. You intend to buy the property, but you have not yet bought it. They did mention something in real estate agent class as to times you don't need a license, but nothing was close to this. Granted they could easily leave things out as the class was not that informing. I could see how pehaps nobody would call you on it, except an unhappy realtor. [ Edited by Ruman on Date 01/19/2004 ]
Ruman,
I'm not sure that I understand your question. You certainly should be able to market the property without it being any conflict of anyone's interest, or being illegal. And if you decide not to use a commissioned real estate profesional when you sell, that's also your businesss. When you buy all of the commissions due will be paid. It's not cheating, or stealing from anyone.
I could see where there could be a problem if you were trying to market the house through a real estate agent or broker and you do not yet own the property.
Bottom line. If you can deliver title when you close with your buyer, what's to stop you?
Your realtor friend is full of it, and is eithere misinformed or just shooting off his mouth in stupid "realtorspeak".
You have every right to market and sell whatever rights you own in the RE, be it an option, a signed EM Agreement, whatever.
No license required to sell whatever you own. A license is only required for you to represent a 3d party and get paid for it.
I've marketed and sold a number of properties in which I had only small toe-hold, and encountered no problems whatever. You can bet I had an absolute right to be there, and to buy the RE at set price within set time, just as you should have.
Of course you can't legally claim to own more than you actually do, but I can't remember any buyers querying me on what right I had to be there.
So technically you never sold the property, you sold a contract and brought in a commission. That was the only reason I was thinking you should be licensed.
So technically you never sold the property, you sold a contract and brought in a commission. That was the only reason I was thinking you should be licensed
You're apparently determined that this situation requires a license. So get one if it troubles you so much.
However my analysis is that NO, no license is required of anybody who sells anything he or she owns...again NO license.
Why? Well, basically a RE license is required in order to represent another person, and if you're representing yourself only, NO, repeat NO license is required.
Just like law practice, dentistry, medicine, accounting, etc...if you're just representing yourself, pro se, NO license is required for any of these professions.
And by the way, a commission is a fee, paid by another person for doing something for that person, or representing that person...so there is no commission involved if you merely buy something cheap and sell it higher. A profit, yes, but commission, no.
A signed Purchase Agreement gives you marketable title. You have the full ability to market the property. You do not have equitable title or legal title at this point. These are distictions made mostly under common law in most states.
Quote:
On 2004-01-23 21:39, JohnMerchant wrote:
Well, basically a RE license is required in order to represent another person, and if you're representing yourself only, NO, repeat NO license is required.
John I like your style.
I trust that your contract is solid, has been reviewed by a competent attorney, and that you'll always have it at hand to back you up.
If so, you are just facing a situation any Investor faces from time to time.
Some Realtors really believe that they are the only ones allowed to transact real estate; they have developed good skills at marketing properties but lack a basic understanding of Contract Law.
Your contract proves that you are an Investor; BUYING and SELLING for YOURSELF.
An Agent however, represents a 3RD PARTY, and has THEIR BEST INTEREST at heart; and in order to be able to do so, they are required to be licensed!
So kindly educate this realtor, and ask him to explain to you in what way you are acting as a representative of the Seller, and what specific act of yours is in violation of any Federal or State Statute?
Respectfully request this learned person to show you the specific State Statute stipulating your violation?
Undoubtedly this Legal Scholar/Agent can also point out to you any and all case law pertaining support or exception to that Statute?
You see, you are in the business of buying and selling real estate for your own risk and account.
You are negotiating a price that will maximize YOUR profit. This is in keeping with YOUR best interest. In doing so you are NOT accomplishing any goals of the seller, or acting in his best interest.
Your best interest as an Investor is to buy a property at one price and sell it at a higher price, in order to make the highest profit for YOU in a fair and legal way.
Having given you my point of view, I must point out, that I am not an Attorney, and that this cannot be construed as legal advice in any way. So consult your Attorney.
Some world we live in...when we give a piece of our mind, we have to immediately take it back through a disclaimer...
Hope this helps.
[addsig]
Thank you for all of your comments. I have spoken to the realtor again and he still thinks he is right. I just told him to worry about his business and I'll take care of mine.
Thanks again
Kecia
Excellent comments everyone on the brokering without a license issue that is brought up.
Brilliant stuff! Exactly, put the burden on these professionals to show you HOW it is illegal. Show me the laws! Otherwise, they are blowing smoke to scare you, because they fear it will screw up their commission.
You own that contract, and you can sell it, whether it is an option contract or p and s, and if you sell it for higher, that is PROFIT for you, not a commission.
Great thread, Dave
Quote:
You're apparently determined that this situation requires a license. So get one if it troubles you so much.
You're apparently determined that it is not. It's no different. And I already do.
Quote:However my analysis is that NO, no license is required of anybody who sells anything he or she owns...again NO license.
And thanks to myfrogger it has been made clear that you do NOT OWN THE PROPERTY. Owning is a vague word, but a signed purchase agreement being proof of ownership of a property is laughable. We all know how easily they could fall through. Until you have a deed I would not call you the owner of a property. Marketable title would be the word we are looking for here, which is still not OWNING the property.
Quote:Just like law practice, dentistry, medicine, accounting, etc...if you're just representing yourself, pro se, NO license is required for any of these professions.
That is really nothing like this topic. But if you want to get like that, it would be like you doing accounting for a business because you plan on eventually buying it. Would a license be required there? Yes.
Quote:And by the way, a commission is a fee, paid by another person for doing something for that person, or representing that person...so there is no commission involved if you merely buy something cheap and sell it higher. A profit, yes, but commission, no.
So you are collecting a profit for bringing together a buyer and a seller, sorry. You still have financial gain for brokering a real estate transaction. That is how I was looking at it. And as davehays puts it, you are selling the contract, not the property. If you were marketing the property than you would be selling something in which you do not own. I was unaware of the marketable title that myfrogger spoke of, also of which no one else here seemed to know about, or would have brought up. That point solves this arguement.
And I asked you to prove how it was not brokering just as you asked to prove how it was. Fair question with a bias crowd.
Quote:Your contract proves that you are an Investor; BUYING and SELLING for YOURSELF.
An Agent however, represents a 3RD PARTY, and has THEIR BEST INTEREST at heart; and in order to be able to do so, they are required to be licensed!
I am not quite sure what you are saying here, but an agent representing a buyer or seller would not be them representing a 3rd party... the agent would be the third party.
Quote:So kindly educate this realtor, and ask him to explain to you in what way you are acting as a representative of the Seller, and what specific act of yours is in violation of any Federal or State Statute?
You would not be representing the seller in this situation, you would be representing a buyer. You would be bringing a buyer to the table to purchase the sellers property. The only difference is that you took your "profit" from the buyer instead of the seller, and you kept it hidden from both of them(usually). You never even actually owned the property as the deed would pass directly to the buyer.
Quote:Undoubtedly this Legal Scholar/Agent can also point out to you any and all case law pertaining support or exception to that Statute?
Yes, you said "us realtors"(yes i am one) lack a basic understanding of contract law, which I disagree with. Aside from that, this would hardly be considered "basic understanding of contract law".
Quote:In doing so you are NOT accomplishing any goals of the seller, or acting in his best interest.
I think you have forgotten that representing sellers is only half of a real estate agents job?
I am a Real Estate Broker I have been for many years. Your contract is all that is required. You are a principal in all transactions that is the end go do it.
The Real Estate Broker in the present instant is Baca (Nuts, Crazy) he is of course shooting you a line cause he would like the world to believe that only he can sell Real Estate.
You may quote me just mail me my commission check for .00007 and I will split it with my others. Sorry for the Broker every now and then they do go insane. I think it is because they make so little money and they feel inferior to others who make more. Now you know why I Invest in Real Estate I dislike poverty. Especialy at lunch. Forgive him he knew not what he did.
Sincerely, Lucius
At signing of the sales contract you receive equitable title and equitable title only. That gives you the right to sell the contract. So could you advertise the property itself and not mention the contract?
You would save yourself alot of time and trouble, and possible legal trouble, by simply calling your states Real Estate Commissioner "the real expert on the subject" you spent more time on this topic then it would have taken to make the call. Pay the $25 or so for a copy of the current real estate laws for your state instead of relying on several "opinions" from people located in a different state then yours where the laws may be different. Choose your battles wisely, is it really worth one deal to sit and split hairs with a pesty broker, next time pull out the current law show the broker and go on with business or correct the situation, thank the broker and tell him your in the investing business and have him send you some leads.
I pulled up the law for my state and it basically says you have to be licensed if you're doing nearly anything dealing with real estate for someone else and receiving a fee OR commission.
That is where I get concerned. I read that you should add in that you receive $X amount of dollars as a "finders fee" or something in the contract. To me that means you are working on behalf of the buyer and receiving a fee. It is very arguable in my opinion that it could require a license if you word it that way.
[ Edited by Ruman on Date 01/25/2004 ]
I don't think that qualifies, you are setting the buyer up with a deal in the property that you have an option on. Iti s your option and you are transferring your real interest to the buyer for a fee. No problem.
There are many things that come up to discourage us from doing a deal, if not we create one or two to keep us from being successful.
I would not let this one bother me at all, contact your local RE club and see what members there say.
I know of no state that won't let you dispose of your interest in "real property". This might be different if you were marketing property you don't have an interest in (i.e. acting like a realtor).
You need to get ahold of local investors as they will be the ones to best inform you, forget about the code, what the realtor says, etc. This is like worrying about the Due ON Sale clause that is almost never excercised. The agent is just sour grapes because he isn't listing the pro[perty and you are.
_________________
Winners are not afraid of losing. But losers are. Failure is a part of the process of success.
People who avoid failure also avoid success.
Kiyosaki
[ Edited by Stockpro99 on Date 01/26/2004 ]
As JohnMerchant sad, you have the right to stupidly represent yourself as much as you have the right to smartly do so, but when from one's opinion and motives depends the outcome of someone else's interest, state wants you to have a license so they know who they will hold liable when unhappy client calls.
For as long as you have an equitable interest in the property and contract specific interest, you DO have the right to sell it and market to sell it you'll do.
Your realtor is clearly full of it but do not blaim him, send him back to school so he can learn the diference beetwen commission and equatable interes!
[ Edited by omega1 on Date 01/26/2004 ]
For the sake of Illinois investors, I will post this clarification: in Illinois, you CAN market the property if you have a signed contract. However, the Realtor is somewhat right because what their local MLS probably prohibits is placing a listing where the person signing a listing agreement is NOT an actual owner/titleholder of the property. Since MLS is really a heart and soul of the Realtor environment, the narrow thing in their mind is MLS marketing, and they are forbidden from advertising a property in MLS in the abovementioned case. In addition, a real estate office/company where Realtor works may have a policy prohibiting such activity. The contract holder, however, should be free to market and advertise property themselves via any legal means possible.
Although is it equitable interest if you specifically put in there that you are paid a finders fee? For the purpose of requiring a license, commission is synonymous with fee. I agree that you would be free to sell it. Playing the devils advocate is good in any situation, though.
Quote:
On 2004-01-26 14:35, omega1 wrote:
As JohnMerchant sad, you have the right to stupidly represent yourself as much as you have the right to smartly do so, but when from one's opinion and motives depends the outcome of someone else's interest, state wants you to have a license so they know who they will hold liable when unhappy client calls.
For as long as you have an equitable interest in the property and contract specific interest, you DO have the right to sell it and market to sell it you'll do.
Your realtor is clearly full of it but do not blaim him, send him back to school so he can learn the diference beetwen commission and equatable interes!
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<font size=-1>[ Edited by omega1 on Date 01/26/2004 ]</font>
Ruman,
Get over it!
What part of NO don't you understand?
There's a reason that there are Attorneys, To provide you with a legal opinion. You are obvoiusly not agreeing with the free opinions based on experience that you are getting from this post, so go and pay an attorney for an opinion. If that attorney says that you can do this, you can always go to a different attorney and get a different opinion. Eventually you may find one that will tell you what you want to hear!
- OR -
If you're just not comfortable with marketing a property when you only have a contract on it then DONT! It's a simple concept.
Let it rest!
Jeff
What part of no don't I understand? No to what? And I have not seen any opinions based on experience because no one has been challenged on marketing a contract. I am not the one planning on marketing a property so I would not care enough to pay an attorney. I just find my view very arguable and you do not. Did I say illegal? NO Arguable. But I guess I will let it rest now, because your post was such a contribution.
Chase
Quote:
On 2004-01-26 23:50, jeff12002 wrote:
Ruman,
Get over it!
What part of NO don't you understand?
There's a reason that there are Attorneys, To provide you with a legal opinion. You are obvoiusly not agreeing with the free opinions based on experience that you are getting from this post, so go and pay an attorney for an opinion. If that attorney says that you can do this, you can always go to a different attorney and get a different opinion. Eventually you may find one that will tell you what you want to hear!
- OR -
If you're just not comfortable with marketing a property when you only have a contract on it then DONT! It's a simple concept.
Let it rest!
Jeff
Ruman,
Please accept my most humble apology. I completely misread something somewhere when I flew off the handle..Now I see that you were a contributor to this post, not the initiator of the string.
I was out or line.
Hopefully someone will find a cure for "Periodic Foot In Mouth Disease" without too many side effects, and soon!
I'm Sorry,
Jeff[ Edited by jeff12002 on Date 01/27/2004 ]
Hey, I know this is an old topic, but I am a broker that has been tearing his hair out over this for a week!
In the interests of anyone else that might come along...
I am in Illinois, and for broker/agents, the answer here (per the legal hotline of the state realtor board itself!) is that you CAN list a contract for assignment with the assignor as your client on the MLS as long as you:
1. Have permission to do so from the OWNER that has title. I put it in the purchase contract that the buyer has the right to list at his expense;
2. That you do not misrepresent what you have to sell, i.e., you are selling interest in a contract and not the property itself.
As for the assignor, that he has an interest as a principal and is therefore NOT practicing real estate without a license when he wholesales a property is pretty well established most everywhere in the US.