Buying a realestate agency?

[Sunstone]

Dear guys,

Wondered if any of you have or have considered buying a realestate agency?

If you looked at purchasing one in your preferred area:

Would this be a way of getting preferential access to properties?
Or are there perceived to be too many conflict of interests?

What are your thoughts in this area?

Cheers,

Sunstone.

[dook]

Crikey Sunstone ,
I hope this means youre still going to have enough time for us of less knowledge. :confused:

[Sunstone]

Dear Dook,

Don't be concerned mate.

An important part of learning is to never stop asking questions.

"The more you know, the more you know the less you know."
-A good motivation to keep learning.

Cheers,

Sunstone.

[brains]

Sunstone, are you considering going over to the dark side?

I have thought about the same thing, but i think there might licencing requirements, like, doesnt the owner of a real estate business have to licenced? Have formal real estate qualifications?

It might be a state specific thing, wouldnt be hard to find out tho.

Id would be a great idea for a few property investors to partner in a real estate office purchase if its possible.

[Desto]

In Qld one can own and operate a Real Estate agency by doing a 12 week course ( full time) and thereby obtain the required Certificate IV in Real Estate Agency Practice.

As for partnering of investor and real estate agency, I don't know. From my recent experience while hunting for an IP, I became aware that RE agents had plenty of investors sitting in their pockets. Some of whom were RE agents of the office where the property was offered for sale. So there certainly were self interests involved when it came to the sale of potential IP's.

While a RE agent is obliged to obtain the highest price for the seller, there is no reason why they cannot nail the property for themselves at a good price.

In my opinion, if you are into real estate investing, then owning one is certainly a plus.

Desto.

[Nicholas H]

You also got to work out why you want to buy it. Is it a business for revenue stream, to buy a job, to get information? I would personally say if you worked there or had much to do with the running of the business then there would be major ethical issues with buying any properties from there. If you want house hunting, cause you knew the area extremely well then you could use the knowledge that you picked up. If it was so you could take advantage of clients who come to the agency cause they think you’re an expert and you want to get there property off them cheap. Then I think this is a very wrong thing to do.

[PT_Bear]

Originally posted by Nicholas H
You also got to work out why you want to buy it. Is it a business for revenue stream, to buy a job, to get information? I would personally say if you worked there or had much to do with the running of the business then there would be major ethical issues with buying any properties from there.

The real estate profession is very heavily regulated. If you do wish to buy a property from an agency which you own or are employed in, there's a few forms and a process you must go through to make sure the agency is representing its client properly.

Most agents don't bother and tend to buy houses from other agents elsewhere. If they're getting 'mates rates', it's because they've developed the appropriate relationships with those agents.

If you want to get an insight into how agents operate, doing an agents rep course is only about $500 and offers a lot of insight. Be warned - licensed real estate agents do not get a cooling off period.

[ruk]

i was a partner in an agency.

the biggest problem you will have is trying to convince the seller your not trying to rip them off.

as someone mentioned earlier, your better off doing a deal with anothe agent anyway - even if the property is listed with you.

get in good with an agent and you will be the first one they call with a new listing - as the agent can't buy everything and would love to make constant commissions out of you.

[asy]

Originally posted by Nicholas H
I would personally say if you worked there or had much to do with the running of the business then there would be major ethical issues with buying any properties from there.

Funnilly enough, so does the state legislation!

It is illegal in both Victoria and Queensland, (and I should imagine the other states), to purchase any properties which are listed by your agency, without first going through a rigorous process of discolsures, valuations and in Victoria, a submission to the Estate Agent's Board including independent valuation... (In fact it's up to 3 years in prison in QLD)

It is not worth doing for an investment property, it is much easier to buy it from another agent.

If you find a PPOR that you really really love you might consider it...


you want house hunting, cause you knew the area extremely well then you could use the knowledge that you picked up.

Yep, it's called area knowledge, part of due dilligence, fair enough we will know the area better than most non-real estate persons in the area, but that's our job...

That's what the vendors expect. In fact, as a vendor and especially as a purchaser, you should be pleased if the agent invests in the area, at least they have faith in it.


If it was so you could take advantage of clients who come to the agency cause they think you’re an expert and you want to get there property off them cheap. Then I think this is a very wrong thing to do.

I agree. See answer above.

asy :D

[Sunstone]

Dear guys,

Thanks for the all the input.

Certainly can see if you are the principal of the agency that it can be difficult to purchase properties.

But a silent partner investing through a non-visible unit trust. Now that could be a possibility. Really depends on how good the operator and the area is.

No brains not going to the dark-side. However being commercial animals one should never discount business opportunities. I see possibilities in your idea of getting a few property investors together to invest in a realestate agency.

Cheers,

Sunstone.

[july]

Hi
I am currently studying my estate agents rep's course and as PT_Bear mentioned, it certainly does give you alot of insight.
Probably the most important course I have studied, I am learning about property management from a landlords, property managers & tenents perspective.

[Nicholas H]

Originally posted by PT_Bear
Be warned - licensed real estate agents do not get a cooling off period.

If you get a license, but it is being bought through a trust, with a company as a truste, so you your self is never buying it. You still loose your cooling off period? or if it was a partner buying it for the trust, does that make a difference ?

[Ross Sneddon]

Hi Guys

As ASY has stated, it isn't all that easy.

Different States have different laws, but others have thought of these "tricks" before and so has the respective Governments and have legislated laws to prevent fraud or dodgy actions.

In most cases an Agency must have not less than 50% of the owners / directors licenced. Fully licenced not just a sales certificate. This means a group of investors cannot operate if only one of the members is licenced.

Licencing differs from State to State but although a course may be completed in a number of months or weeks, they may also have to have experience. Typically this means full time working and registered under another licenced Agent for two years.

Before a purchase is made FULL disclosure to the vendor must be made, and also to respective controlling authorities.

All sales / purchases must be publicly recorded.

Disclosure of agency qualifications and registration at an auction conducted by another Agency must be declared to the auctioneer in advance of auction and the auctioneer must declare to the audience in advance that a licenced agent may bid

An agent, representing a potential purchaser, may also have to declare his / her positon prior to acting at an auction.

If you attempt to use a Trust, company, partnership or "other" type of intervening structure you could be in breach of the law.

No cooling off period, and often insurances may be required to be in place.

Different laws for each State and the above doesn't cover all States nor does it necessarily apply to your State, BUT, be cautious, as controlling bodies, quite rightly, will look very hard at any deal which in some way benefits or appears to benefit an Agent.

Unfortunately, Property has attracted too many unscrupulous people to the industry. Liers, cheats, con men, and you name them, they are there. As an agent myself, I like to think that there are also responsible, honest trustworthy people in the industry.

Clearly the authorities will continue to tighten up the various laws to protect the majority. I would like to think that this would weed out the bad ones.

Regards

Ross

[Sim]

Originally posted by Nicholas H
If you get a license, but it is being bought through a trust, with a company as a truste, so you your self is never buying it. You still loose your cooling off period? or if it was a partner buying it for the trust, does that make a difference ?

In many states you do not get a cooling off period when buying through a trust structure either.

[Macca]

Do the same restrictions apply if the purchaser was a licensed sales person employed by the agency?

Macca:cool:

[asy]

Originally posted by Macca
Do the same restrictions apply if the purchaser was a licensed sales person employed by the agency?

Macca:cool:

Yes.

In Victoria the legislation specifically prohibits any employees of the agency, and their immediate family (mother, father, brother, sister, son, daughter) from purchasing through the agency unless disclosed as per the relevant legislation.

This means that even your receptionist's brother can't buy through the agency unless it is disclosed.

It is a safety valve specifically to stop people profiting from vendors.

As Ross said, I would hope that there are more honest agents than crooks, but at least the legislation is in place to make the shady ones think twice.

asy :D

[Ross Sneddon]

Hi

I don't want this to appear as though I am wagging a finger etc., but the general tone of the questions to date seems to be;

"If I do this or that and even if it is underhand, will I get away with it, will it allow me to purchase a property at a reduced price"?

If the answer is yes, then it means that your gain is someone else's loss and the someone else would be the vendor. This would be an unfair trade where the vendor and purchaser are not dealing on a level playing field.

If a purchaser, not an agent, perceives that a property is worth more than the vendor is asking and the vendor believes that the asking price is OK then it is alright to go ahead and make a deal. However, most State Governments, if not all would believe that an Agent is better equipped, more knowledgeable and is in a stronger position and Governments therefore legislate to protect the one perceived to be in a weaker negotiating position.

As I mentioned earlier, too many shonky types have entered the industry, mostly without qualifications, and deliberately set out to deceive. Look at the new legislation now in place in QLD and the disclosure requirements in place, specifically to protect the purchasers, the Investors, and this is mainly brought about by the practices employed by many over the past ten years.

Much has been published in the press, on TV and radio. You cannot but feel some compassion for those who have been caught in the malpractices.

Hey, psst, do you wanna a hot deal, make a moxxa, we've got a wood duck here. They are old and don't know values, it's a deceased estate, there's a road going through, they don't understand English, builders going broke and just want's to break even etc., etc., etc..

Do your own due dilligence, be careful and make sure you aren't the bunny in the spotlight.

Regards

Ross

[bryan]

Hello Macca

Yes these rules not only apply to the licencee and his/her family but to the staff and to their families.

Cheers Bryan

[lawsjs]

Asy,
You changed your hair colour!

[asy]

Originally posted by lawsjs
Asy,
You changed your hair colour!


Sure did, JL, you are astute!!

I changed it about 3 weeks ago...

I am trialling it, should go to hairdresser in the next week or so...

Do you like it?

asy :D

[bundy1964]

Here localy you need the BA course with a marketing major as well to be an agent or 3 months to be a representative.

For a buy from a customer there is an indipendant valuation required and the paperwork which in the vendors part hints at agents being the scum of the earth and advises that the vendor should back out of the deal if there are any doubts.

[BUNDY]

I am presently enrolled with REIQ and am in the process of completing my full Real Estate Agent's Licence with a view to opening my own agency in 2003.

I am studying the subjects externally (correspondence) which allows you as much/as little time as you wish to complete the course within 12mths. Total cost of course is $3100.00. People spend much more than this on investment courses and seminars, why not do a few REIQ courses and know the ins and outs of the industry you are investing in?

I am doing the course as I love Real Estate and am an active property investor. As a principal or an agent wishing to buy a property yourself or have a relative buy a property who you are acting for, certain disclosure must be made.

So far, I have found the course to be excellent. My knowledge in relation to RTA and PAMD has increased significantly. I think it is always better to know as much if not more than the average real estate sales person.

If a client wishes to place their property for sale through your agency for a set price and you think that it is a good investment and are willing to pay their price and make the appropriate disclosures, I do not see a problem.

Knowledge and experience are always your best tools!!!


BUNDY;)

[Kevin Hockey]

If you buy a real estate agency you will have more to worry about then where your next IP is coming from. :D

I would suggest however, as an agent we usually only find out about the bargains when everyone else does. It's not often I enter a house to be told by the owner "we want to sell and we don't mind if you sell below a fair price". We are given an offer which we know is low and then the owner says "ok I'll take it". That's a simplistic view to it but generally that's what happens.

In Qld, anybody who is a Principal of a real estate agency must be licenced and if it is a company, all directors must also be fully licenced. A shareholder however does not need to be licenced.

At the end of the day, if you are going to be involved in any business I would suggest it should be for the right reasons.

www.nundahrealestate.com.au (http://nundahrealestate.com.au)