When a broker sells his or her own home, the Commission recommends, but does not require the broker to disclose that he or she has a real estate license. The Commission recommends this disclosure, because having a license may give the broker an advantage when negotiating with an unlicensed buyer. If a broker chooses to disclose that he or she is licensed, the disclosure can be made orally or by incorporating a statement into the offer to purchase notifying the buyer that the seller has a license.
Every seller of a residential dwelling of four or fewer units must give the prospective buyer a Residential Property Disclosure Statement (“RPDS”). Every seller, including real estate brokers, may answer, “Yes,” “No” or “No Representation” to any or all of the questions on the RPDS. However, real estate brokers are held to a higher standard than unlicensed persons when buying, selling or leasing their own properties. A broker must still disclose all material facts in transactions where the broker is a party to the transaction. A material fact is any information that would affect a reasonable buyer’s decision to purchase. Therefore, if a broker knows or reasonably should know a material fact about a home he or she is selling and chooses to answer “No Respresentation” to all of the questions on the RPDS, then the broker must still disclose the material fact to prospective buyers no later than the point at which a buyer makes an offer. The Commission has the authority to discipline a broker who fails to disclose a material fact when selling his or her own property.
Brokers who sell their own homes have a duty to discover and disclose material facts. The duty to discover means that brokers must exert reasonable effort to learn about any material fact that may affect a reasonable buyer’s decision to purchase and disclose such information to prospective buyers no later than the point at which the buyer makes an offer.
A broker selling his or her own home should not represent or offer to represent a buyer. This would create an obvious conflict of interest and is strongly discouraged. If a buyer desires representation, then the seller/broker should advise the buyer to seek representation from another broker. If the seller/broker has listed his or her own property with his or her own real estate firm and the firm offers designated dual agency, then another broker in the firm may represent the buyer. The best way to avoid a conflict of interest is always to encourage the buyer to seek representation from another firm.
This article came from the Feburary 2013-Vol43-3 edition of the bulletin.