Can A Real Estate Agent Represent A Family Member?
Every client is important no matter how big or small is a business. But selling real estate is somewhat different than selling doughnuts or hot dogs. Houses are most likely the most expensive asset that a person will ever buy or sell, so it’s crucial that the process goes smoothe and by the book for everyone. Given the fact that the average Realtor® generates around 12 transactions a year, according to the National Association of Realtors®, who wouldn’t want one extra transaction from a family member?
Well, everything looks good in the beginning, but things could get out of control, communication might not be the best and either the buyer or the seller could feel treated unjustly. Agents can represent a family member but they must disclose it upfront before an offer is placed. For Realtors®, this aspect is clearly specified in the Codes of Ethics. However, there are two things that any real estate agent should consider before accepting to represent a relative.
First of all, is the lack of trust. Your client, although a family member, might not trust you completely or might think that you’ve done too little to get them the highest price for their property. If you don’t have too much experience in the real estate business, your family member could replace you at some point for not having brought the results anticipated. This move might hurt your feelings and could even destroy your relationship.
Secondly, your biased opinion could cause problems. For example, buyers might feel that they’re not getting the best price or might think that you’ve inflated the price so that your relatives get more money. You may feel good about representing a family member, but he/she might feel that you’re too intrusive, as they’ll have to disclose the reason for selling the house (it could be due to foreclosure, due to divorce or other reasons), the defects of the house, their annual income, their credit score, the type of mortgage they want to apply for in order to buy a new home. Not everybody feels comfortable sharing these details with someone they know.
All in all, real estate agents can represent a family member, but they should be aware of the risks and weigh in the pros and cons. Sometimes it is better to let another colleague handle their transaction.
Popular Real Estate Questions
Popular Real Estate Glossary Terms
A Building code – also referred to as building control or building regulations – is a set of rules by which a construction project needs to abide. Building codes are ...
Tenancy that may be terminated by one party- the tenant or the landlord- at any time. The agreement may be in writing or oral. For example, Jack has an oral agreement to use Christine's ...
A strong piece of lumber at least two-by-four. It is used for studs and beams to hold a building or structure up. The structure is in effect, attached to, or built onto the structural ...
Selling lots of land for such reasons as building structure on them including homes, office buildings, and shopping centers. ...
Invests in rental property but does not manage that property. ...
The meaning of a guarantee covers a legal and financially-binding agreement signed between three parties involved in real estate or financial transactions. In this document, typically ...
Hollow building block whose dimensions are 8 x 8 x 16. Concrete blocks are widely used in the construction of foundations and outer walls. They provide strength and durability. ...
Fee charged by a public registry for the administrative costs of recording an instrument. For example, a municipal registry charges $30 to record a property mortgage. ...
Arrangement the insured and insurer share on a proportional payment for a loss. ...
Comments for Can A Real Estate Agent Represent A Family Member?
Hi we just signed a contract to buy a home but didn’t put it in writing that my husband and his realtor are brothers. They home owners got a higher offer and are now trying to get us out of contract. They were transparent from the beginning that they were brothers but it just wasn’t in the contract. What can we do to still get the house?
Jan 23, 2024 08:23:01Hello Mari! Thank you for turning to us with this question!
In a real estate transaction, both sides have to be honest. If the seller finds out the buyer and the buyer's agent are related, like brothers, they usually can't just decide not to sell anymore because of that. If the seller knew the buyer and his realtor were brothers and everyone was okay with it from the start, the seller has to stick to the plan.
On the other hand, if the brothers did not tell the truth about being related, this might be a problem. The seller might use this as a reason not to sell. But it can be tricky. If the seller backs out without a good reason, the buyer could take them to court. The seller might have to pay for the trouble caused or even be forced to sell as promised.
If you back out of a contract, you may face legal consequences such as being sued for breach of contract. The seller can also be held responsible for damages, which may include the buyer's costs due to the failed transaction. In some cases, the court may issue a specific performance order requiring the seller to complete the sale according to the original contract.
Still, we recommend you consult a professional real estate attorney for further legal steps!
Feb 02, 2024 04:51:41Can a listing agent sell a short sale to her relative
Jul 18, 2021 22:02:26Hey Shirley! Thank you for reaching out to us. Regarding short sales, the only limitations imposed on these types of transactions due to the potential of fraud are between seller and buyer. The seller and buyer should not be related as they could be colluding in order to lower their expenses and increase their profit. However, in regards to a listing agent, if they are not related to both seller and buyer and are not colluding with one or the other, there are no restrictions imposed against this type of transaction.
Jul 23, 2021 09:02:51My brother is planning on listing our deceased parents home for sale, doesn’t want a commission but the buyers agent is to get 2.5% is this aok?
May 05, 2021 14:43:01Hi Ginger! In most residential real estate deals, the buyer's agent gets a commission equal to 2.5%-3% of the agreed upon price. Hope this answers your question!
May 05, 2021 17:54:10Can my mom be my real estate broker if I want to buy a property?
Mar 16, 2021 21:16:39As we already stated in the FAQ, real estate agents and brokers can represent a family member in a real estate transaction without breaking any law. However, there are situations in which it might not be in your best interest or in the best interest of your family member, who's an agent, to collaborate. Nonetheless, choosing a family member to represent you in a real estate transaction is more of a personal preference rather than a legal matter.
Mar 17, 2021 10:49:46My sis-in-law is a real estate agent and my dad asked her to sell the house only if she promises to split the commission 3 ways so she said she would do that but after house sold she kept the commission. Is there anything we can do to have her split the money that she promised and we can get out commission?
Feb 23, 2021 09:27:46Hey Marilyn! Sorry to hear about your situation. The real estate agent’s commission is outlined in the contract your father signed when he hired your sister-in-law to represent him for the home sale. The price can be negotiated prior to signing the contract, but afterward, there is nothing that can be changed about the agreement. There is no legal issue if all parties respected the contract terms and the agent has received the payment outlined in the contract after the sale. A verbal agreement between the three of you to split the commission is something you as a family would have to figure out, and it has nothing to do with breaking the contract’s terms and conditions. If you want to learn more about how real estate agents get paid, check out our FAQ. We hope you get on good terms with your sister-in-law and come to an agreement.
Feb 26, 2021 10:00:35We are selling our house and the relationship has broken down. She wants to use her brother who is a brand new real estate agent. Is this a conflict?
Feb 11, 2021 16:06:10Hello, Lynda! We are sorry to hear about your situation. It is perfectly legal for real estate agents representing a family member if that is what you were interested in finding out. The problems that might arise in this situation might have to do with the fact that her brother is inexperienced, as you pointed out. Most people might feel morally obligated to choose their relative or friend to represent them in a home transaction if they work as an agent, but that is not always the best way to approach a situation. I hope it all goes well, and we wish you the best of luck!
Feb 15, 2021 10:16:42An agent in NY was told that she automatically becomes a buyer's agent because she represents her daughter who is the buyer.
Dec 29, 2020 15:49:44Hello, Grace!
Every real estate agent representing a buyer becomes a buyer’s agent, even if it’s not a relative. If you are not sure what is a buyer’s agent, or what kind of duties they carry, check our content to find out more. I hope you find this information useful!
Jan 04, 2021 09:15:30We put a contract to buy a home that had a Short Sale approved. The realtor's family owns the property and it had a reverse mortgage. Is there a conflict of interest for the Realtor ? We gave our earnest money on 6/1/2020 and the realtor's family (brother and sister) are still living in the home. We feel he is purposely slowing the sale down so they can live in the house longer since it is a reverse mortgage that the parents had. The last parent died in Jan 2019. It has been close to 90 days and we don't have an approval from HUD or Novad Consulting. Our realtor has done little to move the sale to a close. They are relying on the Seller's Realtor to tell them the truth.
Aug 23, 2020 10:08:32Hey, Dawn!
We are sorry to hear about your situation, but unfortunately in this case we can't say for sure if there is a conflict of interest in the middle. It would be better if you could reach out to a real estate attorney, that would help you figure out the situation.
Sep 10, 2020 07:56:08Real eastate agent rejected full price offer no contingencys to sell to family member. Is that legal
Jul 04, 2020 00:59:43Hey, Brandy! Homeowners can reject an offer if they wish, and to be honest there are a lot of reasons why your offer can get rejected. However, if a homeowner rejects an offer for the wrong reason this could lead to legal action taken against the homeowner. Valid reasons to reject an offer are for example, offers that were not high enough or the homeowner is not sure if the buyer will be able to get a loan. Unlawful reasons to reject an offer are housing discriminations such as an offer being refused for reasons regarding the buyers sex, race, national origin, or familial status. We also have an article that talks about the top five reasons why your home offer was rejected, so you can check that out if you are interested.
Jul 10, 2020 08:15:33Have a question or comment?
We're here to help.