Can Your Real Estate Agent Buy Your House?

Even in today’s white-hot real estate market, some homes are still hard to sell, leaving home sellers scratching their heads (and searching their wallets). Fortunately, there may be a solution for homeowners and the real estate agents who represent them when your home doesn’t sell quickly: an agent buyback. 

Some real estate agents will offer to purchase their unsold listings. But is that a good idea? Read on to find out under what circumstances agents can purchase their listings.

First Things First: Is It Legal for My Real Estate Agent to Buy My House?

The short answer is that it’s legal for your agent to buy your property, but whether or not it’s okay for them to purchase will depend on their brokerage’s specific rules and the terms of the listing agreement.

Some brokerage firms are focused on moving real estate, even if that means facilitating an in-house buy. Certain brokerage firms are willing to let their real estate agents buy their assigned listings because they view being able to guarantee a sale as a huge benefit to their clients. After all, it’s the exact reason they contracted with that brokerage firm in the first place. 

However, other brokerages feel that realtors purchasing unsold listings can turn into a conflict of interest. Realtors have to adhere to strict guidelines to obtain (and keep) their real estate license, and they’re expected to always act in their client’s best interests. Sometimes, realtors buying unsold property from their clients can muddy those waters. Brokerages who want to avoid even the slightest hint of violating that oath may prohibit their agents from buying their own listings. 

Why Do Realtors Offer to Buy Their Listings?

Now that we know it’s legal to do so, why would your real estate agent attempt to buy your house? There are many answers to that question, but their motives primarily fall within the following categories.

• Buy it to live in: Your house might not be right for some homebuyers, but your agent could love the space and want to live there themselves. 

• Buy to convert into a rental: Some agents will purchase your unsold home in the hopes of converting it into a rental property. Depending on the home’s condition, a real estate agent might intend to rent your home out to people who are looking to lease. 

The Ethics of Dual Agency

Most real estate transactions happen with the help of two different agents—one who represents the seller and one who represents the buyer. Occasionally, you’ll see closings happen with a single real estate agent representing both parties. This practice is called dual agency. 

While dual agency has its advantages, such as streamlining communications and speeding up the transaction, it comes with significant drawbacks. It can present a conflict of interest because it’s difficult for one agent to act in the best interest of both the seller and the buyer, especially when they represent the buying party.

In fact, dual agency is such a tricky issue that it’s illegal in eight states, including Colorado, Texas, and Wyoming. The ethics of dual agency are important to consider when your real estate agent offers to buy your home. 

The Pros and Cons of Selling to Your Real Estate Agent

Like any big decision, deciding to forgo your real estate listing and sell your home to your agent can be complex. There are plenty of factors to consider before deciding if this move is right for you.

Pros of Selling to Your Agent

The biggest selling point of letting your agent snap up your property is that you’ll be free to move on to wherever you’re heading next. This benefit could be a huge relief if you’re on a tight closing schedule with buying another property or already paying the mortgage for your new home. 

Additionally, if you’ve been working with your agent for a while, they likely already know the ins and outs of your property. That means they’ll be able to quicken the pace of your transaction, including any necessary home inspections or home appraisals. 

Cons of Selling to Your Agent

While having a guaranteed sale may sound too good to be true, there are a few cons to allowing your real estate agent to buy your home.

First, your agent likely won’t pay the same price that you’d get if your home went into a bidding war as a typical listing. The ethics of dual agency come into play because the agent has the skills and experience necessary to negotiate the lowest price possible for their purchase. This drawback is especially true if the agent plans to “flip” the property and resell it.

Another major drawback is that the real estate agent may not put their full effort into trying to sell your listing if they have plans to buy it for themselves. If they know up front that you’ll sell it to them if the property doesn’t get another buyer, some people may not market the listing as well as they would other properties.

3 Questions to Ask Your Real Estate Agent Before Selling to Them

Is There Anything We Can Do to Help My Property Sell?

There might be a reason why your home isn’t getting any bites after sitting on the market for a while. Ask your agent if there’s anything they think you could do to your property that might entice buyers to give it a chance. Sometimes it’s as easy as improving your curb appeal or putting a fresh coat of paint on your walls. That way, you can try other selling tactics before considering selling to your agent.

What Are You Going to Do With It?

If you’re debating selling your home back to your agent, but not sure whether it’s in your best interest, try to determine what they plan to do with the property. If they plan to make a few upgrades and relist it, you could consider making that investment yourself. 

While they may not divulge their plans—they may not actually know exactly what the future holds for your old home—it could give you a better idea of their motivations for buying the property.

Can I Relist It Later?

As much as realtors tout location, location, location as the secret to moving real estate, sometimes it’s about the timing of a listing. Ask your realtor about the pros and cons of removing your listing from the market and trying again at another time instead of selling it to them for less profit.