'I Sold My Brother's House': The Perils of Hiring a Real Estate Agent You Know

Things can get awfully messy when you mix business and family, so you can imagine my hesitation when my older brother asked me to sell his house.

At that time, in 2014, I had only been working as a real estate agent for a year. Although I'd helped clients buy homes, my brother's listing would be my first experience selling a house ... and my first crack at a big commission. (Gulp.)

Just about everyone knows a real estate agent or two, so it makes sense that many turn to that friend-of-a-friend or cousin the day they decide to buy or sell a home. Yet here's the reality: This choice is fraught with risks—both to your relationship and to a successful real estate deal. In case you're thinking of hiring a real estate agent in your social circle, here are some of the challenges you can expect, based on my own experiences.

Lesson No. 1: Don't hire an agent you know unless he knows your neighborhood, too

When my brother had purchased a three-bedroom, 3.5-bathroom townhouse near Baltimore in 2010, it was the perfect starter home. But after living there for four years, he was ready to move to a larger place.

Although I grew up in Baltimore, I live and practice real estate mainly in Northern Virginia, so was by no means an expert in his market. And because my brother wanted to list his home as soon as possible, I had to study up, fast. I spent countless hours combing through local housing market data.

It was exhausting—and, looking back, made me wonder whether it would have been easier on everyone for my brother to hire a Baltimore-based agent instead. This specialist would have had months or years to absorb what I'd tried to cram into a few days.

Lesson No. 2: It's tougher to disagree on key points—like price

It’s difficult for sellers to detach emotionally from their home, and their agent if it's a friend or family member. Consider this a double-whammy when it comes to hashing through some critical details, like a home's price.

Since my brother loved this house, he believed it to be worth a lot, prompting him to say with confidence, “I know what the asking price should be."

Unfortunately, what he "knew" was just his hopeful, uninformed opinion ... and much higher than the number I had in mind.

My immediate response was to knock his dream price down to size (perhaps a bit more bluntly than I should have) by saying, “Well, no offense, but I’m the one who works in real estate every day, so I know what I’m talking about."

A tense silence ensued. So, to prove I wasn't just bossing my big brother around for fun, I showed him three comps—short for housing "comparables," or homes that have recently sold in the area. Agents, of course, use comps to arrive at a realistic asking price for new homes they put to market.

Once my brother had the numbers in front of him, he agreed to my listing price of $229,900. It was slightly less than what he paid for the home four years earlier, but the market had changed, and home values had decreased. He was going to have to take a loss if he wanted to sell his property quickly.

It was a hard conversation, but disagreements between agents and their clients are common—and can easily turn into a nasty argument when you already know each other on a personal level.

Lesson No. 3: Your agent may insult your taste in home decor, and more

As if telling my brother his house wasn't as valuable as he'd hoped weren't awkward enough, I also had to tell him the place needed repairs. I recommended replacing the cracked glass door on the back porch, adding new wooden window shades (to replace the cheap plastic blinds), and installing new carpeting throughout the home. Altogether, these repairs would cost about $3,000. My brother balked.

“Can’t we just offer the home buyer a credit at closing?” he asked. His hesitation is common: It can hurt to hear that your place isn't perfect, particularly from someone who's been hanging out there for years and never complained about those plastic blinds before. But selling a home requires you to scrutinize a home as a stranger would, rather than as a friend.

Lesson No. 4: If the house doesn't sell quickly, more awkwardness ensues

Although I aggressively marketed my brother's listing, a month went by without a single offer. Granted, it was winter, when sales are slower, but I nonetheless felt that I was failing my brother, which was far more painful than letting down a client I didn't know well.

I finally told my brother he might consider reducing his price to drive more interest from buyers.

“But I’m already losing money on this house," he said.

“I understand, but we’re not going to find a buyer unless we reduce the price,” I explained.

A week later, with no offers on the house, we made a $10,000 price reduction ... and it paid off. We accepted an offer three days later, then sailed through to closing. But we still had one more hurdle ahead, perhaps the biggest of all.

Lesson No. 5: Even friends and family deserve to get paid

Many people might want to hire a real estate agent they know because they think they'll save money—friends and family discount, right? Yet my brother and I agreed on a fairly standard 5% commission—2.5% to the buyer's agent and 2.5% to me.

Even so, it still felt weird collecting a check from my own flesh and blood. Should I have offered to cut my fee, or do it for free?

The short answer is no. I'd put in a ton of work, and my brother said he was happy to give me the business.

Sometimes work and family can go together after all.