Hello, I recently got my real estate license and now that I have it I have a couple of questions about wholesaling. I want to submit offers on properties that are currently listed. I plan on paying commission to the listing agent so that they make more than 3%. I was wondering if in the special provisions section I should add that, “I am a licensed realtor and it is my intent to assign this contract and to make a profit.”
I plan on getting pre-approved for a hard money loan in case I am not able to wholesale the property for one reason or another and I end up having to purchase it but can anyone suggest any other clauses that I should add in order to protect myself?
Yes, you absolutely can wholesale with an re license. You’ll usually need to disclose that you’re an agent on the contract, check with your broker. Also, you’ll want to put “and/or assign” after your name on the contract. Best of luck!
I am a wholesaler and a licensed realtor and have done countless deals, you will want to disclose everything, I typically add “Buyer is a licensed realtor who intends to purchase the property for profit or loss”.
You don’t always need to give away the other side of the commission unless some other realtor sends you a particularily great deal.
I am sure their may be some new realtor law somewhere that could point towards wholesaling being illegal, but who on earth can tell you that just because your a realtor that you can’t sell the contract that you put on a property?
I am guessing that the laws cover putting a home under contract that your clients may have interest in and then trying to sell the same home to them. That could be construed as a violation of ethics.
1st, you’re making offers on listed properties. I’ll assume that these are REOs. In almost all cases, REOs will NOT let you assign contracts.
2nd, it will be the rare deal that is listed on the MLS and is cheap enough to wholesale to another investor (that didn’t see it already).
3rd, as mentioned, if you contract a property, THEN try to sell it to your client, you may have ethic issues.
4th, as an agent, many states have strict requirements concerning FSBOs (best wholesale deals) and licensed agents that will make it very difficult to be effective. If you have to disclose to a seller your professional opinion of value, THEN tell them, “but I’m only going to give you 50% of that” it’s going to be hard to close. If you have to represent the FSBO as a seller’s agent, then it’s going to be hard to act in YOUR best interests.
#1 is true. Many ways around that. #2. Not true at all. I’m doing MLS deals all the time. All I wholesale are REO’s. #3. Simple. Don’t sell to your clients. Many other buyers out there looking to buy. #4. If you disclose everything upfront you won’t have problems on the fsbo side. I know realtors who are buying on the fsbo side and have zero problems.
Don’t make this difficult. Make your offers, be upfront and disclose, buy the house and go make money.
Nate, no problem with disagreeing with me. My wife does it all the time. Heck sometimes I’m even wrong (occassionally). Keeps me humble. :biggrin
#1. Yes, there are many ways around this. But, you need to learn wholesaliing before trying to learn the ways around things.
#2. I’ll contend that it’s more inclined to certain markets and more specifically, to certain people. Don’t know your buying background, Nate, but in a previous post, someone threw up Steve Cook’s name as a REO wholesaler. Let’s be honest, first, very few of us are in Cook’s league. Second, when you’re making offers on 10-100 REOs at a time, you’re going to get better deals than most.
#3. Simple answer. Harder to do. Are you going to tell your clients that they CAN’T buy from you?
#4. Again, Nate, alot of what you can, or can’t, do when dealing with FSBOs depends greatly on your state and their laws/guidelines. Simply saying that you know agents that do that isn’t good enough, my friend. Here, in NC, would be very hard to be an agent trying to buy FSBOs as an investor and NOT break some ethics code/law/etc. Now, getting caught is altogether different but we’re not talking about that either.
Keep in mind, boys and girls. There is nothing wrong with differences of opinion. It’s the best education that newbies can get because they get to see ALL sides of the issues, good and bad.
Michelle, I have a licenced RE agent that works with me, I do all the buying as his hands are tied thank to RE laws, and he sells it works out great. Just find yourself a partner.
As a real estate agent your fiduciary responsibility is to keep the best interest of your clients in mind. With that being said, you could run into some ethical issues if for instance you start trying to find homes that you are sure that your client would want, but you put the home under contract yourself, the try to sell it to them. An example like that would be walking a pretty thin line of an ethic violation.
On the other hand if you have clients who are looking for rental property in general and you happen to put one under contract and then “decide” that you don’t want it, you could wholesale the property to them, but always disclose everything.
There are great deals on the mls it is completely territorial and one persons advice is completely “Their Experience”, so keep that in mind. (I have wholesaled countless properties from the MLS)
Another method of working with FSBO’s would be to do a “show and sell form” stating the price that they would sell for along with a section that the rest can be forwarded onto you as a commission. Personally I hate dealing with FSBO’s because FROM MY EXPERIENCE they don’t list because they want to save money, meaning they don’t want to give me their equity either. This has been my experience the FSBO’s who use the yard sign. On the other hand people who call one of my signs are actually FSBO’s themselves, and I have had great success with them. I guess it depends which type of FSBO your working with