For all of those who are licensed agents…Does anyone have experience dealing with their Broker when it came to buying and selling personal investment properties?
What roadblocks or hurdles did you have to deal with throughout your investing career.
My Broker doesn’t seem to want me to be creative with any deals. (Just fight to list a property and sell it…or seach to find a qualified buyer and find them a home.)<----what he wants.
Thanks for any help you can give.
Darin
Darin - I got my real estate license early last year. My only objective was to use it to help my investment career. I interviewed a number of brokers. Some of them did not want to employ me because they only wanted the regular agent (not investor). Some of them were fine, but they asked for a bigger split and/or higher insurance due to the risks associated with having an agent/investor. I found one that was really excited about having an agent/investor. He started doing the same and eventually decided to become a broker. He offered to give me tips and help me get started.
So I guess you need to interview other brokers until you find one that doesn’t mind having investors as agents.
The one I found even allowed me to pay a monthly fee instead of split commission, which is better if you do several deals - actually, it is usually better even if you do only 2 or 3 deals per year…
Have a good day and good luck!
You probably do need to find a BIC that’s more inclined at least to understand what you’re doing.
That said, you probably need to clarify what you mean exactly by “creative” deals.
Reason is because as a licensed agent, and as a Realtor, we are legally and ethically handtied to exactly how “creative” we can be.
Raj
Just an update…
(((Roger J)))…by “creative” I mean doing deals that are not strictly MLS/retail buying and selling.LOL
My broker is a little leary of me even buying a property that is not even listed on the MLS. :banghead He even said that he’s “not sure how the RE Commission would look upon this”. He SHOULD BE familiar with how things work because he’s a BROKER!
I realize and am very familiar with the fact that I have to disclose, disclose, disclose at first contact and on all legal documents and I have my own state approved contracts, attorney, LLC, etc, so that I’m not using any of my Company resources. I’m also extremely ethical as to all RE issues because I expect to be held to a higher standard because of my knowledge.
I’ve even spoked to a South Carolina Realtor lawyer and he said there is nothing wrong with buying a property and paying the appropriate agreed upon commissions to my broker if the MLS is involved and not paying any commissions if it’s FSBO (simplified conversation).
It’s just a shame that he can’t understand that I’m going to be paying him more commissions than ever and that I’m going to be a great resource for all the other agents in the office. It may be time to take my license elsewhere especially when i’ve become more aware of RE issues than my own Broker.
Darin,
Just because he’s the BIC doesn’t make him the end-all for knowing everything about RE or the possible issues involved. What it does do, however, is make him responsible for YOU if you DON’T know or do it wrong. Simple response here is that he is either going to let you do it, and he needs to find out, based on what you are going to do, what exactly you can do, or he’s not going to let you do it, period.
Of course, that again depends on exactly WHAT you are going to be trying to do. Doing deals not strictly MLS/retail buying and selling isn’t exactly a wealth of information. If you came to me and said that, I wouldn’t let you proceed either. You need to be specific.
What your attorney has said, or hasn’t, doesn’t really matter UNLESS he is well versed in RE commission rules/regs as well as Realtor code of ethics.
Since you haven’t clarified, I throw out some possibles, depending on your state laws concerning such:
As a Realtor, you cannot do Sub2 deals, period, without risking the loss of your (and your BICs) license.
In some states, an agent MUST represent the seller in a transaction. Makes it kind of hard to be the buyer AND to get the seller the best possible price.
Even if you don’t have to represent seller or able to have seller sign release, you, as a Realtor, must disclose your professional opinion of value of the property. Again, harder to buy when you have to say, “it’s worth $100K, I’ll pay you $50K.”
You cannot list/sell any property from anyone that is NOT the registered owner. In other words, you cannot put a property under contract, then list it on the MLS as yours because you do not yet own it. What you are selling at that point is a contract, not a property.
RE Commissions laws/rules vary by state and state laws concerning RE are changing faster than ever these deals. Make sure that you know them before you jump into “creative” deals as an agent.
Raj
I have an investor friendly broker who holds my license. I can do whatever I want and he doesn’t mind it. It is all about trust and reputation though. Brokers are responsible for the agents actions afterall.
I have two other broker investors who told me they would like to hold my license.
RogerJ … “As a Realtor, you cannot do Sub2 deals, period, without risking the loss of your (and your BICs) license.”
So…your telling me that it is illegal for ANY Realtor to do ANY Subject-to?
…“What your attorney has said, or hasn’t, doesn’t really matter UNLESS he is well versed in RE commission rules/regs as well as Realtor code of ethics.”
The Lawyer I spoke with is the suggested Lawyer directly from the South Carolina Association of Realtors.
I didn’t say illegal. What I said was that unless you want to risk losing your license, as a Realtor, you can’t do sub2 deals.
Why? Because, part of the code of ethics states (paraphrased) that you, as a Realtor, will not knowingly allow or encourage a buyer or seller to break contracts already in place, ie, The DOSC in practically all mortgage notes today. So, if you do these without the written consent of the lender (not a sub2), you are breaking the code of ethics. Moreover, it goes on to state that if you KNOW about an act, then you should report or possibly be in violation of the code of ethics.
Now, whether you get caught or not is an entirely different matter. However, my thoughts are a) it’s only worth risking if you’re doing alot of business and b) more business increases the chances of someone taking notice and offense, c) hence, it’s not worth doing.
Raj
Raj, NAR sells books on subject 2. Owner Financing always existed even with existing financing, HUD1 form contains “subject to” block, closing companies and their lawyers close on subject 2 transactions all the time. Lawyers and title companies have similar if not stricter code of ethics.
There is nothing wrong with sub2 transactions even if you have a license, if you know for a fact that it does violate code of ethics, please provide reference to such material or case law.
DOSC is a right the bank has to accelerate the mortgage. The lender has the CHOICE to call the loan due.
In all cases, you SHOULD disclose and let the seller know and sign on a disclosure explaining the risk.
I understand the DOSC perfectly, fadi. Thanks for the input.
I never said I agreed with what is fact about NAR, just pointing out some possible negatives should a realtor try to do this.
I’m not here to try to prove any point, and the code of ethics and the phone numbers to speak to anyone in NAR are out there for people to call if they choice to do so and find out for themselves. If you don’t believe me, that’s perfectly fine with me. If you want to check it out, okay. If you don’t and want to do it any, that’s okay, too. Chances are, you wouldn’t have a problem anyway.
Why do you think that in all the anti-sub2/lease-option laws that are either already in place in many states or being proposed/tried to be enforce in many more, that most have a Realtor exception to the rule? Simply put, because it’s already in place for Realtors.
Raj
Roger works in the state of NC. The NC attorney general has prosecuted Subject To cases as fraud because the lender was not notified of the transfer and did not consent to the transfer.
If Roger fears that participating in a SubjTo deal in the state of NC puts his license at risk, he probably has good reason to feel that way.
The laws are passed due to investor abuses, wich is honestly sad. I am an agent in Texas, we have new laws that passed regarding sub2 that require lender notification OR title commitment. it is designed to let the buyer know that there is a lien on the property.
Honestly, I buy using owner financing and not straight sub2. This way the seller has a recourse in case I default.
It does vary from state to state, and the laws are being passed due to abuses by investors. I know NC is very strict on sub2.