I am a realtor and also an investor. I wanted to know the correct or ethical way to proceed with a possible short sale. I recently made contact with a homeowner who just recently receive a NOD is willing to talk to me. Can I make an offer to her and then turn around and and list the property (even though I have it under contract) for the contract amount plus my assignment fee and stating in the listing that this is a shortsale subject to third party approval.
I know I can wholesale to another investor but seeing that I am a realtor I thought that I could also utilize the MLS to increase possible buyers.
I spoke with my manager about this and her answers were not very clear. I got the impression that it could be done but that I should make sure I have the permission of the homeowner and that I should possible speak to a real estate attorney.
I notice that there are a lot of listings that are short sales and listed already considerably for less than what is owed and stating that it requires approval which tells me that the bank has not approved it yet.
Any insight would be appreciate because I not want to violate any Real Estate licensing laws.
This depends on which state you are in. I am in California and the law here is that an agent is responsible to his principal and the welfare of the principal is considered higher than the needs of the agent. If you, as a professional, make an offer to your principal (she becomes your principal when you list the property) and the offer you make is not high enough - you can be accused of taking advantage of your principal - you are the professional and should know the value of a property. Some brokerages will not allow a listing agent to make an offer on his own listing to avoid even the appearance of illegal activity.
You might want to review the ethics courses offered by N.A.R. before going any further.
I’m a bit confused as to how you could ask for an assignment fee in an MLS listing since such listings either offer a percentage of a flat fee to the brokerage representing the buyer.
If your broker allows you to buy the property of your principal you should list it first, let it sit on the market for a reasonable time and then make an offer on the property. Your broker is correct is saying that you will need the approval of the principal - in writing. I also agree that you should consult an attorney.
Thanks for your feedback. I guess my question is a little confusing. The home is not listed. I was thinking of making an offer as an investor to the homeowner, I would then wholesale it to another investor. I was just then wondering if I could also list it even though I have it under contract to open up my pool of other potential buyers in addition to investors.
I had a wholesaler also ask me this question because he has quite a few homes under contract that need to be assigned and I was not sure if I could even list it because he does not own the home but he is just merely under contract. in this case he would make his assignment fee and I would make my commission from the bank.
Have another agent in your office list the property and buy it. They can then pay you a 100% referral fee. Then turn around, list it and put it into the MLS. If done correctly you’ll make a nice profit from the initial purchase and resale, not to mention the commissions and referrals.
Re your question about listing places that are under contract from a wholesaler - this would be the same as if I listed your property and your aunt Sally’s property without your consent. Only the owner or trustee can agree to a listing agreement.
If you make an offer as an investor you most likely would have to disclose the fact that you are a licensed agent to the seller.
If you list it for sale you take what the market brings - you get a commission if it sells, you get nothing if it doesn’t sell. I don’t see how you can have it both ways - under a contract and then list it for sale.
Shorsaleruby is on the right track. Have another agent list it so the deal will at least have the appearance of an arms length transaction.
Be careful here though - if you buy it for $50K and sell it for $75K the original owner may have cause for a lawsuit because you were involved in the deal before it was listed. And again, as an agent you are presumed to have more knowledge than the average person.