When it comes to wholesaling some pros say dont tell the homeowner you are not buying the house because then you are brokering without a license. Other pros tell the homeowner up front they are not buying the house. Is that or is that not brokering without a license?
I do not think its brokering, since you have the property UNDER CONTRACT. The contract gives you equitable title, and you are just transfering that.
Thats my understanding I may be wrong.
The majority of the time the homeowner won’t care as long as his financial situation has been resolved.
The problem is that everyone tries to interpret the law based on their own understanding. Many said land trusts are safe and shield investors based on the laws, and many got sued and lost. Some say LLCs and Cs protect the investors, and many lost.
The bottom line is how the court will interpret your actions, regardless of the paperwork. Many have had signed contracts and the court voided the contracts because it thought they were one sided, someone was at a disadvantage and so forth.
I am not aware of wholesalers being sued, that does not mean none got sued though. if you are ethical in your practices, and extremely careful with who you get under contract with, you should be fine. If you have negative vibes about the seller, walk away even if the deal is good. Unless you plan on closing of course.
If in doubt, get the darn license and get over it. Not sure why everyone so afraid of getting licensed, this is a business.
well fadi, Im not afraid of getting my license , I want to wholesale properties and sometimes buy and hold. I dont feel like helping retail sellers get rid of their homes. Many people are wholesaling properties without brokers license so why should I pay for one if I dont need one. If it was so clear cut I wouldn’t be in here trying to find answers would I ?
Having a license can benefit you but it can also legally tie you to your states Realtor code of conduct.
As a Realtor you are required to serve the seller in the best way possible. Often times this means you need to help them get the best price for the house they are selling.
When you purchase their house at 60% of its market value it is tough to decipher whether or not you obtained the best price for the seller.
I prefer not to be licensed but to own a fraction of a brokerage. Non-licensed individuals may own a real estate brokerage, thus giving them the benefits of being a broker without the inherent risk. One needs to keep in mind though that all of the risk still falls to their broker should something go wrong.
One specific example where not being licensed has helped me is related to the word MLS. You are not able to trademark names or have domain names with the letters MLS in them if you are a Realtor. They may fine you or revoke your license.
For non-licensed individuals it is free game. There are over 90 trademarked names with the initials MLS such as Major League Soccer (MLS) and hundreds if not thousands of domain names.
A simple ad on Craigslist advertising for a Broker to partner with will bring a lot of responses.
Your ad should look something like this:
Title: INVESTOR SEEKS FULL-TIME BUYER’S BROKER
Ad text:
“Looking for a Realtor (preferably a Broker) to become an active participant in our investment business. Brand new technology allows our company to make over 100 fully executed offers per day to properties listed within the MLS. We are seeking a Realtor to become our full-time buyer’s agent and perform the following tasks:
- Field incoming calls from listing brokers
- Evaluate incoming contracts for deal possibility
- Inspect and take photos of properties worth purchasing
- Actively communicate with Title Co’s and Hard money lenders
You will be paid your full commission on all properties purchased.
Meet with a few of the candidates and see what your gut feeling is about each of them.
As you start to remove yourself from the situation you will be trusting this person with much of your business. There are checks and balances you can build in for added assurances but that is another subject all together.
Working With Real Estate Agents
Repeat after me, “I was hoping you could do that.”
Realtors get paid an awful lot of money when listing a property for sale. Buyer’s agents, in my opinion, get used by their clients and hardly ever close deals. Fact is a lot of Realtors don’t mind doing a lot of work, but hate paying for advertising.
Hope this helps,
Matt Gerchow
[Currently Touring S. America for 4-months]
Each state law is different, but if you are acting as a principle, you are not working for the seller. At least in Texas, the law require we disclose that we are licensed.
Being licensed, or being an investor, you are held at higher regard because you know more than an innocent home owner. Investors have a bad name to begin with.
Always get disclosures signed by the seller. I make them sign my disclosure after they initial every paragraph. I let them know I am an agent and buying the property for the purpose of making profit, I adviced them to talk to an attorney, I adviced them to talk to an accountant, if there is ever a dispute, the house is the only recourse…etc.
There are thousands of investors who are agents and brokers. I know so many of them.
If you are a party on the contract, then you are not brokering anything and therefore do not need a broker’s license. At the time that you sign a contract, you are in fact the Buyer or Purchaser. You can write “and/or assigns” after your name or whatever name you put in the Buyer section of the contract.