Can An RE Agent Wholesale RE??
I've heard different answers to this question. It is my understanding that it's not a proplem for an agent to assign a contract to purchase to a third party if all parties involved are aware. The reason I ask is because I'm considering taking my licensing test again, but I don't want it to negatively affect my investing business. I want to be able to continue to wholesale properties on my own, under my own business name, on my own time with no affiliation w/ the broker that I would be employed with.
If anyone has any feedback on this, let me know A.S.A.P cause I need to register for the test on Friday.
Take the test. You can't lose. Yes, there are conflicting views on this subject. Mine is that if you do not use the MLS, you do not use a cooperating real estate company, and you do not use/involve your broker in any way,shape, or form-you're good to go.
You must disclose that you are a licensed agent. You must state several times on the various forms that you are not representing the buyer/seller. You are not acting in the capacity as a R.E. agent for anyone. You are acting uniquely as an individual/ prinicipal.
You will need to put your broker on notice and get his consent. The point being that if you act as an individual you have the right to buy/sell for your own account. If you act in any way as an agent then you need to do it under the supervision of your broker. Many agents sell their home/investments as FSBO's while disclose that they are licensees without any problem.
Psst. What's the answer to test question #22????
Outstanding Advice. My gut has always told me that It would only be to my benefit to get my license. So I'll just go and do it.
Psst.. If I knew the answer, I already have the damn lincense (HAHA!)
By the way, what's business like out there in Nevada?? I've always been interested in learning more about that area. I know that Vegas is one of the fastest growing cities in the country. In time I'd like to be able to capitalize on that, and It's always good to have a contact or ten. Send me a private message and we'll talk
Good Post!
I to am thinking about getting my RE license but did not know if there would any conflict of intrest between me selling my own properties.
Thanks for the post and for the advice.
Since you've only heard one side, I'll play devil's advocate here (since it's my position on the subject anyway).
Depending on how you mainly buy your properties, investing as a licensed RE agent could negatively affect you. You will have to disclose that you are an agent anytime that you involved in a RE transaction. Some people view agents negatively and may not trust or want to deal with you simply because you are one.
Another problem here to is that an agent works for the seller in ANY RE transaction unless it is clearly explained to ALL parties involved that the agent is a buyer's agent (and thus, out to get the lowest price). Without this, an agent is supposed to disclose to the seller the agent's professional opinion of FMV of the property. Much harder to get a deal, if you have to say, "Well, the FMV of your home is about $100K, but I'm only willing to give you $70K."
Finally, I hold the view that it will be difficult for someone to try to be good at two professions. You'll likely only concentrate on one, and the other will not work out very well. IF the other happens to be the agent, your broker may not like you hanging around for long.
To sum up, even though these professions are related, they are different. You could be a contractor and a building inspector, but would you want to be the buyer of the home that the contractor built and inspected himself?
Roger
You will have to disclose the fact that you're a licensee. So when you find a deal, you'll say this:"you property worth $100K but i'm willing to pay $70K"
So the next question will be " you're a licensee, so what's the FMV of my home?"
You must say $100K.
So you charge 6% commission...then let's list it...and boom...you just lose the deal...
It is as simple as that and as agent, i lose a lot of deal because of my license...
I am new to this site but i would agree being a realtor ****Must Reach Freshman Investor status before posting URL's*** It may be best to do one or the other when you are a realtor and investor there is alawys a fine line to walk when it comes to agency and disclosure.
I can understand that if someone is in the preforclosure stages and you are directly buying the property you might have a problem. What if it is an REO? I don't see the problem if you are going to be the seller and the listing agent?
Now lets go back to the preforclosures for a minute and lets say that you are talking to owners that thier house goes to auction in 30 days. You now tell them that you know an investor (your partner hint hint) that will buy thier property at a decent price. They now know that you are a RE agent and that all hope is lost for them saving their property on their own.
Something to think about!
Tim[ Edited by timshrff on Date 12/19/2003 ]
Well, the argument rages on and on. When I go out as a Realtor, I don't switch hats and suddenly become an investor. There's an immediate confilict of interest, www.etc.etc. The point being that you can live to seperate and distinct professional lives. Keep them separate and distinct. If there's gray areas, then you're not doing things correctly. A doctor can also be an inverstor. It happens all the time. Realtors can also be investors . It happens all the time- to the more enlightenented ones. The sad truth is that Realtors just work for tips. The money is in the investment arena.
When I find a motivated seller through my own efforts, I tell them up front that I have a real estate license, that IN SPITE OF THAT, i have no interest what- so -ever in listing their property. That I will not list their property under any circumstance. I'm acting uniquely as an investor. I need to make a profiit. Is that O.K. with you???
I've never had a motivated seller tell me that they don't want to deal with me because I'm a licensee. They are in pain. They need help. If I'm their best solution they will do the deal. My paper work and disclosures are excessive. Nobody in the 30 years that I've done this has the slightest doubt whether I'm acting as an investor or in an agency capacity. The has never been a complaint or any type of problem.
I think it is best, as an investor, not to be licensed. If I should "need" ( Heaven forbid) the services of an agent, well, they are a dime a dozen.
C-
I agree, Sammy Vegas.
It would seem to me that if all parties are aware , and the issue is delt with delicatley and appropritely that it wouldn't be a problem. Plus, I want access to M.L.S which is my main motivator to getting a license. In addition to all that, I would think it would give me a leg up on other investors, when selling myself to a seller. Letting them know that they are dealing with a "licensed professional" That is aware of all state laws and guidelines would make them more comfortable. I would think. In other words, "Mr. and Mrs Jones, I'm a licensed Realtor. However our business here has nothing to do with the broker that I'm licensed with. I am also an investor and our business is strictly between you and I ... blah, blah, blah
That being said do you guys think it would be better to hang my license with a Mom and Pop shop, or a bigger firm, like ReMax or Prudential, etc???
Hi Chris,
First off let me just say that I know many agents who are wholesaling deals. You can legally wholesale deals while you have your license. That isn't a problem. Now it is my opinion that the benefits of having your license outweigh the benefits of not having it. Sure you have to disclose that you are an agent and you need to do things above board, but you should do so even if you are not an agent.
As far as having to tell people what there homes are worth when dealing with them, I do it even though I'm not an agent, and if you do it the right way, they don't get upset. I'll tell sellers that I'm going to make a profit and I let them knwo what I think I may sell their home for. They don't mind because I'm honest. If I were trying to get over on them, they would sense that and perhaps not want to deal with me.
In any event, you can wholesale, and if you do it clean, the advantages will outweigh the disadvantages for you.
Quote:
On 2003-12-18 11:47, chris1220 wrote:
I've heard different answers to this question. It is my understanding that it's not a proplem for an agent to assign a contract to purchase to a third party if all parties involved are aware. The reason I ask is because I'm considering taking my licensing test again, but I don't want it to negatively affect my investing business. I want to be able to continue to wholesale properties on my own, under my own business name, on my own time with no affiliation w/ the broker that I would be employed with.
If anyone has any feedback on this, let me know A.S.A.P cause I need to register for the test on Friday.
[addsig]
Wow, a responce from a "guru". This site is great!!! Thanks for your respoce Steve!!!
Hey, since we're such good buddies now, maybe you can gve me a discount on some of your material!!
Seriously, thank you everyone for your advice. It's really helped me make my decision. F.Y.I. I didn't make the appointment today, but I wiil be taking the test at the end of next month.
Still I'd like to know if anyone's had more success with a large firm as opposed to a smaller one. My thinking is that a smaller firm would be more flexible with what it is I'm trying to do. Any Thoughts???
Tell me if this qualify's.
I also have to disclose being a dealer to my would be clientelle. i personally think it is a bennifit to have a licence in any field. My experience is that having a licence gives off the silent message that says; " I am an expert listen to me" and takes people off the defense.
" Mr/ Mrs jones, (your state)state law requires me to tell you that i posess a RE licence. However, i have no other interest in this property other than for my own interests as a personal investment. There are some benifits that come with having a licence, two of wich you ought to find comforting:
1.) I am familiar with the process of buying and selling real estate for this is how i make my living (if you do)
2.) the manditory continuing education in the real estate field i must take to keep my real estate licence active. "
Does anything need to be signed? If so..
"Now, Mr/Mrs jones would you mind acknoledging that i fufilled this requirement by confirming right here......"(pointing to the signature spot while handing them a pen)
Successfull sales people NEVER ask anyone to "sign" anything.
_________________
B.G. & Wheeler D. LLc Inc.
(A division of: Half Vast Enterprises)[ Edited by WheelerDealer on Date 12/19/2003 ]
To the question can an investor be a licensed agent. Yes, just disclose up front, but also check with your broker. Some may not like the idea.
I have been a licensed realtor for 4 years of investing. I have full access to mls to watch for the few really great deals that get posted, I can watch for the initial listings of all REO properties and get the first offer's in, and I can run my own comps with out depending on a realtor who wants me to buy the house from them to give me bad info.
I am licensed with a large national firm - Keller Williams and I would be happy to discuss KW with you, just send an email to ****Must Reach Freshman Investor status before posting URL's***.
But why a national company.
I like the back up a national company gives me. For my low office fee of $45 a month the provide me with errors and ommission insurance on all contracts I run through them. I usually only buy listed properties as a buyer, but sometimes if I have a real tough sell I do list it.
They provide me with a top notch voice mail system for free ($10 to $20 value).
They provide me with a coop service to use if I do list a property.
They provide me with a free interactive web site to list my listed propeties & I can also post my FSBO's here if I disclose they are FSBO's.
They offer me complete training from the realtor & legal standpoint.
They offer me continuing education & beleive it or not, a lot of my free classes at KW mirror the seminars I pay for from the gurus on finding houses.
With a mom and pop or being your own broker, you may not get the above support.
With most traditional brokerages, you pay an upfront monthly fee & then split your commission 50 /50.
Not to oversell KW for an agent, but much of the KW philosophy is based on Rich Dad Poor Dad & they beleive in multiple streams of income.
So if you get your license and hold it at a KW - your office fees are very low & include all the above support. Your commission split is only 36 % to KW & 64% to you and it caps out at $21,000 annually. Since I am not too worried about commission, I don't mind the split.
If you list your own houses, you can list and pay your self a very low commission to cover office fees.
Now here is the bigging with KW if you like residual income. As an investor you will work with a lot of other Realtors. When you introduce new agents to KW and their training, profit sharing, and philosophy, and the new agent (or experienced agent) becomes a KW agent, then you earn profit sharing from their office everytime they sell a house.
After three years you become vested and if you leave KW, your profit sharing continues.
So not only can you use your licensce to find the deals, buy the houses, and make residual rental income, but you can recruit the agents you buy from and earn residual profit sharing.
You can use your web site to market your houses or your buying message, and generate buyer leads that you can then share with your friendly mortgage broker and get a referral fee.
Sorry guys I really feel strongly about KW. Completly different national company that has so many concepts that I have learned at real estate investing seminars. It is also a very investor freindly company that has many agents that are mostly agents for their own investing purposes, and then have there spouse who gets licensed to be a more traditional agent under them to earn profit sharing plus commission, plus they offer ownership in new offices to the agents that are working there & they do make profit for their agent owners.
So yes, get your license. Check out your national brokerages. If you would like to discuss KW a little more, drop me an email and visit my KW web site at ****Must Reach Freshman Investor status before posting URL's***
Kim Tucker
****Must Reach Freshman Investor status before posting URL's***
****Must Reach Freshman Investor status before posting URL's***
****Must Reach Freshman Investor status before posting URL's***
Kimtucker,
It is nice to see an agent so taken with his firm. They seem to treat you well and that is where you belong..
Being a Realtor has advantages. You are obviously more qualified, if you have kept on learning and expanding as most do.
When I hit the door I utilize it as an edge. When I announce that they are entitled to a free consultation and that I am a fully licensed Real Estate Broker, qualified for Mortgage, etc. etc. it is helpful.
Interesting, if you announce that you are an attorney, they seem to draw back and the expression changes. Sometimes they order the daughter and wife from the room. That I do not mind, it is when they grab a cat and run protectively into the next room that I take offense.
Sometime the announcement that I am fully licensed Broker has another effect. There is a general opinion in these parts that only the intensely challenged become www.Realtors.That also can work to your advantage.
Of course my favorite is the Real Estate Investor that knows it all. Feels in view of his one time success removing an elderly lady from her one last asset for postage is a feat to be praised by all.
I represented a nice elderly man who due to long life was no longer capable of running his own affairs. In due time I was appointed Conservator. He decided one day to just sell one of his houses, so out he goes hand letters a sign and sticks it in the ground. Along comes Gerald Singer taking a day off from selling used cars and tries to buy the house. He hands my client a $10 bill and has him sign a Grant Deed to the property and even stranger Notarizes the deed. Here sits a Grant deed placing him in ownership and directly below on the same page, Jurat included his signature as a Notary Public.
Gerald always was a pushy one.
To cut to the instant. I settled with Gerald, for $2,500. I merely informed him that he was taking an advantage, that there was a Conservator appointed and before filing an action against him and his Notary Bond I would take $2,500 and lunch at Perino's no not with him a lady of my choosing. He paid, funny thing he tried it again about three weeks latter. This time the son of his target, became even more upset and wrapped a steel clothes hanger around his neck. I helped get it off and ever since he has this funny little weezy voice. I understand he is trying to get a record contract as a lead singer in some sort of Hip Hop band.
I cannot emphaze enough. All Transactions should be win win.
Pensively Lucius
I work with Remax. My broker supports agents' investment efforts. There are several in my office who do nothing else but work with their investments. Remax typically takes on experienced, proven agents who are use to making the money. In my case, and in the case of several other colleagues, we were brought in green. Well, I'm not all that green. My ex and I bought, renovated and sold properties for a dozen years prior to my getting my license. I've only been licensed a year, and I am so appreciative of the information that I have access to. Anyway, initially us newbies were put on a 70/30 split. For that we get the services of the front desk receptionists and apointment setters, free faxing, black and white photocopying to a generous limit, color copying for a small fee, an office, a phone, use of the fancy conference room, access to skilled agents, weekly informal classes with the broker. Once we get our wings, we will pay a monthly office fee and get to keep 99% of our commissions. The office fee seems steep when no sales are being made, but I did the math, and once an agent is rocking and rolling, the office fee is the best way to go, because that's all you pay, and everything else you get to keep.
It also helps to piggy-back on this national chains successful reputation. In my area, the company is #1.