Residential Real Estate Agent · Orange County, CA · Member since 2009 · 289 posts · 95 votes
I have a real estate salesperson license but am not practicing or affiliated with any broker. I am looking to get started in short sales and have a partner who will negotiate the shorts with the lenders. Basically, I will bring the short sales leads and they will do the negotiating. We will flip the house and split the profit. This arrangement is ok but I know that I have to disclose that I have a real estate license to everyone involved. I was just looking to get more information on this.
How exactly do I disclose that I have a license? Does the seller have to sign something or is there a form to fill out?
If I eventually do affiliate myself with a broker and am working with a Realtor to get the leads, can I collect a commission and split the profit from the flip?
Any licensed agents doing this sort of thing? I’m just looking to get some direction on what I can and can’t do.
Like I said I’m not affiliated with a broker so I don’t have someone I can ask. Any help is appreciated!
I'm not an agent or a broker or a lawyer but I'll give my opinion anyways.
If I were you, I would act either as the agent or the investor, not both. You will find you are a conflict of interest representing a distressed seller and knowing that you want your offer to be accepted which in most cases is the lowest offer. If I were an agent, I wouldn't touch that. But, if you act as an investor and disclose you are an agent and buying this property to make a profit then so be it. I'm be willing to bet CA has some pretty strict laws preventing "predatory" agents. Do a forum search, and you see a few discussion on it. Other option is tear up our license, if you can, and just be an investor. :mrgreen:
What is your exit strategy? To buy and hold or do a quick flip? If its a quick flip, would you be representing the A-B Seller or the B-C seller?
Quick flip. As the investors, my partner and I would be B in both transactions. Since most of our leads would be from Realtors, I wouldn't be representing any party.
But then what if we get leads that are not from Realtors? Can I represent the sellers as a listing agent and then collect both a commission and the profit from the flip?
Since you haven't hung your license with a broker as Ralph suggested you probably can't represent as a listing agent. But what you can do if you're not going to use an agent is to put a Loss Mitigation fee in there for yourself, and put in seller's concession on the HUD-1. Since banks are accustomed to paying 5% commission, realistically they don't care if that 5% is going to an agent or non-agent, just make sure when you put in your offer that it's included on the HUD-1 properly -- because if you don't, then it will be a pain for escrow to pay it out the way you planned.
I'm not an agent or a broker or a lawyer but I'll give my opinion anyways.
If I were you, I would act either as the agent or the investor, not both. You will find you are a conflict of interest representing a distressed seller and knowing that you want your offer to be accepted which in most cases is the lowest offer. If I were an agent, I wouldn't touch that. But, if you act as an investor and disclose you are an agent and buying this property to make a profit then so be it. I'm be willing to bet CA has some pretty strict laws preventing "predatory" agents. Do a forum search, and you see a few discussion on it. Other option is tear up our license, if you can, and just be an investor. :mrgreen:
I figured it would be a conflict of interest if I were to be representing the seller and collecting the profits from an eventual resale. So I'll keep my investor hat on!
I also read on another post that most lending companies won't pay any commission if the agent is also the investor. I don't have any experience with that, but it seems to be more profitable to be an investor rather than an agent in short sales.