New Realtor, Investor, and to BP - Need Advice
Residential Real Estate Broker · Grand Junction, CO · Member since 2016 · 2 posts · 0 votes
Hi! I'm a fairly new Broker Associate in Colorado and am getting started in my own Real Estate Investing LLC. Are there any Realtors out there who are also wholesaling who could give me some typical scenarios for deals they have successfully completed. I'm avoiding the Bandit signs and Craig's List ads due to signage and ad laws... Unless acting as an investor under my LLC would negate that problem? Does anyone know? I know I have to give full disclosure to all parties - just trying to stay within the law but still find discount sellers and investor buyers. Thanks!
I was told at a real estate meetup that if you take down the bandit signs you put up that you may be staying inside of the law? Definitely do not quote me on this as it was just something I heard but thought I'd share. Ways I am finding deals right now is through driving for dollars- this gives you a list of potential properties that no ones else has. After I determine what properties interest me I look up the owner on the assessor's website then contact them directly via phone call and if I can't locate the number I will send the owner a postcard/letter.
Other ways are cold calling, door knocking and placing door hangers in the areas you are interested in, its not the most luxurious line of work but it definitely can be a way to find off market deals.
How is the market over in Grand Junction? Are you seeing a spike in prices like we have in Denver metro?
Be VERY careful about wholesaling under your license. You are now held to a higher standard when it comes to real estate. Is your managing broker ok with it? You should get his/her approval.
The best advice I can give is to wear one hat or the other. If you go into a deal as an agent, stay that way and don't switch into investor mode.
Also, make sure an attorney drafts your assignment language in the contract.
@Karin Walker I am an agent and I do some wholesales. Here is my thinking. 1) you must advertise your agency and NO, an LLC is not a shield from that. Disclosure is required by law. In reality motivated sellers don't care. 2) When I wholesale, I keep my fees at or below 6%. I am bringing buyer and seller together so I think that is reasonable. I haven't had to defend myself in court so I don't know how that would stand up. 3) I also buy directly so my advertising, while disclosing that I am an agent, focuses on me purchasing the property. If I turn around and resell it, so be it. In most cases when I wholesale, I double close. If is assign a deal it's because it's so skinny that I don't really even make 3%. With high dollar properties (>$500K) that works ok.
Don't fear your agency, it gives you power and knowledge. If you are advertising on Craig's List and with Bandit Signs (if they are legal locally) then it's not hard to disclose. If people don't want to deal with an agent they won't call except to complain. Complaints is part of the business of finding motivated sellers. In reality, a motivated seller wants to sell and calling an agent is
@Daniel Eisman I'm not sure where (what communities?) you heard if you take bandit signs down they are legal if you take the down. I know that is not the case in Denver and most of the major surrounding communities (Littleton, Centennial, Aurora, Arvada, Wheat Ridge, etc). You can go and read the ordinances online if you question that. I did read them when I was starting out. What you may be confusing is that people avoid being called out by the code enforcement (code enforcement doesn't work weekends) by taking them down at the end of the weekend but that doesn't make them legal.
I have a little different take on this. I've been licensed for 11 years, and selling RE is certainly my full time job. I've shied away from wholesaling or ever purchasing anything that wasn't listed on the MLS. Perhaps I'm being overprotective of the ethical standards as a licensed Realtor, but I think it is unethical to contract for a purchase with an unknowing, unrepresented member of the public to purchase their RE at below market prices, given my superior and specialized RE knowledge. All of my purchases have been through active MLS listings.
I would suggest attending one of the NAR Ethics classes and asking them your question specifically, but I think if a member of the public ever decided retroactively that you had taken advantage of your specialized RE knowledge to take down a property at below market prices without suggesting to that Seller to market it broadly in an attempt to get the best possible price, they would have something to say about it. I'm not an NAR booster by any means, but a large reason for their existence is to make sure the public is not taken advantage of by its members. This would be far too deep into the gray area for me personally, but I would definitely explore it with a managing broker and perhaps even a RE attorney to make sure you have your bases covered if you decide to go this route.
@Karin Walker It appears that the underlying objective here is that you have no deal flow (yet).
So, you priority ought to be lead generation.
I would focus on identifying sellers with obvious motivation (mortgage and fax default) to start. You must make clear whether the seller is your client for which you are advocating for best price and terms, or if you are now playing a role carving out a share of the equity, contractually.
The advantage of focusing on raw lead generation is that you will see lots of opportunities. Don't waste time trying to help clueless buyers find a house, even if qualified. Refer them to others with the time and patience.
Focus on connecting with and talking to as many principals who need to sell as possible. Don't worry about networking or luncheon, etc. Build and work lists. Don't tell them you are new. No one wants to add risk and more jeopardy to their already stressful situation.
If you catch yourself sitting around going nothing, start reading, studying and improving your knowledge.
I started in 1978. Stay hungry and remember it's about attitude and action.
@Bill S.- Thanks for your insight. Like I mentioned it was purely word of mouth that I heard this and they were most likely referring to the fact you pointed out- code enforcement does not enforce on the weekends, which is why you must take down at the end of the weekend.
Thank you everyone! A lot of helpful information! I haven't started yet and am still studying so I will get expert advice from my managing broker...
@Adam Haman the thing that is so hard for folks to understand is that some people are simply not looking for the most money out of their real estate. For an agent to superimpose their thinking that money is most important is doing the sellers a dis-service. For example, when I buy I know I can close the deal. When I list a property and someone else brings a buyer, there is always a question about their willingness and ability to close. If someone's greatest need is to close before the sheriff sale, what is the best option for them? Putting the property on the MLS and hoping the buyers that come can close or taking my for sure offer. If my sellers wanted to list the property, most probably know a half a dozen agents that would be happy to do so. Many, in fact, tell me they want to avoid all the brain damage that agents listing the property bring to a transaction. I am a member of NAR. I have taken the ethics classes. I disclose my status as agent with my "superior and specialized knowledge". I do so many times during the transaction. This is not a black and white issue.
Hi @Bill S., certainly wasn't looking to offend with my post, just to throw a couple considerations out for a newer agent who perhaps isn't ready to navigate a situation I described as "too deep into the gray for me" and you describe as "not a black and white issue." I think we're on the same page on the reality of wholesaling as an agent, just that you choose to do it and I do not. Agree to disagree.
It isn't difficult at all for me, or many folks to understand that some people aren't looking for the most money out of their real estate, but they are admittedly few and far between...unless you target your advertising to them, which I do not, and which you probably do. I imagine you come across many more such people in an average year than I do, and if I truly came across someone looking to get out NOW and not terribly concerned about price after I informed them that with a little time and patience they could probably do better, I'd probably find a way to work it out to purchase from them on these terms as well, likely with the input of my managing broker and perhaps a RE attorney (I hate typing that...I've rarely met an attorney that helps things get done!).
Bill, I have no doubt you go about your business in a very professional way, I've met you and I know that to be the case. My post was not meant to criticize you, just to warn a newbie against some of the pitfalls and difficulties that could arise that may not occur to a newly licensed agent, and indeed have never come into play with me personally over 11 years in the business. With experience comes a broad understanding, finesse, and skill, all of which I'm sure you exercise in these situations. For me, though, being a Realtor is my day job and the only income my family has outside of our RE investments, so I don't like to tread too closely to anything that could remotely threaten my license status...even if my own lack of knowledge is the only threat in this situation.