Can I Wholesale and be a Real Estate Agent

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Can I Wholesale and be a Real Estate Agent

William Burnson
Dallas, TX · Member since 2019 · 3 posts · 0 votes

I became licensed to practice real estate a few months ago and am with a broker in Texas. Does this affect being able to invest in real estate as far as wholesaling is concerned? Is that off the table now or can I still do that without isssue? 

Thanks

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Russell BrazilBusiness Member
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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
7y

@Matthew Schneider

When you become a licensed real estate professional, every single one of your real estate activities becomes subject to your brokers supervision. Rentals, flips, wholesaling, consulting. All of it. And all of them become subject to the oversite of your states real estate commission or department of licensing.

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    7y

    This is up to the discretion of your broker.

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  • Matthew Schneider
    Real Estate Agent · Atlanta Area · Member since 2019 · 11 posts · 2 votes
    7y

    Disclosure: I'm new to REI.

    I recently saw Brent Daniels give a talk and asked him some advice after his show... He literally told me to DO exactly what you are talking about--work for a broker, but also do investing on my own. 

    If you spend your off hours finding deals, analyzing investments, building a portfolio, investing your hard earned money, does this really involve your broker @Russell Brazil? 

    @William Burnson are you working as an agent for investors or retail cliental? If retail, I really don't even see how there could be any potential for harm... Someone please correct me if I am way off target here! 

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    7y

    @Matthew Schneider

    When you become a licensed real estate professional, every single one of your real estate activities becomes subject to your brokers supervision. Rentals, flips, wholesaling, consulting. All of it. And all of them become subject to the oversite of your states real estate commission or department of licensing.

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  • Matthew Schneider
    Real Estate Agent · Atlanta Area · Member since 2019 · 11 posts · 2 votes
    7y

    @Russell Brazil  That makes sense. I am just caught up on the fact that real estate investors don't need a license, but once you have a license--all deals you do must go through your broker, even personal deals? What if you were acting solely as "an investor," weren't representing anyone but yourself, found a deal, and wanted to invest... I guess you are saying this is no longer a case once you have a license? Is that correct? 

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    7y

    @Matthew Schneider

    Correct. All real estate activities of a licensed person create liability for their broker, and all must be supervised by their broker per brokerage supervision requirements of each states brokerage law.

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  • Elmore Johnson
    Specialist · Atlanata, GA · Member since 2019 · 7 posts · 3 votes
    7y

    This was a very insightful conversation. It has enlightened my path a little more as to what direction I want to take me real estate endeavors! Thanks! 

    0Reply
  • Bryan S.
    Rental Property Investor · CA · Member since 2018 · 225 posts · 180 votes
    7y

    @William Burnson I would check with your brokerage and ask, but I did listen to a podcast yesterday where the guy actively wholesaled properties as an agent. However, he was required to disclose he was an agent to the seller.

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  • John Thedford
    Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    7y

    I can buy and sell om my own but if I wholesale all fees must pass through my broker.

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  • Matthew Schneider
    Real Estate Agent · Atlanta Area · Member since 2019 · 11 posts · 2 votes
    7y

    @Russell Brazil In the midst of studying for my Real Estate License, and I just got to Unit 5 "Licensee Selling his Own Property." You were right on the Bullseye. I'm posting the GA textbook definition for this topic below, in case anyone desires to know the 'legal definition.' Thanks again Russell. 

    --------Straight from RE Express, Unit 5-------

    If a person becomes a licensed real estate salesperson, associate broker or broker, he can no longer “act” as an unlicensed person in dealing with any real estate transactions – even the sale, rental, purchase, or lease of his own property!

    The Code (of Georgia) states that all real estate licensees – whether active or inactive – must disclose on ALL contracts that they are licensed in real estate. This is for the protection of the general public. In a case such as this, the licensee’s real estate knowledge and experience could put the other party at a disadvantage, if that other party was unaware of the licensee’s true status.

    This rule also applies to those licensees who advertise regarding their own property. They must disclose their licensed status.

    Licensee as Principal

    If a (Georgia) licensee wishes to sell or lease his property, he must do one of the following:

    1. List the property with the broker. In this case, any trust deposits made will go into the broker’s account.
    2. List the property with a different broker – after first obtaining his own broker’s permission to do so. In this case, any trust deposits would go into that other broker’s account.
    3. Handle the transaction himself. This will necessitate the licensee opening a personal trust account, which must be registered with the Georgia Real Estate Commission and set up under the supervision of the licensee’s broker.

    Because an active licensee’s broker is considered accountable for all the licensee’s transactions – including personal ones – the broker must be informed in writing and must approve the procedure and any advertising the licensee wishes to do. This is true even with option #2 above, in which the licensee can choose to utilize another firm’s services.

    Whenever a licensee offers to purchase a property as a condition to obtaining a new or extending an existing brokerage engagement, he or she must write a contract expressing all the terms and conditions of the purchase prior to or at the time of entering into or extending the brokerage engagement.

    Whenever a licensee offers to purchase a property in order to enable a party to purchase, sell, lease, or exchange another property, he or she must write a contract expressing all the terms and conditions of the purchase prior to or at the time of the other party’s entering into a contract for the new property.

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  • John Thedford
    Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    7y
    Originally posted by @Matthew Schneider:

    @Russell Brazil In the midst of studying for my Real Estate License, and I just got to Unit 5 "Licensee Selling his Own Property." You were right on the Bullseye. I'm posting the GA textbook definition for this topic below, in case anyone desires to know the 'legal definition.' Thanks again Russell. 

    --------Straight from RE Express, Unit 5-------

    If a person becomes a licensed real estate salesperson, associate broker or broker, he can no longer “act” as an unlicensed person in dealing with any real estate transactions – even the sale, rental, purchase, or lease of his own property!

    The Code (of Georgia) states that all real estate licensees – whether active or inactive – must disclose on ALL contracts that they are licensed in real estate. This is for the protection of the general public. In a case such as this, the licensee’s real estate knowledge and experience could put the other party at a disadvantage, if that other party was unaware of the licensee’s true status.

    This rule also applies to those licensees who advertise regarding their own property. They must disclose their licensed status.

    Licensee as Principal

    If a (Georgia) licensee wishes to sell or lease his property, he must do one of the following:

    1. List the property with the broker. In this case, any trust deposits made will go into the broker’s account.
    2. List the property with a different broker – after first obtaining his own broker’s permission to do so. In this case, any trust deposits would go into that other broker’s account.
    3. Handle the transaction himself. This will necessitate the licensee opening a personal trust account, which must be registered with the Georgia Real Estate Commission and set up under the supervision of the licensee’s broker.

    Because an active licensee’s broker is considered accountable for all the licensee’s transactions – including personal ones – the broker must be informed in writing and must approve the procedure and any advertising the licensee wishes to do. This is true even with option #2 above, in which the licensee can choose to utilize another firm’s services.

    Whenever a licensee offers to purchase a property as a condition to obtaining a new or extending an existing brokerage engagement, he or she must write a contract expressing all the terms and conditions of the purchase prior to or at the time of entering into or extending the brokerage engagement.

    Whenever a licensee offers to purchase a property in order to enable a party to purchase, sell, lease, or exchange another property, he or she must write a contract expressing all the terms and conditions of the purchase prior to or at the time of the other party’s entering into a contract for the new property.

    That is no big deal. All it states is that you must disclose agency status. When I buy, sell, or lease one of my properties all I have to do is disclose that I am an agent. I have found that to be a plus when dealing with people. 

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  • Matthew Schneider
    Real Estate Agent · Atlanta Area · Member since 2019 · 11 posts · 2 votes
    7y

    Yes, but it also states that all your monetary transactions need to either be deposited into your brokers trust fund, another brokers trust fund (with agreement from your broker) or your own trust account (oversaw by your broker). 

    Correct me if I am wrong, but your broker will oversee all of your business. So in essence, you would be required to tell them of your business... because legally they have to overlook all of your transactions... and quite frankly as your broker they're responsible too. 

    *Sorry can't seem to (mention) you... don't know what's up with that... Newbie to these forums! 

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    7y
    Originally posted by @Matthew Schneider:

    Yes, but it also states that all your monetary transactions need to either be deposited into your brokers trust fund, another brokers trust fund (with agreement from your broker) or your own trust account (oversaw by your broker). 

    Correct me if I am wrong, but your broker will oversee all of your business. So in essence, you would be required to tell them of your business... because legally they have to overlook all of your transactions... and quite frankly as your broker they're responsible too. 

    *Sorry can't seem to (mention) you... don't know what's up with that... Newbie to these forums! 

    Yes you are correct, at least in the case of most states. Obviously with 50 states, and a number of territories and the District, not everything is necessarily uniform everywhere, but most states regulations mirror each other on this issue.  It is one of the downsides people often skip over, or dont operate above board without realizing it.

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    1Reply
  • John Thedford
    Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    7y
    Originally posted by @Russell Brazil:
    Originally posted by @Matthew Schneider:

    Yes, but it also states that all your monetary transactions need to either be deposited into your brokers trust fund, another brokers trust fund (with agreement from your broker) or your own trust account (oversaw by your broker). 

    Correct me if I am wrong, but your broker will oversee all of your business. So in essence, you would be required to tell them of your business... because legally they have to overlook all of your transactions... and quite frankly as your broker they're responsible too. 

    *Sorry can't seem to (mention) you... don't know what's up with that... Newbie to these forums! 

    Yes you are correct, at least in the case of most states. Obviously with 50 states, and a number of territories and the District, not everything is necessarily uniform everywhere, but most states regulations mirror each other on this issue.  It is one of the downsides people often skip over, or dont operate above board without realizing it.

     I do my PERSONAL deals without my brokers consent. They know I buy and lease properties. They do NOT oversee any of them. If I get commissions on my purchases they would pass through my broker. I do not wholesale, but if I did those fees must pass through the broker as well. It appears your laws MAY be a bit more stringent as an agent OR maybe I am doing something wrong and will have to ask the jail guards for a computer to keep posting here:)

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  • Matthew Schneider
    Real Estate Agent · Atlanta Area · Member since 2019 · 11 posts · 2 votes
    7y

    Here is another statement I just read @John Thedford : 

    "Every associate broker, salesperson, and community association manager is prohibited from advertising under the licensee's own name to buy any property or offering for sale, rent, or lease any property. All advertising by associate brokers, salespersons, and community association managers must be under the direct supervision and in the name of the broker who holds their licenses."

    0Reply
  • John Thedford
    Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    7y
    Originally posted by @Matthew Schneider:

    Here is another statement I just read @John Thedford : 

    "Every associate broker, salesperson, and community association manager is prohibited from advertising under the licensee's own name to buy any property or offering for sale, rent, or lease any property. All advertising by associate brokers, salespersons, and community association managers must be under the direct supervision and in the name of the broker who holds their licenses."

    Is that in your state? We have pretty much the same rules. I can run ads that state I buy property. I MUST list my name as well as the brokerage name. However, I can represent MYSELF when I buy, sell, or lease my own properties. My broker does not oversee these activities. The only time my broker gets paid is when I am representing others. I can list my own house for sale, I can buy without paying my broker, etc..BUT I cannot wholesale unless my broker approves and the fees MUST run through them. It sounds like your state rules may be a bit more stringent than in FL. Also, of course any listings, etc are under the oversight of my broker.

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  • Matthew Schneider
    Real Estate Agent · Atlanta Area · Member since 2019 · 11 posts · 2 votes
    7y

    @John Thedford Yeah I wonder the state to state differences--I'm sure they vary. In Georgia it seems you are a-ok to do it yourself, but you must inform your broker. The least amount of supervision you could have in GA is (from my understanding) to have your own (supervised) trust fund account that you manage to do all of your personal deals. The only requirement between you and your broker in this scenario is that you provide them with a written reconciliation statement every quarter on your personally managed trust fund.

    BUT to your point, the broker still has oversight, and if they didn't agree to this, you would have to list through them, or through another broker (given your original broker gave you permission to do so). What does this all look like if you were the broker? Seems like there is a marriage between broker and sales agent where one without the other can't do much of anything? 

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  • Jabari Long
    Real Estate Broker · Detroit, MI · Member since 2014 · 384 posts · 149 votes
    7y

    @William Burnson Disclose. Disclose. Disclose. You can still Wholesale just make sure both the seller and your end buyer knows you’re a Transaction Coordinator and not their agent.

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