Working as an in-house agent for a wholesale company

New York, New York
Real Estate Agent
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Working as an in-house agent for a wholesale company

John Brandt
Member since 2022 · 4 posts · 1 vote

So I have a marketing background and I'm a licensed agent. I have an opportunity to work for a wholesale company as a salaried worker and "in-house" agent. My duties are to market their properties on facebook and email and to take photos of the property. That's what my salaried position is. But if the wholesaler wants to list the properties on the MLS I would be doing a listing agreement with commissions to my broker and the buyers broker as if they were any other client. The bonus is their acquisitions team sometimes gets people on the phone who are not interested in wholesaling but rather list with an agent. Then they pass the lead to me. This gives me potential listings that I wouldn't have received otherwise.

The reason I am contemplating this position is because it combines two of my favorite things. Marketing and real estate. I can get paid a straight salary for marketing, yet have some great possibilities for new listings whether they are from the wholesaler or a lead they just give me. BUT……….

1. Is this a slippery slope?

2. If the wholesaler doesn't want to market the property on the MLS but they give me a bonus for getting a buyer from their own buyers list due to my marketing efforts is this illegal?

3. What potential scenarios do you see that could end up being an issue? 

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Jonathan GreeneBusiness Member
Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
4y

You can't list wholesale properties on the MLS without a novation agreement and many states and local MLS will not allow it as there is no ownership interest. Your broker will not let you work for a wholesale company since most of the deals you will assist with will not result in commissions to the brokerage. They want you because they can't market properties to the public without a license because that is the unlicensed practice of real estate. They are trying to be able to send them out, but you sending out properties, as a licensed agent, when they are not listed with your brokerage, will not work.

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  • Jonathan GreeneBusiness Member
    Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
    4y

    You can't list wholesale properties on the MLS without a novation agreement and many states and local MLS will not allow it as there is no ownership interest. Your broker will not let you work for a wholesale company since most of the deals you will assist with will not result in commissions to the brokerage. They want you because they can't market properties to the public without a license because that is the unlicensed practice of real estate. They are trying to be able to send them out, but you sending out properties, as a licensed agent, when they are not listed with your brokerage, will not work.

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  • John Brandt
    OP
    Member since 2022 · 4 posts · 1 vote
    4y
    @Jonathan Greene:

    Actually my broker is allowing me to work for them but your response is very interesting. If the contract between the wholesaler and the seller says the wholesaler has a right to market on the MLS then how would I not be allowed to have a listing agreement between me and the wholesaler? The only time I would personally be paid a commission is when it's paid to my broker through the listing agreement. Aside from that, my pay from the wholesaler involves nothing more than my duties as marketing.

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  • Jonathan GreeneBusiness Member
    Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
    4y

    @John Brandt you are describing a novation agreement so if your state allows it, you can do it, but it has to be noted on the MLS. Local boards and MLS do not want listed properties of homes where the seller is not the direct client of the brokerage. It's riddled with issues on the payout. All of the wholesale deals are not going to go through the MLS so if you market any that are not on the MLS there will be an issue at some point. The point is that this is way murkier than it seems. Something bad will happen within 3 months.

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  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    4y

    John if your broker is allowing you to work with the wholesale company then the principal broker might not care much about being licensed.

    You get some investor types (small outfits) that get licensed and then will go after non-vanilla type business and transactions.

    Each brokerage has a BRAND they need to protect. Letting agents go after subsets of different focus in the name of taking listings and possibly making more sales comes with a ton of liability. The juice often is not worth the squeeze. The wholesalers often go after lower priced properties they want to get for cheap. These properties even if seller does not want to take their offer but wants to list the properties often have tons of issues but sellers want top dollar.

    Just seems you might do better working on more upscale type homes on a team. A wholesale company is likely going to run you ragged doing tons of work to occasionally throw you a bone to keep you around. Wholesale companies are often taught to find newer to mid level agents who are desperate for business and will agree to almost anything to get going.  

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  • John Brandt
    OP
    Member since 2022 · 4 posts · 1 vote
    4y

    Damn. I’d really like to make this work. I am a completely ethical person and was really looking at this opportunity to make money in marketing while increasing my real estate clients through real listing leads and wholesale listings. I’m not sure if this makes it any better but here is a clause in the wholesalers agreement. Below is a clause in their purchase contract with the seller. Does this make it more acceptable for me to list properties with the wholesaler signing the listing agreement?

    23. NO BROKER OR AGENTS: Both the Buyer and the Seller hereby represent and warrant to the other that they have not dealt with any real estate broker or real estate salesperson in connection with the transaction which is contemplated hereunder. Each party hereby agrees that they will indemnify, save harmless and defend the other party for a brokerage commission, finder's fee or other similar fee which may be advanced in connection with the transaction contemplated hereunder. However, if the buyer decides to pursue an end-buyer to assign this contract to, as in Section 21 of this agreement, then the buyer has the right to enlist the services of a licensed agent to assist in marketing the property on the MLS. Any commissions agreed upon between the licensed agent and the buyer will be paid out of the buyers proceeds. The listing agreement will be bound between the buyer and the licensed agent and the seller agrees to hold the licensed agent and their brokerage harmless if this agreement is terminated.

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  • Bruce Lynn
    Real Estate Broker · Coppell, TX · Member since 2011 · 5k+ posts · 4k+ votes
    4y

    Some parts of this you may want to do, some you probably don't want to do.

    I would think most MLS want you to sign a listing agreement with the owner of the property, not a 3rd party wholesaler. There are a ton of reasons for this. One issue is your Paragraph 23....to me up front you are saying you are going to break your agreement with the original owner if you list it in MLS.

    I'm not in the wholesale business, but how many of these bust?   What happens when you offer 3% broker coop, everything is fine until the seller's family finds out you've sold it for double what you are paying the original seller, so they refuse to close.  You might well be obligated to pay the cooperating broker their cut, even though the seller or your 3rd party wholesaler never pays you.   

    Your broker might be agreeable in general, but if they do good compliance checks, they may not like that you are signing listing agreements with a non-owner....stuff like that is just ripe for lawsuits....and brokers don't normally like lawsuits....even if you have everything documented...you have to think how it looks if you go to court...what does a jury do.....how do those headlines look....Big Bad Boy wholesaler steals grandmas house and profits 100%.   Think you win that one?   You always sign with grandma and she is onboard, but when the family finds out....they get sideways fast.  Grandma never tells them or consults them until after she signs....but then tells them she's moving in with them and sold the house and needs to be out in 30 days ....then all hell breaks loose.  Now they want to shop it, or don't want to sell it, or call 5 realtors or 5 other wholesalers.

    So picking up buyer clients, or charging your wholesaler some fee for producing contracts, or some other aspects of this probably work well, but not all you described.

    Best wishes and good luck.

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  • John Brandt
    OP
    Member since 2022 · 4 posts · 1 vote
    4y

    So I found out that you can list wholesale deals on the MLS with an agreement signed between you and the wholesaler. The MLS views these types of deals as equitable ownership and can be done legally since the law recognizes the intent of the wholesaler to purchase the property as having equitable interest. While ownership of title is still in the sellers name, equitable ownership allows wholesalers to list. I have verified this with my local MLS and the real estate commission.

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