Marketing as a investor with a Real Estate License
Nottingham, PA · Member since 2017 · 11 posts · 4 votes
Marketing as a investor with a Real Estate License
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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
8y@Llewelyn A. in states where Net Listings are illegal, I do not think an agent should wholesale using the method of an assignable contract. I think that this method of wholesaling is in essence a net listing. However net listings are legal in some states. @John Thedford has said they are legal in Florida...and thus I would say in Florida if you want to use this method of wholesaling you should in fact be licensed.
If an agent wants to wholesale, I believe then that they should buy the property, close on it, and resell it.
It is also important to note the role of an agent, their duties, their agency laws are drastically different from state to state. In many states the primary duty of an agent is to their principal, or client. In Maryland for instance, your primary duty is not to your client, but to the public. Most agents in Maryland do not even realize this. We do have a fiduciary duty in Maryland to protect our clients interests, however the interests of the public are outweighed. I bring this up, because I believe that in states where your primary duty is to the public, then wholesaling as an agent becomes even more problematic. If the person selling their house...even if they are not your client, you still retain legal responsibilities to that individual as they are a member of the public. So even when double closing in Maryland, you could potentially run into issues if the Real Estate Commission were to think that you ripped off grandma.
Now I know Maryland and DC law the best even though I do do business in other states, so some of the specifics of your primary duty I do get wrong in other states...but Virginia I believe your primary duty is to your client so it would be less problematic there for instance. @Antonio Nguyen do you know if in VA if your primary duty is to client or the public?
@Ned Carey has said, and I tend to agree with him, that wholesaling can be done legally in every state, it is just a matter of figuring out how to do so. So maybe being licensed in some states is necessary, maybe in other not being licensed is necessary. Maybe an assignable contract is good in one state, but double closing is better in another state. Maybe some places you can advertise the property you have under contract, and maybe in other states you shouldnt advertise it til you close. The problem is that so many people are just ignorant of the laws. This doesnt just mean wholesalers, but just everyone in general..agents, attorneys, loan officers everyone. I cant tell you how many times I am telling other agents I am dealing with that you can not do X, it is illegal, and they have no clue.
District Invest Group545 Reviews
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- Real Estate Agent · Souderton, PA · Member since 2016 · 591 posts · 414 votes8yYes there are rules that require disclosure. Check your state and local laws, but you for sure must disclose you are an agent if talking to a consumer about buying or selling a house. The yellow letters may need to have your agent and broker info on it as well, it would have to be on the marketing material in my state. Are you an agent? Typically this is covered during the licensing process.
- Nottingham, PA · Member since 2017 · 11 posts · 4 votes8y
Thanks, I'm studying to get my license in PA, I know I need to but my brokers name on my mailing when mailing for realtor leads, I was not sure about marketing for other leads. I though maybe if I market in the name of a company, I might not have. I'm just not sure if it is worth it for me to get my license.
- TBD · Member since 2017 · 43 posts · 17 votes8y
I have heard that this type of approach is counter-intuitive for RE agents. If a seller asks you a question such as "what is my property worth" you have to give them data backed answer that may not work in your favor. I have heard of folks whom do not get their license for this fact as you can't really market properties to pay off a mortgage or similar lines.
- Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes8y
Originally posted by @Amos Stoltzfus:
Hi I have a question on how marketing should be done, if say for example you are sending out yellow letters for wholesale leads, and you have a realtor license. There are special rolls a realtor has to follow when marketing, my questions is do these rolls apply only when marketing as a realtor, or would they also apply when marketing as a investor for wholesale leads?
Generally speaking you need to disclose your status anytime your marketing to the general public about all things real estate. I've heard some people say they thought disclosing their status as an agent would hurt them. I can assure you that they are wrong. In my experience people have always felt more comfortable with me BECAUSE I was licensed. It's the #1 reason I was able to build a $50M+ management portfolio in a few years.
- Investor / Broker · Brooklyn, NY · Member since 2016 · 665 posts · 1k+ votes8y
Hi Amos.... funny, I just Googled that a few hours ago as I just got my Broker's License.
Here is a Video of a Broker who believes that having your License is much better than being an Unlicensed Wholesaler: Wholesaling While Licensed!
Basically, he says you have to disclose EVERYTHING. While it may seem counter-intuitive, you should absolutely let the Seller know that he is better off wholesaling from you than an unlicensed wholesaler BECAUSE you HAVE to disclose everything including what you believe the Property is worth.
Then, should a Wholesaler actually contacts the Seller, really, there is no way that the Seller would go with someone else who would otherwise NOT have to disclose everything, including the Fair Market Value.
What is a bit confusing to me is that NY State makes Net Listings illegal. Wholesaling as it's implemented is basically a Net Listing. However, if you are in Contract, are you still bound as the Principal of that Contract, selling your interest in the CONTRACT and not the Property itself, would that still be considered a Net Listing? I haven't done enough research to answer that question, but it seems that as long as it's not advertised generally, then it's legal.
As an Agent or Broker, you will have much more qualified Contacts available to you for these Wholesaling opportunities, I believe. You may even consider the Wholesale Contract like a Pocket Deal, done by word of mouth.
Each party of the transaction, Seller and Buyer, will have to know the full disclosure on both sides.
While I have to say check with an Attorney as I don't know all the intricacies of this type of transaction, I would tend to believe that an Agent/Broker would have a much better chance of servicing both the Seller and Buyer than an Wholesaler who is not Licensed.
I'd like to hear from some of the more experienced Agents/Brokers like Russell Brazil.
- Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes8y
@Llewelyn A. in states where Net Listings are illegal, I do not think an agent should wholesale using the method of an assignable contract. I think that this method of wholesaling is in essence a net listing. However net listings are legal in some states. @John Thedford has said they are legal in Florida...and thus I would say in Florida if you want to use this method of wholesaling you should in fact be licensed.
If an agent wants to wholesale, I believe then that they should buy the property, close on it, and resell it.
It is also important to note the role of an agent, their duties, their agency laws are drastically different from state to state. In many states the primary duty of an agent is to their principal, or client. In Maryland for instance, your primary duty is not to your client, but to the public. Most agents in Maryland do not even realize this. We do have a fiduciary duty in Maryland to protect our clients interests, however the interests of the public are outweighed. I bring this up, because I believe that in states where your primary duty is to the public, then wholesaling as an agent becomes even more problematic. If the person selling their house...even if they are not your client, you still retain legal responsibilities to that individual as they are a member of the public. So even when double closing in Maryland, you could potentially run into issues if the Real Estate Commission were to think that you ripped off grandma.
Now I know Maryland and DC law the best even though I do do business in other states, so some of the specifics of your primary duty I do get wrong in other states...but Virginia I believe your primary duty is to your client so it would be less problematic there for instance. @Antonio Nguyen do you know if in VA if your primary duty is to client or the public?
@Ned Carey has said, and I tend to agree with him, that wholesaling can be done legally in every state, it is just a matter of figuring out how to do so. So maybe being licensed in some states is necessary, maybe in other not being licensed is necessary. Maybe an assignable contract is good in one state, but double closing is better in another state. Maybe some places you can advertise the property you have under contract, and maybe in other states you shouldnt advertise it til you close. The problem is that so many people are just ignorant of the laws. This doesnt just mean wholesalers, but just everyone in general..agents, attorneys, loan officers everyone. I cant tell you how many times I am telling other agents I am dealing with that you can not do X, it is illegal, and they have no clue.
District Invest Group545 Reviews - Nottingham, PA · Member since 2017 · 11 posts · 4 votes8y
I did a little research on net listing, and from what I found net listing are legal in PA, but I'll ask my attorney just in case.
- Investor · Phoenix, AZ · Member since 2013 · 136 posts · 29 votes8y
I'm curious what the requirements are for agents realtors and brokers in Illinois.
- Investor · Middle River, MD · Member since 2017 · 191 posts · 127 votes8y
Originally posted by @Amos Stoltzfus:
Hi I have a question on how marketing should be done, if say for example you are sending out yellow letters for wholesale leads, and you have a realtor license. There are special rolls a realtor has to follow when marketing, my questions is do these rolls apply only when marketing as a realtor, or would they also apply when marketing as a investor for wholesale leads?
I am an agent in Maryland. To your original question, and only your original question, NO, you do not need to follow the marketing "rules for realtors" when you are not marketing AS a realtor.
Realtors are AGENTS for the broker. When you work in their name, you need to follow those rules. If you have some other business, and you don't use their name, you can follow whatever rules are in place for THAT other business.
HOWEVER, as others have said, you are STILL a licensed real estate agent, and there are responsibilities that come with that. You must disclose that fact, for instance. Not in marketing, but it a real estate contract. You must still be ethical in real estate transactions, etc. Even when you are not acting AS an agent.
Back to your original question though, if you had a donut business, would you have to adhere to the real estate advertising rules for your donut business? Of course not.
- Bridgeville, PA · Member since 2013 · 395 posts · 105 votes8y
Being an agent is all about disclosure, if you don't disclose properly you risk losing your license if ever turned in.
Every contract you write for yourself and every piece of marketing you do should have a disclaimer and you might want to go a step further and have the person sign a general notice before writing any business that they understand you are an agent.
Feel free to reach out if you have any further questions.
- Real Estate Agent · Sacramento/Placer ~ San Francisco Bay Area counties · Member since 2012 · 1k+ posts · 743 votes8y
Lots of great advise you've received regarding marketing as a realtor as opposed to an investor. Should you already have your license the last thing you want is to have a sanction on your license.
Use caution.
- Real Estate Agent · Fairfax, VA · Member since 2015 · 29 posts · 5 votes8y
This is a very interesting question. I think that the underlying theme represented by the associations in all jurisdictions is that we need to be honest with the public, but our fiduciary responsibility is to our client.
That again, Virginia is the wild West. It seems to be more acceptable there to go off the contract, and not stick to it line by line. I often find that expectations are off on the other side because there seems to be folks feel like they have the freedom to translate the contract in all kinds of ways. Not sure if anyone else has had that
@Russell Brazil According to NAR code of ethics in VA:
We have duties to the public, our clients and other agents and the duties to our clients are listed first for a reason.
It states "When representing a buyer, seller, landlord, tenant, or other client as an agent, REALTORS® pledge themselves to protect and promote the interests of their client. This obligation to the client is primary, but it does not relieve REALTORS® of their obligation to treat all parties honestly. When serving a buyer, seller, landlord, tenant or other party in a non-agency capacity, REALTORS® remain obligated to treat all parties honestly. "https://www.nar.realtor/about-nar/governing-documents/code-of-ethics/the-code-of-ethics#!#DutiestothePublic
Hope this helps, great discussion!
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