Working with a realtor but buying from wholesaler

16 Replies

Hello everybody. I need some advice from the BP community.

A realtor has started to work with me to find a deal.  We have already scheduled a viewing this weekend. Then, this morning I saw a wholesale post that could fit my need. Is it OK (or ethical, etc...) to pursue the wholesale deal? I can only buy one property. So if I get the wholesale deal, the realtor will have wasted his time.

Thank you in advance for your advice.

-John

Pretty much. The real estate business is very tough for agents. Many agents try to get their clients under an exclusive working contract. Which really doesn't hold any water. Especially if the client feels they are not satisfied with the performance of the agent. So its easy to break. If you have signed agreement. If not , not much to worry about any ways.  The best thing to do is transparent and direct about your goals and ideas. That way you don't waste your time and others.   Let them know you found another avenue that suites your needs. Now, once you explored that and after that you may then realize that you may prefer to work with a professional. Its best to find someone who has the experience and knowledge that help reach your goals. Wholesaling , auctions,bid packages can be  challenging for the single and or the  beginning investor. Once you find that key agent stick with  them and let them do all the work for you. Building a working relationship can be profitable in the long run.  

Another point. If, and only if, you feel that agent worked hard for you, a concession or token for their efforts would be very appreciated. How much? Up to you. However, If he hadn't done anything expect for email you a few MLS listings , then your ok. No harm no foul in parting ways.

Hi John,  Your profile says you  have "soooo much to learn" and have just a couple of houses under your belt.  With that in mind, are you comfortable working directly with this wholesaler?  If not, then perhaps you can bring this realtor into the deal at a discounted rate.  That way you preserve the relationship and get his help in keeping an eye on the transaction and making sure the wholesaler does a clean transaction with you.  That presumes the deal allows for a little more cash out on your side.

Good luck,

Andy

@Carlos Aguilar Thank you for your reply.

We have not met yet. So far we only exchanged emails. He contacted me when I submitted an inquiry on a short sale; he managed to arrange a viewing with the owner this Sunday. He also did some researches, called the listing agents, on 4 other properties that I emailed him; nothing scheduled for those. So far I am satisfied with what he did for me.

Morally it does not feel right to pursue other avenues. On the other hand, he works on the opposite side of town, maybe 1 hours drive to my area; I am concern about his availability.

@Andy W.Thank you for that suggestion. I will try to bring the realtor into the deal, maybe to help me understand the docs and transactions.

@John Truong  mentioned, it's better to find a Realtor who's experienced with investors, as most see investors as a waste of time. ("All they do is throw lowball offers at you," is a common complaint)

You have a few things to consider, but don't let it stress you too much.

@John T.

You don't need a buyer's agent to bring you deals. Find a few good listing agents and ask them to give you a first look at their not-yet-listed deals. If you buy from a listing agent he/she gets the whole commission and that creates an extra incentive for them to deal directly with you.

For example, on the property that you found, you should've contacted the listing agent and asked about it. If you ended up buying it - great. If not, ask that agent to bring you deals "just like that one". If they say "yes", follow up with them on the regular basis, so that they know and remember you.

Nick

@Joseph Cox Yes, I introduced myself to him as an investor, and listed some of the items from the BP guide that helped agents work with investors,without mentioning the bunch of low ball offers but I did say I would try not to pay asking price.

And good point about finding a "local" agent who may know the market better. As a matter of fact, my first two purchases were with an agent who know my area *very* well. He is also an investor who invest in the same area. However, I feel that there is a conflict of interest. He may keep the best deals from him and just shows me the left overs.

@John Truong  

There is no obligation on your part to this agent.  He doesn't have a contract for starters, which would have defined what each of your responsibilities are.  That contract would also have set for the commission he would get if he did the things he was supposed to do, which is bring you a property that you buy.

Keep in mind, you could have signed a non-exclusive buyer's agency agreement with him, which would have compensated him for any deal he brought you that you ended up buying, but would not have compensated him for any deal that you pursued on your own and bought without him.

Right now, he hasn't done much at all.  He hasn't earned anything yet.  I see you're worrying about your ethics, don't.  You don't have to pay for something he has not earned in order to keep your ethics.

@Nick B. In your opinion, is it OK to work with several agents? So far nobody found anything for me, neither this agent nor the one I worked with in the past. I am the one picking the listings from the web then asked the agent to check if they were still available and to schedule the showings.

You mentioned contacting the listing agent directly. I have done that for the past month. He is the only one who replied, but he is not the listing agent just working at the same brokerage. 

Today a listing agent called me about an reo that I inquired earlier. I did not qualify to buy it, but she had another property that is pending but would relist it soon because the buyer did not have the fund. She proposed to sell it to me once the buyer completely backed out. Then I made the mistake of telling her that I was working with a realtor. she stopped talking about the property and told me to work with my realtor. I found out later that the property was an REO, from the pictures the interior was completely remodeled, the price was really good. My realtor has not able to contact her again to submit a back up contract. Did I make a mistake?

It's  a must to work with multiple agents. I also make it known to the listing agent that I don't have a buyer's agent and they will get all the commission. 

How did you contact listing agents? I usually email them and follow up with a phone call.

@Jim Piper   How long does that non-exclusive agreement expire? And is there such a thing as an "exclusive agreement" which says I can only have one agent, anything I buy with a different agent, the former will get the commission? As a complete newbie, I signed some agreement with a different agent last year, I do not really know what I signed.

So my understanding is that you agree with @Nick B. about working with this agent when he brings me deals, but I should try to work with the listing agent when I find deals on my own.

Originally posted by @Nick B. :

It's  a must to work with multiple agents. I also make it known to the listing agent that I don't have a buyer's agent and they will get all the commission. 

How did you contact listing agents? I usually email them and follow up with a phone call.

Got it thank you very much. I should work with this agent when he brings me his deals, and try to contact the listing agents for deals I find on my own. So far I only emailed the listing agents.

Now I am upset at myself for missing a very good deal this morning. A listing agent was about to give me a really good deal. She stopped talking about it when I told her about this agent, and she told me to work with my agent. Now she does not return my agent's messages.

@John Truong  

Most of the things on any agency agreement are negotiable.  How long?  I'd say typically they won't be less than 3 months.  Alot of are 6 months in my area.  The agent is probably not going to want a non-exclusive type of agreement.  But really you can't go exclusive, because if he doesn't produce deals for you you're out of business.  On an exclusive agreement your agent will be compensated on anything that you buy.  You don't want to go that way in my opinion.  If a wholesaler contacts you with a great deal, you agent is going to get a commission with an exclusive, whether he did anything or not.  Some of them have a fee that the agent earns whether you bought anything at all.

I've never hired a buyer's agent. If someone brings me a property, I will use them. That's rarely, if ever happened. When I see a property I'm interested in in the MLS, I contact the listing agent. They get both sides of the commission if you're unrepresented, so it's a great deal for them. I generally try to negotiate the commission down, but whether I do or not I think I'll have the listing agents full attention. BTW, you need to be comfortable with your knowledge level. Remember, the listing agent represents and has a fiduciary relationship with the seller. You are just a customer to the listing agent, he has no fiduciary responsibility to you. So when dealing with the listing agent just understand that it's his job to get the best deal he/she can for the seller. You're unrepresented, so you need to be able to take care of yourself.

Keep a copy of everything you sign.  It might be important.  Like what that agreement you signed last year.  There's a good chance it's already expired at this point, but obviously we don't know for sure.  Keep copies.

@John Truong  

You're on the right track about relationships. I don't know Missouri state law, but here [FL] brokers and their agents only have a fiduciary responsibility when there's a Single Agent Relationship with the buyer or seller. Brokers always form a Transaction relationship and never a Single Agent one. Why? Because there's a high possiblilty that the same broker will represent both the buyer and seller. If no relationship notice is signed by the buyer/seller then under (Florida) state law, it automatically becomes a Transaction Relationship. It may be the same in your state, and it's easy to find out online. Some states may not allow dual-representation by law. Without a Single Agent Relationship, you only get limited representation, including limited confidentiality. (Please don't confuse Relationships with the Buyer's Agreement previously mentioned—not the same thing)

Originally posted by @Joseph Cox :

 John, when someone tells an agent they are "working with a Realtor" it is code for "I've signed a buyer-broker agreement, to work exclusively with my Realtor." 

The listing agent is telling you to work with your Realtor, because she's now believing she won't get any commission from you. If you explain that you haven't signed an agreement (if that is true) then you can offer to work with her on that property you want.

You quoted the exact words I told the listing agent, and now she is unreachable. I have not signed anything yet. I will meet this agent for the first time tomorrow to view 2 houses I found on mls.

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