Is it Ethical to...

12 Replies

Wholesale as a licensed Realtor?

Probably not. Most realtors have agreements with their brokers that prohibit this sort of thing.

Yes as long as you disclose you are a realtor it can be done. speak with your broker or find an agency that allows you to do both. 

Thanks @Shawn M.  I was also curious if this is a touchy subject with most brokers or generally acceptable?  I figured they rather you list the property so they get their piece of the action, therefore it might be frowned upon.  

Originally posted by @Shamus Quirk :

Wholesale as a licensed Realtor?

 I second every one else's statement on here. It is ethically wrong to be wholesaler while possessing a real estate license.

@Shamus Quirk my understanding is it varies.  I know a few that wholesale successfully and as far as I know ethically as an agent. I think as a wholesaler you need to show the benefits to your broker.  There are people who need to sell properties that cannot afford to use a realtor, you represent a solution for these people.  The broker can benefit once the property changes hands and you step in to try to sell a newly renovated property as an agent, the key in this scenario is proving to your buyers list you are not just a wholesaler but also their realtor.  Also you will create leads from wholesaling of people that want to sell the standard way. 

Great perspective @Shawn M.  It seems like this is more of a case by case basis.  I guess it is best to run it by my broker, present the case from your point of view and see what he says!

Originally posted by @Shamus Quirk :

Wholesale as a licensed Realtor?

Ethical?  In some states it may not even be legal.  Texas defines a fiduciary relationship between the agent and the seller.  Disclosure of being an agent may not be enough to protect the agent should the seller decide to sue.  Certainly, you should never try to wholesale a property for which there was ever a discussion of representing as an agent.  This means if the initial contact was 'I need someone to list my house' and the agent determines it cannot be profitably listed, that agent would be at risk in any follow-up that included wholesaling.

I'm not a lawyer but once was an agent.

NO it is neither ethically wrong or legally wrong . In fact some large real estate agencies really specialize in wholesaling properties and of course the brokers are just find with it and have worked hard to refine how they structure their deals and offer the best of all worlds to sellers and buyers as well.

We can say or assume most real estate agencies and brokers prefer to retail properties because of the large commissions they realize but a good broker with talented agents can and do build there agencies based on wholesaling properties and in fact in many states and cities now it is becoming legally required that you be a licensed real estate agent to do wholesaling. Some say no and some say yes the thing is that once people hear and believe you can do wholesaling without a real estate license they think they can just go about it in any imaginable way but there are legal guidelines and its easy to step outside those guidelines especially if you want to become really successful at wholesaling and do it full time and with allot of passion. 

Interesting and thought provoking question and responses here. There was a large recent thread regarding Ohio and the general consensus was that wholesaling was illegal if NOT licensed. Interested to see what others thoughts are on this topic.

Originally posted by @Gilbert Dominguez :

NO it is neither ethically wrong or legally wrong . In fact some large real estate agencies really specialize in wholesaling properties and of course the brokers are just find with it and have worked hard to refine how they structure their deals and offer the best of all worlds to sellers and buyers as well.

IMHO, it is ethically wrong.  Ohio being an example of using regulation to restrict competition I will except them, otherwise if a broker/agent thinks the best outcome for the seller is to 'wholesale' the property, simply write the listing contract to reflect a commission structure that reflects a typical wholesale profit.  There is no reason for the agent to take an ownership interest as they have the 'right' to a defined commission and can still function in the best interest of the seller.  If they don't want to represent the best interest of the seller, they should give up the license to take a commission.

ok, let us say this is or remains open to discussion and consideration depending on area specific policies, regulations and or ordinances  i.e area specific real estate law. The law is the law just make sure you know what is it in your own neck of the woods that is all. 

Thank everyone for their contribution to this discussion

A ton of great perspectives here, I just want to thank everyone for their input!

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