Investors wanting to get their RE license should read...
Allen MarisPro Member
Investor · Santa Ynez, CA · Member since 2008 · 375 posts · 175 votesInvestors wanting to get their RE license should read...
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Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
11ySounds like @Account Closedand your old broker are of the same mindset, eh. Maybe it's all brokers. No wonder I don't use any of ya.
70 Replies
- Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes11y
Originally posted by @Bill Gulley:
And yes, having a license takes you out of harms way in wholesaling as you should be working as an agent and making about the same thing. Doing net listings can get you hammered. :)
Being an agent doesn't keep wholesalers out of harm's way. If you are working as an agent instead of wholesaling (contracting and then assigning or double closing), you are not wholesaling and you are not a wholesaler. Apples and oranges. There is no comparison in earnings in my world. I don't work for 3% or 6% or 10% of purchase price, nor do most of the CA wholesalers I know. I mostly close on what I re-sell, but the target is never agent wages. I work mostly props under $200K. The target is $30K minimum profit and I often do better. Way better.
- Professional · Jacksonville, FL · Member since 2015 · 397 posts · 34 votes11y
Originally posted by @Allen Maris:
I've been licensed for about a year now and had been working under a broker for about 8 months.
I just did my 5th yellow letter campaign in my area and an agent received one and they called and complained to their area president who in tern called my broker. Even though though I broke no rules, the threat and unwanted attention alone was enough for my broker to drop me. I followed his advice about how to disclose and how to stay compliant with my mailings, yet some uptight ignorant agent got all worked up for nothing and has caused me problems.
So once licensed, find a broker that's fully on board with what you do and keep them well informed so they can fight for you in case this happens too.
Good luck to everyone.
Seems like the broker either felt you were somewhat cryptic with your investment activities, could get distracted or doesn't want the headache of having to monitor and scrutinize your activities. Dealing with 'regular' realtors, often is a sufficient enough hassle that some brokers will often frown at having to deal with the investor/agent.
- Real Estate Agent · Fountain Valley, CA · Member since 2015 · 83 posts · 27 votes11y
thanks for the post. I learned a lot from this thread!
- Investor · Sherman Oaks, CA · Member since 2008 · 6k+ posts · 3k+ votes11y
Originally posted by @Allen Maris:
I've been licensed for about a year now and had been working under a broker for about 8 months.
I just did my 5th yellow letter campaign in my area and an agent received one and they called and complained to their area president who in tern called my broker. Even though though I broke no rules, the threat and unwanted attention alone was enough for my broker to drop me. I followed his advice about how to disclose and how to stay compliant with my mailings, yet some uptight ignorant agent got all worked up for nothing and has caused me problems.
So once licensed, find a broker that's fully on board with what you do and keep them well informed so they can fight for you in case this happens too.
Good luck to everyone.
For ANYONE in California that is licensed, and is getting LIP from a broker not liking your wholesaling marketing, see this attorney, who was a RE broker for 10 years before going to law school, practices in Long Beach, Paul Samarin JD
http://www.realestateclubla.com/educational-tools/...
He should be able help squash your political broker problem.
"Watch the crowd, Go in the opposite direction."
- Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes11y
@Allen Maris Maybe you can upload the letter you sent out.
Your situation is very dicey, and that's probably the reason your broker dropped you. It's fraught with liability, IF YOU ARE BUYING PROPERTY THAT ISN'T LISTED.
Here's where your real problem probably comes in: You have to make sure that you are disclosing to the property owner that you are a licensed agent. You also have to be sure to disclose what the true market value of the property is, based on comps, etc. and THEN if the seller is willing to sell for a lower price, you are on pretty good ground. Next, I ALWAYS put into the contract that I am a licensed agent, give them comps on the property, AND tell them that because I am a licensed agent, buying for my own use, they should seek the advice of their attorney before entering into the contract. But, be sure to get EVERYTHING in writing.
I'm not seeing why the agent would have been upset. Had you purchased the property and if it's listed, you would have been obligated to pay the commission to the listing agent.
Ditto for your broker, I'm sure you have some type of agreement, that any listings or sales that you do personally, the office still is owed commissions?
@Allen Maris, thanks for posting this. I am working on getting my RE license and finding an investor friendly broker now, so this is a great reminder for me.
- Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes11y
Originally posted by @Account Closed:
Originally posted by @Bill Gulley:
And yes, having a license takes you out of harms way in wholesaling as you should be working as an agent and making about the same thing. Doing net listings can get you hammered. :)
Being an agent doesn't keep wholesalers out of harm's way. If you are working as an agent instead of wholesaling (contracting and then assigning or double closing), you are not wholesaling and you are not a wholesaler. Apples and oranges. There is no comparison in earnings in my world. I don't work for 3% or 6% or 10% of purchase price, nor do most of the CA wholesalers I know. I mostly close on what I re-sell, but the target is never agent wages. I work mostly props under $200K. The target is $30K minimum profit and I often do better. Way better.
That's the issue with "wholesalers" they don't do anything an agent can not do and they grossly overcharge, dipping into the owner's equity in residential transactions.
I would not balk at 15% in commercial transactions and I'm not putting Joey the flipper in a commercial category, where commercial transactions involve sophisticated parties.
The ISSUE is understanding the VALUE of goods and services, wholesalers need to ask your Attorney General what they see as PRICE GOUGING, ask them how they view the value of any service in real estate. where a straw man never takes title, never touches it to improve it and simply flips a contract.
The money has to come from someplace, either the seller is paying (by losing equity) or the buyer is overpaying in a residential deal.
I know that no wholesaler would, call the AG, nor will they even attempt to see or understand what I'm talking about, nor will they ever see such dealings as predatory. That's because they really lack a higher level of knowledge in real estate, ethics, economics, financial practices and yes, law! I am not being hateful at all, but some are artful at cognitive bias, making justifications supporting such thinking and their actions as they benefit them, they are not going to change.
Birds of a feather flock together, the other wholesalers you know probably have the same insight and lack of understanding.
Wholesalers are absolutely convinced that they are helping owners, convinced themselves (cognitive bias) and convince owners as well, while taking more from them than what the actual services are worth. That value is long established for decades in real estate, any wishing or egos or justifications by wholesalers won't change that. There is a great sense of entitlement when one justifies doing the wrong thing to their benefit against public policy and the normal rate of compensation purely out of greed I might add.
My implication above, which you usually miss, is that a Realtor won't be wholesaling, they will act ethically and legally as a licensee. A good agent also has more volume than the wholesalers and the established value of their contributions can make for a very nice living, they won't want to wholesale granny's house.
And, again, I have no issue with wholesaling, when done properly, ethically, charging fairly and, well, as legally as can be done.
Problem is, most of the wholesaling deals we hear about or are admitted to here don't fit those requirements.
So, Marie, I don't think you understand the issue nor do I think you're willing to understand the issue, I really doubt you'll change, I'll never see predatory dealing as something to build any business on, that only leaves us to disagree. I'm not going to argue the point either. And believe me, I think you're better than most, but that doesn't make you worth more in providing a basic service.
Wholesaling is a niche, it is not an industry, it does not command different rules, it's simply facilitating a sale of real estate. :)
- Lender · Los Angeles, CA · Member since 2015 · 399 posts · 174 votes11y
Originally posted by @Karen Margrave:
@Allen Maris Maybe you can upload the letter you sent out.
Your situation is very dicey, and that's probably the reason your broker dropped you. It's fraught with liability, IF YOU ARE BUYING PROPERTY THAT ISN'T LISTED.
Here's where your real problem probably comes in: You have to make sure that you are disclosing to the property owner that you are a licensed agent. You also have to be sure to disclose what the true market value of the property is, based on comps, etc. and THEN if the seller is willing to sell for a lower price, you are on pretty good ground. Next, I ALWAYS put into the contract that I am a licensed agent, give them comps on the property, AND tell them that because I am a licensed agent, buying for my own use, they should seek the advice of their attorney before entering into the contract. But, be sure to get EVERYTHING in writing.
I'm not seeing why the agent would have been upset. Had you purchased the property and if it's listed, you would have been obligated to pay the commission to the listing agent.
Ditto for your broker, I'm sure you have some type of agreement, that any listings or sales that you do personally, the office still is owed commissions?
I'm guessing you are getting this from CAR or NAR rules. These are private for profit organizations. If a state licensed salesperson or broker chooses to join these organizations that is there prerogative, they are under no legal obligation to do so. If a licensee is not a member of these organizations, they are not required to follow their rules or even to know what they are. Where is this information coming from?
- Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes11y
@Account Closed The California Bureau of Real Estate, rules govern dual agency, secret profits, fiduciary responsibilities, etc. Some of it is "common sense" to limit ones liability.
California Bureau of Real Estate
Are you a licensed agent David? I am, and have been for 30 years. I have never been dropped by a broker, had a complaint filed against me with the board, or the BRE, AND I buy property for myself, list it for sale, and sell it.
- Lender · Los Angeles, CA · Member since 2015 · 399 posts · 174 votes11y
Originally posted by @Karen Margrave:
@Account Closed The California Bureau of Real Estate, rules govern dual agency, secret profits, fiduciary responsibilities, etc. Some of it is "common sense" to limit ones liability.
California Bureau of Real Estate
Are you a licensed agent David? I am, and have been for 30 years. I have never been dropped by a broker, had a complaint filed against me with the board, or the BRE, AND I buy property for myself, list it for sale, and sell it.
I am licensed. It wasn't meant to be a contentious question. This is an area of much confusion worthy of discussion.
There is an article by first tuesday that addresses this whole issue, I don't have it at my finger tips right now or I would post a link.
My understanding is this: If you are an agent in a particular transaction, you must do all the things you suggest. Keep in mind that just because you are licensed doesn't mean you are an agent. It takes a lot more than being licensed to be an agent in a particular transaction. If you are not an agent, you don't have to do any of the things you suggest.
The challenge is to make the seller understand the truth, that you are NOT acting as their agent in this particular transaction. How do you do that? Well, what most licensee's do in California to establish their non-agency status is to simply include a statement in the purchase offer or closing documents that the buyer is a licensee acting for their own account. There, done, you have established your role as a buyer and not an agent. Since you are now a normal buyer with no agency duties you can proceed without any further disclosures.
This is no different than any other profession. If you are a lawyer buying a house for example, you want to make it clear you are not acting as THEIR attorney, if you have done anything to make the buyer think you are acting as their attorney, you better either make a clear disclosure you are acting strictly on your own behalf and not as their attorney or incur all the fiduciary duties and disclosures required appropriate to that status.
The things you suggest are not wrong, I just don't believe they are necessary. Even the simple disclosure I suggest is not necessary, it is only meant to remove any possibility the buyer might *think* you are acting as their agent.
- Real Estate Broker · Sanford, NC · Member since 2014 · 169 posts · 69 votes11y
@Allen Maris thanks for posting your experiences Allen -- I will be getting my agent's license in the next few months and all of this information has been helpful.
Thanks!
- Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes11y
@Account Closed didn't mention, and that is whether or not there would be any commission being paid on the transaction, etc.
I have done list/sales to myself where we added commission on to the sales price, but of course made sure everything was disclosed, and in writing and understood by the sellers, etc., but always suggesting they seek the advice of their attorneys. I always figure it's better to be on the safe side and disclose too much than end up in a lawsuit.
Anyway, thanks for the info.
- 11yDustin KircherPro MemberFlipper/Rehabber · San Diego, CA · Member since 2015 · 22 posts · 15 votes
Allen,
Myself have been licensed since 2006 and do 50% Investing and 50% working with clients. There is definitely some problems that occur when you are licensed and marketing to buy homes. Really it comes down to disclosing that you are licensed. You are always going to get some crappy agent that is going to complain because they are scared of loosing business but just brush it off. Also I have had issues with Brokers that did not like that I purchased and sold my own properties. I am now with a good broker that I pay $50 a month and a flat $495 for each transaction. I hope this helps and best of luck to you!!
- Investor · Santa Ynez, CA · Member since 2008 · 375 posts · 175 votes11y
@Brian G. - Thanks for the words of encouragement from Grant's teachings.
@Karen Margrave - no I wasn't going to be collecting an agent's commission for buying the house. Being an agent had nothing to do with my investment goal on this marketing plan other than forcing me to disclose.
@Dustin Kircher - Thanks for your comment and encouragement.
The thread has turned into a lot more than my intent. I wanted to give a heads up to new or potential agents really. I'm not over here crying in my beer, this was purely just a small hiccup in the overall journey. Thanks to everyone that's commented, given their opinion, encouragement, etc. It's clear the real estate code is open to interpretation. Maybe that's by design?
- 11yRoy N.Pro MemberRental Property Investor · Fredericton, New Brunswick · Member since 2013 · 7k+ posts · 4k+ votes
Originally posted by @Account Closed:
It's not hard to see what the issue is. Every property you are able to buy "off market" is depriving an agent of their 3 or 6%. The volume of sales of residential property in Santa Barbara just isn't enough to feed all the agents if people buy off market. That being said, the actual dollar amount is plenty. You don't need to be a top producer if you dial in 10 $1M+ properties per year. Which is relatively easy to do unless you work the North County.
Unless your run-of-the-mill residential agent is of higher caliber than where we operate, they are not going to be able to (or want to) sell a run-down properties in which you would be interested as a flip.
- Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes11y
Originally posted by @Roy N.:
Originally posted by @Account Closed:
It's not hard to see what the issue is. Every property you are able to buy "off market" is depriving an agent of their 3 or 6%. The volume of sales of residential property in Santa Barbara just isn't enough to feed all the agents if people buy off market. That being said, the actual dollar amount is plenty. You don't need to be a top producer if you dial in 10 $1M+ properties per year. Which is relatively easy to do unless you work the North County.
Unless your run-of-the-mill residential agent is of higher caliber than where we operate, they are not going to be able to (or want to) sell a run-down properties in which you would be interested as a flip.
The run of the mill agent here isn't high caliber. But they will happily list even the most serious of fixer props. The values in the OP's area are very high, practically nothing under $500K. Lots of horse props for $1M+. No one in Coastal Cal turns down as-is fixer listings. It's not like the Rust Belt where the listing is all headaches and a tiny commission.
That's one of the objections to wholesalers in this market. A legitimate objection IMO. There is no condition that prohibits listing a property and selling as-is. There are cash buyers here for everything. I typically work props that can't be sold for other reasons. Mostly title and tenant and lien issues, problems most agents can't and won't solve.
- Investor · Santa Ynez, CA · Member since 2008 · 375 posts · 175 votes11y
Originally posted by @Account Closed:
The run of the mill agent here isn't high caliber. But they will happily list even the most serious of fixer props. The values in the OP's area are very high, practically nothing under $500K. Lots of horse props for $1M+. No one in Coastal Cal turns down as-is fixer listings. It's not like the Rust Belt where the listing is all headaches and a tiny commission.
These days we're lucky to see anything under 600k for anything east of Buellton.
- Investor · Santa Monica, CA · Member since 2014 · 7 posts · 0 votes11y
This guy David C above is really the one who sounds like a cry-baby. "Poor me. All those silly new sales agents causing me so much stress. Wah, wah, wah! You misread Allen's post. Stop trying to frame his very worthy post as your own neurotic past and clearly present unhealthy mindset. You sound just horrible. Take your meds and go see a professional. Sorry I had to say this but I know others are thinking it. Off we go.
- 7yJeff LanghamBusiness MemberRealtor · Carmel-By-The-Sea, CA · Member since 2016 · 54 posts · 25 votes
I'm thinking about getting my license as well but I have a good day job and put in quite a few hours. I'd like to purchase a property to save on commission and wouldn't mind working under a broker as long as I could find a flat fee such as what was mentioned earlier. This sounds attractive that I would be able to do my own purchases for a flat fee. I suppose the next step would be to take the exam since I have already taken my course work. Thanks @Dustin Kircher
Jeff Langham, MBA, Realtor®518 Reviews
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