I'm a licensed real estate agent in California, but I also have a W-2 job as my primary source of income. I'm wondering if there are any legal issues involved with wholesaling or personally buying an off-market property. I'm trying to avoid being sued 6-12 months after wholesaling or flipping a property that was bought off-market and well below market value when "As a licensed agent you knew the property could sell for more if listed on the MLS". Would a simple disclosure that I do have a real estate license be sufficient?
Thank you BP community!
Hi @Frank Perkins ,
I've been educating, educating, educating myself on all things Wholesaling to be sure I am legally, accurately, and effectively engaging in Wholesaling for myself and my Investors. With that said, I have asked my brokerage and C.A.R. Legal what are the implications for Realtors and real estate salesperson in writing and assigning Wholesale P&S Contracts.
Here are my questions and answers from C.A.R.:
Question 1: What am I required to disclose as a Realtor and real estate sales person in writing and assigning Wholesale P&S Contracts?
Answer: You must provide the NOD and include the following:
- I am a licensed real estate salesperson in the State of California and a Realtor with the National Association of Realtors.
- I have a financial interest in this transaction.
- I am representing myself in this transaction.
- I am not representing you or anyone else in this transaction
You can also include this in your cover letter to the Buyer.
In addition, anytime during the verbal interaction with the Seller/property owner, if they ask you for real estate advice or guidance, you can tell them, in a nice way, that since your role is not as a real estate salesperson or Realtor in this transaction or as representation to anyone but yourself in this transaction, you want them to get the best advice from someone representing their interest and recommend they speak with their attorney or real estate salesperson.
And you can tell them your intentions, as part of the verbal offer, your contingencies are an inspection and appraisal so you can determine the actual value of the property. But you are not acting as a real estate sales person in the transaction and this has been disclosed, so you analyzing repairs and knowing the estimated ARV and what it can list for, is as a Buyer not as a real estate salesperson.
Question 2: Can I use C.A.R. RPA, AOAA, and NOD forms as a self-representing Buyer and can I remove my brokerage since I am not acting as a Realtor or real estate salesperson?
Answer: You can definitely use the C.A.R. forms, but you will need to check with your brokerage on their policy re Realtors and real estate salespersons writing and assigning Wholesale P&S Contracts. Some brokerages might exclude any E&O protection for you doing outside-of-brokerage deals. Some brokerages might not have any exclusions, because by the nature and consideration of your first disclosure as to your role and interest, which is in writing and agreed to by the Seller, the E&O would not be available to you. See if your brokerage has an agreement for this, most likely they do cause as you know as a real estate salesperson, you should get everything in writing.
Hope this helps,
Updated 8 months ago
The content of this forum post or any forum post should not be construed as legal, business or tax advice and visitors to this post or any post of Nina Grayson should seek specific advice from qualified professional people before undertaking any action following information read, received, understood, or used from this post or any post herein made by Nina Grayson.
Thank you Nina, very informative! I was surprised to see more people have not been asking these questions on the forums.
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