General Real Estate Investing

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Jacob Cunningham
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Wholesale lease options with real estate agent

Jacob Cunningham
Posted Sep 19 2022, 17:54

let’s say I want to begin wholesaling, maybe even wholesaling lease options. Can I work with a real estate agent? How would they be compensated for their time and effort? Could I have them handle a portion of the deal with the seller and end buyer for me? Would this be a JV between me and the agent? I would like an agents representation to avoid any legal grey areas and to network as well. 

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David M.
  • Morris County, NJ
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David M.
  • Morris County, NJ
Replied Sep 19 2022, 19:46

@Jacob Cunningham

Sorry, but sort of "no..."  Depending on you State and who you talk to, agents can't wholesale....???  They can't be compensated as agents since that would be "brokering" of real estate but you are expressly "wholesaling" real estate.  Even if you had a licensed agent working with you, you aren't getting any "agent representation/coverage" since they wouldn't be acting in the capacity of a real estate agent in brokering real estate.

Also, agents tend to be members of the National Association of Realtors (NAR) which requires them to be honest. While its been said that the best policy even for wholesalers is to be open and honest, not all wholesalers operate that way. Additionally, the agent may have "honestly" tell your prospective client that the wholesale is not the best deal/approach for them depending on the nature of the property/situation. Without full disclosure / honesty, the agent could be charged with ethics violations which endangers their NAR membership and potentially their license.

Thats the harsher side of it I suppose...

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Jacob Cunningham
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Jacob Cunningham
Replied Sep 19 2022, 20:09

Oh ok! Well thank you for that. So working with an agent is a no. So I guess I should stick to the lease and option contracts to avoid legal trouble. 

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Doug Pretorius
  • Investor
  • Kitchener-Waterloo, Ontario
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Doug Pretorius
  • Investor
  • Kitchener-Waterloo, Ontario
Replied Sep 19 2022, 20:12
Quote from @Jacob Cunningham:

let’s say I want to begin wholesaling, maybe even wholesaling lease options. Can I work with a real estate agent? How would they be compensated for their time and effort? Could I have them handle a portion of the deal with the seller and end buyer for me? Would this be a JV between me and the agent? I would like an agents representation to avoid any legal grey areas and to network as well. 

Yes and no.

Yes you can contract property that's listed on the MLS to wholesale. It will be exceptionally difficult because you will need to convince not only the seller but also their agent. But it is technically and legally possible.

No most states prohibit you from listing a contract on the MLS and when you're wholesaling you only have a contract to sell you don't have property to sell.

Both of these apply whether you're wholesaling for cash or lease options. Wholesale lease options have the added problem that in most cases you won't get enough money from the tenant/buyer to pay one let alone two commissions.

If you still want to go ahead you don't need a JV agreement. Just hire the agents and pay commission like normal.

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Joe S.
  • Investor
  • San Antonio
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Joe S.
  • Investor
  • San Antonio
Replied Sep 20 2022, 12:19

There’s so many things that could go wrong with wholesaling lease options. I understand that’s my opinion. There are gurus out there that promote their course on how to do what you described. I’m assuming you got an ear full of one of these commercials or one of the knock offs.

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Jacob Cunningham
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Jacob Cunningham
Replied Sep 20 2022, 14:10
Quote from @Joe S.:

There’s so many things that could go wrong with wholesaling lease options. I understand that’s my opinion. There are gurus out there that promote their course on how to do what you described. I’m assuming you got an ear full of one of these commercials or one of the knock offs.

Been looking into wholesaling and came across Joe McCall and some of his videos. 

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Keonnee Linnell
  • Realtor
  • Tracy, CA
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Keonnee Linnell
  • Realtor
  • Tracy, CA
Replied Oct 3 2022, 15:03

I recommend finding someone in your local market to shadow if you're going to be doing something like this. As stated above, there are many legal gray areas that most realtors aren't comfortable working in. Best bet is to consult a Real Estate Attorney, pay them for their time (usually $300-400/hour) and have them help you navigate the legalities of this particular situation.

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Noah Laker
  • Real Estate Broker
  • Sacramento, CA
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Noah Laker
  • Real Estate Broker
  • Sacramento, CA
Replied Nov 26 2022, 15:04
Quote from @Jacob Cunningham:

let’s say I want to begin wholesaling, maybe even wholesaling lease options. Can I work with a real estate agent? How would they be compensated for their time and effort? Could I have them handle a portion of the deal with the seller and end buyer for me? Would this be a JV between me and the agent? I would like an agents representation to avoid any legal grey areas and to network as well. 


 Hey what's up Jacob,

I'm a real estate broker in Sac and I have a couple of young agents working with me on Realty and Property Management. You should consider obtaining your license and doing things the right way; wholesaling has been lucrative for a lot of people but it's getting a lot more scrutiny now, and for good reason. 

Give me a call some time!

Hardinpm.com

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Nate Sanow
  • I​nvestor & Agent
  • Tulsa, OK
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Nate Sanow
  • I​nvestor & Agent
  • Tulsa, OK
Replied Nov 26 2022, 15:10

Doing lease options as a type of wholesale deal, and, adding a realtor into that is enough to give me a headache just typing it.  I do think lease options can work, separate from wholesaling, and separate from realtor-ing.  

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John Woodhouse
  • Wholesaler
  • Cedar Rapids, IA
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John Woodhouse
  • Wholesaler
  • Cedar Rapids, IA
Replied Nov 27 2022, 07:37

Why are you interested in wholesaling lease options? I suppose it could be a niche that no one else is looking into in your area so you have an edge. 

I would just say before you try doing something unique like that, do normal real estate wholesaling. There are plenty of people on YouTube to teach this or sell you a course so that you can have a running start. 

one issue you might have with wholesaling lease options is that you might not have enough leads (lease option homes to wholesale). It's a system used more in a buyer's market. 

Also as a wholesaler, it's nice when you can work with the same end buyers over and over again. These would be the people in your market who buy a lot of homes. The end buyer that would be interested in a lease option would probably be someone who doesn't have much money, therefore they can't buy a deal very often. You'd need to find a new end buyer for every deal. That is if my understanding of lease options is correct.

Hope this was helpful. 

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Billy Daniel
  • Rental Property Investor
  • Russellville, AR
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Billy Daniel
  • Rental Property Investor
  • Russellville, AR
Replied Nov 27 2022, 07:49

I doubt you will find an agent who is willing to work with a wholesaler like this.  By its nature wholesaling does not benefit the seller to the maximum extent possible.  As a wholesaler, do you tell your seller how much money you are making?  Most don't because then the seller would ask for more money.  Realtors are required to disclose their fees upfront.  I'm sure most wholesalers are honest and upfront, but several are not.  On top of that, there is little, if any, legislation to regulate their actions.  All this adds up to a huge liability if a realtor works with a wholesaler.

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Eliott Elias#2 All Forums Contributor
  • Investor
  • Austin, TX
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Eliott Elias#2 All Forums Contributor
  • Investor
  • Austin, TX
Replied Nov 27 2022, 08:12

If you're wholesaling on market property they will make 3% on everything you wholesale. If off market I would JV it and still give 3%

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Jacob Cunningham
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Jacob Cunningham
Replied Nov 29 2022, 11:35
Quote from @John Woodhouse:

Why are you interested in wholesaling lease options? I suppose it could be a niche that no one else is looking into in your area so you have an edge. 

I would just say before you try doing something unique like that, do normal real estate wholesaling. There are plenty of people on YouTube to teach this or sell you a course so that you can have a running start. 

one issue you might have with wholesaling lease options is that you might not have enough leads (lease option homes to wholesale). It's a system used more in a buyer's market. 

Also as a wholesaler, it's nice when you can work with the same end buyers over and over again. These would be the people in your market who buy a lot of homes. The end buyer that would be interested in a lease option would probably be someone who doesn't have much money, therefore they can't buy a deal very often. You'd need to find a new end buyer for every deal. That is if my understanding of lease options is correct.

Hope this was helpful. 

Thank you!! I’m still learning everything.