My broker wants a cut of my wholesaling deals???

Question

JD Martin · Answer

Caveat: I have never been a real estate agent. But I did stay at a Holiday Inn Express once.

Most businesses have non-compete clauses, written or implied, and will either demand compensation or terminate those who fail to comply. If you work for a broker, and your job is to bring in leads, and you are working leads for yourself, most businesses would see that as a conflict of interest.

Why not just quit the brokerage and do the wholesaling full time?

John Chapman · Answer

Most brokerage places I know will insist on some sort of fee, even for your own deals.  I pay my broker a small fee for every buy and hold deal I buy, even it's an off market deal not involving the MLS.  I think the reasoning is that, once you have a license, every real estate transaction you enter into exposes the broker to liability, however remote.  (I know some brokers want every deal to go through their offices for E&O purposes.)  I'm not sure I really agree with this logic, but I think it's fair to pay them.  I do want to contribute to my broker's bottom line as I'm not out there as a normal realtor and that's the only way he'll get compensated for taking me on as as salesperson.

Gotta agree with @Jd Martin there seems to be a bit of a conflict with what you're doing.  They probably should get a cut.

Andrew Jenkins Jr. · Answer

Hello Mr. brooks I am not a broker I did take some classes over the years. I am new on the investing side but do have a good understanding of what is going on. First do you have to do your deals in the office you are working at, I'm sure there is another place you can go do your deals. You did say they aren't a part of the companies business. Then 40 percent is way more then then the standard fee a broker would get if you sold a house. This is almost half and sounds like a bit much to me as well. if your not in a position to do your deals any where else I would ask if they could lower the amount they want as you are doing all the work and have bills, travel and so on. be careful how you word it to your boss because you could lose the job all together which maybe a blessing as it sounds like you are doing well. If nothing works out then you will have to go with it until you can go out on your own good luck.

John Thedford · Answer

I don't pay a fee for my personal buy and holds. I don't play the assignment game. Any good lead that I get, if not purchased by myself, I will list through my broker. Most agents have no idea what it costs to run a company (and some probably don't care). If your broker supplies the overhead, E&O insurance, training, etc they why would you expect them not to make a cut. It is indeed a conflict of interest in my opinion but you may differ. Remember, it is a two way street. They can tell you to move your license, or you can take it and move. Agents are contract labor. I agree with another poster. You can always give up your license if you don't intend to benefit the company and strictly play the assignment game. Otherwise, what incentive would you have for taking a listing? Beat the seller down, take your assignment cut, and cut out the broker.  If I was to have a brokerage I would definitely expect a percentage!

John Thedford · Answer

if you are not producing anything for the company of what value are you

Dana Whicker · Answer

(cause they have better education , systems, and what not)

^ That's why they want a cut of your assignment fee.

Many brokers would end their relationship with you if they knew you were wholesaling instead of listing properties.

Trey Brooks · Answer

Trust me my life purpose is to add value, I know investors who just hang their license with a brokerage... but they don't do anything. My goal is to break into retail, while still doing my wholesale deals, but i don't see why they should get 40% of the assignment fee.  @John Thedford

@Jd Martin (Sorry should've elabored I was posting this while at a red light).

But I'm 19, I've been wholesaling for about 6 months now, been learning for a year and a half. I've done 11 deals. I'm at an amazing small brokerage, that gets Investing, but I want to gead towards retail. So I was switching my license (cause they have better education , systems, and what not).

But they were saying they want 40% of my assignment fee... and I wasn't quite comprehending why. They didn't really produce much of a why & I didn't want to insult them. I'm trying to figure out why they should or shouldn't get a cut of my assignment fees.

Thanks for responding

JD Martin · Answer

This is a confusing post. You work for a listing agency and are wholesaling on the side?

My broker wants a cut of my wholesaling deals???

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