Using Real Estate Agents, Brokers and Realtor as arbitrage buyers...
How possible is this strategy for finding solid buyers?
Hello, I am new to the Real Estate investing, wholesaling business and I am not sure how possible it would be to use agents or brokers to buy new properties that are off market. From what I know about real estate is that agents are there to facilitate the sale of of the property to the buyer so. If the buyer likes the property then they buy it correct? So what would stop me from finding a property that is off market, negotiating a price from the seller $1-5-10k less than asking price and then try to have an agent find a buyer and cash me out? My profit would be $1-10K and I could then have a more consistent buyer pool that would increase my success rate of sales. Instead of big huge profits, there would be small profit margins but more sales.
This sounds way too easy of a strategy, im sure I am forgetting something or not understanding the flaw in this strategy. So what are the flaws? Profit margins eaten up by fees? Commissions? Laws? Conflict of interest?
Any feedback is appreciated.
Most Popular Reply
You're in WA and we only operate in FL, otherwise I would offer to help. We have a real estate agency arm that is run by the same person that runs our real estate investment arm, so she represents a lot of wholesalers. Since she has so much experience flipping and building homes herself (she has a formal degree in it), she's very different from most realtors. If you're going to use an agent, they really need to know their stuff...it can't be just any agent. Most of the time, the contracts are assignable, but a lot of MLSs won't allow those to be listed, so you might need to use a short-term bridge to take the deal down if you want it on the MLS instead of listing it with the hopes of doing an "A-B, B-C" close with Transactional Funding. Those can be harder to find (we only do it in FL for now). Back to the agent, they can be very helpful using the MLS to come up with As Repaired Value and talk through issues with the wholesaler to keep them from making big mistakes. We also discount out what we make. We have one wholesaler that is a machine and we might have 15 deals listed for them at once. If you get the right agent and build a strong relationship built on trust and loyalty with one another, they can be your most valuable team member. Good luck with your new venture. I'm sure you'll do very well.