Being a licensed wholesaler?!?!

14 Replies

I'm getting ready to start wholesaling, but I've also had this urge to obtain my real estate license.  Are there any restrictions that a real estate agent has to obide by or can a licensed agent be involved in wholesaling?  And by, being involved, I mean locating deals, writing up contracts, and sellign them to investors?

Thanks!

Being an agent will probably make it easier to wholesale (access to MLS and buyers).

Good luck!

@TraVaughn Cobbs

Not sure about the laws in your state, but accepting a net listing is illegal in many states. That means if you get a property for say 60K and then agree to collect anything over that you have violated licensing laws. If you get licensed first and foremost you have to disclose your status. Then in order to properly wholesale all parties involved must know and you should act as the principal in the contract. Essentially you would tell the seller, I am going to purchase your property for 60K and I will sell it for 70K. Your buyer would also have to be aware of this as well. In the contract your fee would be the 10K not just a blank figure.

There are many real estate agents and brokers in Indianapolis who still wholesale properties that they get under contract or purchase.  It's all about disclosure to all parties involved in the transaction. 

Being a licensed real estate can make it more tricky. You have to be careful of being very upfront on your purchase contract that you intend to assign the contract for a profit, which you should be anyways. Just makes it all the more important as an agent. You don't want to be in the position of making it look like you are taking advantage of someone as an agent. I disagree with @Gary Shaw having access to the MLS is an advantage, As a wholesaler, most of anything you do with be off market.

Great thanks gentlemen!! So in your opinion, would getting my license be something I should try and obtain with the purpose of helping me be a mores successful wholesaler, or should I avoid it for now?  It sounds like if I do obtain it, it will complicate things a little more in my transactions.  Thanks guys!! @Tyrus Shivers  @Mike D'Arrigo  @Ben G.  

@Gary Shaw  

mls access is nice for running comps, but yes, as a wholesaler you are looking for off market deals. Another benefit of being licensed is that you have access to expired listings.

@Tyrus Shivers Are you saying that as an agent one should disclose what they will TRY to sell for, or that once they have the assignment agreement they should go back and put that on the P&S?

@Russell Ponce I think what Tyrus is saying, is that you must disclose to the seller that you are an agent as you write the contract since you are essentially the person buying their home from them. If you use the MLS (at least in VA) to list that property afterwards, you could be perceived to be circumventing the system to secure a net listing, which is illegal (again, at least here in VA). Agent compensation can be a percentage of sale price or a flat fee, but you cannot take a net listing where you guarantee the seller X number of dollars and then keep anything the property sells for above that.

IMO, I would either plan to wholesale or be a licensed agent but not both. Definitely creates some muddy waters that outweigh the benefits of MLS access.

@Russell Ponce  

Yes, it should be disclosed. I would create a P&S for 60K and then use a separate addendum with the seller saying that I plan to assign the contract for 70K. Then assign it to the buyer and place in the assignment the original purchase price for me was 60K. That is how I would do it. It will save you the headache for someone claiming you did not disclose everything and you accepted a net listing. It is easy in my opinion once you have your license to just list on behalf of the seller.

Ok understood and agreed, it sounded at first like a suggestion to put the end price on P&S at time of signing which of course would be a calculated estimate at best. I appreciate your posts @Tyrus Shivers  and your suggestions to be honest and upfront.

As a Broker, I just close on each deal that I "wholesale" or "Wholetail".  This keeps the transaction clean.

I've never had much luck with buying via an assignment or through someone that assigns me a contract.  I prefer to just go straight to the seller and purchase the property and then pay the "wholesaler" a finders or marketing fee.

In addition, unlike most above, I do get a large portion of my deals from the MLS and make several hundred offers per month. I could not do this if I wasn't a licensee.

Of course I realize this goes against the whole ides of "wholesaling" and the no money strategy.

Originally posted by @Shawn Holsapple:

As a Broker, I just close on each deal that I "wholesale" or "Wholetail".  This keeps the transaction clean.

how does this work for investors who do not have access to capital to close each deal and who may be wholesaling because they have minimal amounts of cash to work with - with most of it being used to market to find deals.

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