I've been trying to get in contact with wholesalers in my area to look for investment properties. I called one number on a CL ad regarding "SECRET SALE LIST NOT ON MLS" that looked like a wholesaler looking for buyers.
So I meet up with the guy, and he's actually a broker. He starts showing me MLS listings he's printed out in the area and I brush those aside asking about the the off market deals. he pulls out a map of my area with some red dots saying these are the areas where we have some pre-mls leads. then he talks about using techniques other realtors don't use and wants to keep secret...and finally he pulls out an example of a postcard he uses in a mailing campaign, and he says we can target areas you're looking for blah blah. (it has the family with kids angle looking to grow a family in your neighborhood...).
So I ask him about running a campaign like that (because I'm looking to maybe run one with the help of someone who's done it before) and he gets all whispery voiced and says he doesn't want people to know aobut this and can I keep it quiet. I nod...
So then he pulls out an agent exclusivity agreement and wants me to sign it. I decline and thank him for his time and I'll be in touch.
When I searched his number it came up with more "valuation" services etc, but not so much "i'll buy your house cash". he mentioned to me in talking that he does price opinions and then he knows that's a lead for a potential seller before it's on the market. Maybe not so much wholesaling, but trying to keep these pre-market not really wholesale deals in his pocket, a little sketchy, no?
But this experience made me wonder, is it against some broker rules to do some sort of yellow letter type campaign? can an agent wholesale on the side without breaking some sort of agent sacred oath?
At least fishy. At worst, borderline illegal, and certainly against codes of conduct.
so you're saying...don't sign a contract with him? I wish I would have posted first! ;)
I was just wondering in general if there are limitations of a broker/agent for doing wholesaling themselves...or is that kinda a grey area nobody wants to talk about?
Yes, agents can wholesale, when they approach an owner as an Investor, not as an agent. The "valuation" services this guys promotes is a common offering by agents to get their foot in the door by offering "free CMMA's" to build a relationship with an owner who's considering selling. The CMA service is most certainly being offered in his capacity as a broker. Nothing wrong with that at all, in trying to get a listing. But, when you enter the relationship with an owner as an agent/broker you are obligated to be working for them, for their best interest. Changing hats and wholesaling/flipping the property for a profit, at the owner's expense, is a different story and will get your license revoked, fined, etc.
It's not illegal for a broker or salesperson to offer a 'pocket listing'. Its been done for years. Its not something that's advertised. Which would make it an MLS listing. Its under the radar for a day or two. Simply you get a 24 to 48hr heads-up on listing that's about to go on the MLS. As an investor you get to get it under contract if you choose prior to it hitting the MLS in that timeframe ...or not. Legally there's a 24 to 48hr window for the broker / salesperson to place the listing on the MLS. Someone offering you this service ' pocket listing' is a good thing if you know how to capitalize on it.
Not clear on the other whispering that you two had going on..... ;-)
I think what you are doing is a great first step@Bob R. . I think that is one of the great things about BP. When you encounter many different situations-which you will most definitely encounter while investing-you can just present it on the forum and many people will chime in and give advice. As you sort through the advice, it will give you some direction for which you can follow. I just want to say that you're heading in the right direction by getting the advice before you made the decision. Hope you found everything that these nice folks said to be useful:-)
I don't think this guy was doing anything legally wrong, I think he was just trying to convince you that he had some secret strategy to help you better than anyone else.
Regarding being a wholesaler, yes he can buy and sell properties as an investor but ethically he is suppose to disclose to the home owner that he is a licensed agent. If this is not properly disclosed upfront he can be sued later by a disgruntled seller.
I agree with Wayne.
The issue always seems to come down to how the agent represented himself in the beginning and if that changed during the course of conversation.
IF They start with-
"Hi, I'm a broker/agent and I'd like to talk about your property", then finds out the price the Seller wants and offers to buy it. That's a no-no. Your fiduciary duty is to protect your client, not your pocketbook.
IF they start with-
"Hi, I'm a cash buyer looking to buy direct from Sellers who don't want to pay commissions . . . ", as long as he discloses to the Seller that he has a license and on the purchase contract, you are fine.
Bottom line is be who you say you are and don't change your role partway through the conversation or bait and switch.
That's where people get in trouble.
As far as disclosure goes, do you put in the wholesale contract or have a separate contract all together with you disclosing you're a licensed RE agent but acting as an investor, this way its shown that you've disclosed this to the seller and no recourse can occur?
Join the Largest Real Estate Investing Community
Basic membership is free, forever.