How to or how not to work with a Realtor in wholesaling

40 Replies

Hello, I was wondering what the realities are if you find a property that an agent is working on and you think you can get a good deal on it by wholesaling. Does this bother most agents that you would try to wholesale the property, or are they generally okay with it as long as they still receive their commission? I am a newbie at wholesaling and birddogging so any advice on this would be very helpful,

Thanks,

I would recommend taking another route.

Well I'm not actually in that situation right now but just wanting to learn how to handle it if it comes up. I know the best deals to find are gonna most likely be FSBO type deals, at least from what I know so far lol, but if it does come up are there certain ways of handling that work best?

Just my opinion but if a realtor has it listed I would move on to another off market deal.

It can be done and it's not impossible by any means but it isn't the ideal situation.

I have used a realtor to sell a property and list it on MLS after I had it under contract. I did find value in that.

When you find a property that's listed with an agent, it's already been exposed to 10-100 times as many people as you would expose it to. The chances of you finding a buyer for a higher price than could be gotten off of MLS is slim, unless you have some ignorant buyers. For this reason, an informed agent will know what you're trying to do, and convince his seller that it's a waste of time contracting with you, which it is.

Yeah, that makes total sense in only using an agent to help sell the property.  The only scenario is see it happening on the front end where you are getting the property under contract may be if you know the realtor personally and then maybe something comes up, but other than that I think finding another way is probably best, thanks

If your question is, will a realtor be ok with you tying up a property with a contract, then you try to wholesale or assign it to someone else before you close on it,  and if you cant assign it you back out. Not likely any Realtor will let you do that.

If you find a deal, close on it, then you can wholesale it to someone else, and Realtor shouldnt care. We do a couple of deals like that a month. But it requires having better mls offering systems in place, being a lot better and faster, having cash,  having better relationships with reo realtors,  than the guys you are planning to sell to. 

Its not impossible to wholesale mls deals, depending on the area you are in. REIA meetings etc I constantly hear that there are no deals on the mls, but its where we buy aprox 80% of our deals, and where we get most of what we wholesale to other rehabbers.

What if it is a bird dog deal? Say you know of a property that would be a good deal for an investor you already have a relationship with. The property has an agent on it but all you really do is introduce the investor to the realtor for a bird dog fee from the investor if they take it?

Am really appreciating all the good feedback, this definitely beats spending thousands of dollars on a guru and probably better information too.  Thanks !!

Re:  Birddogging, if your question is will the realtor care, not likely. I suspect there would not be a real introduction,  but you would just be telling the rehabber about the property.

If you have time to find or look at these properties, do a basic evaluation to see if its a deal, a rehabber may he willing to pay you for that,  if it saves them a lot of time that they dont have. Maybe 500-1000 for each property they buy that you evaluated/found for them, its what I would pay. 

One of our staff spends 20-30 hours aweek, monitering mls,  and doing analysis on potential deal,  writing offers on new ones, price drops, back on market, and everything that is still active, in the strike zone,  that we havent writen on for 21days. 

We will do analysis on 10-30 houses a week,  a full time rehabber just doesnt have time to do that. 

If you find out what a couple rehabbers need, and fill that need you can get paid for that. 

The size of our paycheck, typically reflects the size of problems we are solving for others.

@J.j. McGuigan  

 I think the point being missed here is that it is not up to the Realtor to accept or reject your offer.  It is against the Code of Ethics for a Realtor not to present your offer to the seller, or steer the buyer from accepting the offer based on their personal feelings.  They can present facts, let the seller know what you are planning on doing, but that is it.  In fact, I recommend you be honest with the seller about your intentions.  

You also have the right to make your offer directly to the seller (with the Realtor present) to better explain why they should accept your offer.  

Happy Investing!

@Marc Carlson  

You are correct that an agent must present all offers.  But I can promise you, I've Never had a seller accept an offer from a wholesaler, after I explained what they were doing.

And, a Buyer does Not have the right to meet with the seller when their offer is presented. That's a delusion promoted by some guru/promoter guys.   They can, and do, ask...but it never happens with me.

@Ronnie Boyd 

  in the scenario you described who signed the listing agreement?  Was the seller aware of this...

@Wayne Brooks  

  I think this is were investors that complain about RE agents don't get it.. they don't realize that a very good RE broker will have if not complete but part near complete control of their client with regards to these issues.

I have had agents that wanted to present the offer to me personally or to the Seller personally but as you said its a request not a right... Last thing I want would be some person I don't know getting in my clients face or mine for that matter.. I love docusign and Hellosign for just that reason the less we talk to the other side the better of we are :)

I guess what I still might the hung up on is if you are honest with the seller that you are wholesaling and tell them you have buyers that would be interested in buying, and the realtor would still get their commission, why wouldn't the seller at least entertain the idea.  If the realtor and seller each get their profit from the sell even though it is wholesaled, why would they not at least consider for instance on of the investors you are in contact with's offer.  Is it just that people don't like the idea of their property getting flipped ??

@Jay Hinrichs

My contract states that I do not intend to occupy the property. I explain in person as well have it stated in the contract that I'm not going to live here I may chose to rent this property, sell it to another investor,rehab and sell it for profit etc & so on.

I also verbally explain and have it it writing that I can start marketing the property after the contract is signed (which includes MLS) at this point It can be listed by a realtor on MLS.

I market and go into every deal looking for fix and flips which is what my sole focus is now. If I feel it's something another investor may want I will still pass it along.

But I always make sure the seller understands fully what is happening and is ok with the transaction. But again my first intention is to fix and flip, my business today is to get the larger spread vs doing a wholesale deal..

@J.j. McGuigan  

  The reality is your not licensed ( correct) so you can approach the seller on your own if you wish to.. then its up to the seller and the broker to figure it out.

Some sleazy sellers in this scenario may even cancel the listing and try to sneak a sale to your buyer if they think they can get more money. If I was the broker on the deal I knew this happened I would file a complaint against you personally with the DRE for selling RE without a licnese.. But that's just me...

If your interested in getting into Real Estate why don't you just go get your license learn the right way to transact business .. I bet over time you will make many more deals and get paid to do it.. as opposed to trying to circumnavigate the RE rules ethics and laws.

Originally posted by @Marc Carlson:

@J.j. McGuigan  

 I think the point being missed here is that it is not up to the Realtor to accept or reject your offer.  It is against the Code of Ethics for a Realtor not to present your offer to the seller, or steer the buyer from accepting the offer based on their personal feelings.  They can present facts, let the seller know what you are planning on doing, but that is it.  In fact, I recommend you be honest with the seller about your intentions.  

You also have the right to make your offer directly to the seller (with the Realtor present) to better explain why they should accept your offer.  

Happy Investing!

An agent acting in the best interest of his client should advise his client as to whether they believe it is a good offer for the seller.  It is part of their fiduciary responsibility to let their client know of concerns they may have.  The seller ultimately makes the decision.

Here in Massachusetts and New Hampshire, no right of buyer or his agent to be present at the delivery of an offer is conferred on the buyer.

@Wayne Brooks  @Jay Hinrichs   Ultimately, it is not up to us as Realtors, it is up to the sellers and buyers.  I may not have been clear with my statement before.  We do not have the right to tell a buyer that they can not present the offer to the seller.  It is our job to ask the seller if they are OK with it, the decision is up to them.

From the Realtor Code of Ethics:

  • Remember that the decisions about how offers will be presented, how offers will be negotiated, whether counter-offers will be made and ultimately which offer, if any, will be accepted, are made by the seller—not by the listing broker. (Revised 5/01)
  • Remember that decisions about how counter-offers will be presented, how counter-offers will be negotiated, and whether a counter-offer will be accepted, are made by the buyer—not by the buyer’s broker. (Adopted 5/01)

@J.j. McGuigan  

What you don't get is that there virtually no chance you can go out and get a higher price for this property, than can be generated from the MLS. In order for you to be able to resell it for a higher price, the seller has to agree to a price lower than he can get else where. This is why you have to find ignorant and or desperate sellers for your business to work.

I just got called a couple of weeks ago by a seller in foreclosure, but with equity. The best offer they got from rehabbers/wholesalers going FSBO was $110k. I listed it, had a Cash offer, no inspection, 10% EM, for $137k in 4 days. Yes, the commission is $8470, but did the seller still come out ahead? Plus they avoided the "preapproved buyers offering $140k", who couldn't possibly get financing, wasting an important 45 days (auction in 60-90 days). The power of exposing a property through the MLS is either not understood, or intentionally down played by many. The rehabbers I personally know maxed out at $128k.

You'd likely be trying to selling to the $110k guys, so you'd need it under contract for $100-105K.  So, is it in the seller's best interest to sign a contract with you?

@Marc Carlson  

  Ethics are just that Ethics they are not laws... ONe can be brought up on ethics charges by the Board of Realtors but it does not have the effect of law.. its more like a  Shamming.

But yes having been a RE broker since 1975 and one in 3 states I am constantly taking continuing education and ethics is always a module that we take.

However as to the point of this thread this individual is licensed so not bound by the RE code of ethics.  Just the laws of his state...

Most of what goes on in wholesaling IE not buying the property just trying to tie it up and assign a contract in my mind and I think most states if taken to the mat is acting as a re agent without a license.. and some states are starting to crack down on the activity as they get complaints of the many newbie or not so honest folks taking advantage of the public.

I make pretty large % of my income helping fix and flippers do just that come into title on the properties so they don't have these issues.  And I see bird dog fee's all the time on these huds.. but I am not the bird dog police ... but that does not make it right.

@Ronnie Boyd 

our MLS would require your seller to sign the listing agreement you would not be able to sign it in the scenario you describe.. but good disclosures on your part...

PS I just started in Charleston 1 year ago I love that place and it could not be further from my home base of Oregon.. you talk about a great market...

Originally posted by @Dell Schlabach:

If your question is, will a realtor be ok with you tying up a property with a contract, then you try to wholesale or assign it to someone else before you close on it,  and if you cant assign it you back out. Not likely any Realtor will let you do that.

If you find a deal, close on it, then you can wholesale it to someone else, and Realtor shouldnt care. We do a couple of deals like that a month. But it requires having better mls offering systems in place, being a lot better and faster, having cash,  having better relationships with reo realtors,  than the guys you are planning to sell to. 

Its not impossible to wholesale mls deals, depending on the area you are in. REIA meetings etc I constantly hear that there are no deals on the mls, but its where we buy aprox 80% of our deals, and where we get most of what we wholesale to other rehabbers.

Indeed it's not impossible to wholesale deals off the MLS if you actually buy them. I'm in agreement with your advice to close on a deal and then resell it. That's what I do. I think I've done two contract assignments in the last ten years. It's the rare deal or situation where an assignment or double close would work for me. I want to control the resale so buy it. Most "wholesalers", especially here on BP aren't buyers and resellers (what I think wholesale actually means), but rather want to control property via contracts and minimal capital. I did a fair amount of that when I started, but never off the MLS.

IMO there can be a value add if you buy a property off the MLS or directly from the seller and then offer it to your buyer's list or even relist it on the MLS. Maybe you vacate the tenants, maybe you closed in 5 days cash with silly seller contingencies, maybe it's a package deal, maybe you buy it with a title flaw that can be easily solved on the resale.....dozens of things that many buyers can't/won't do. A non distressed (or less distressed) property has more value to rehab buyers and those buying off the MLS.

Originally posted by @J.j. McGuigan:

I guess what I still might the hung up on is if you are honest with the seller that you are wholesaling and tell them you have buyers that would be interested in buying, and the realtor would still get their commission, why wouldn't the seller at least entertain the idea.  If the realtor and seller each get their profit from the sell even though it is wholesaled, why would they not at least consider for instance on of the investors you are in contact with's offer.  Is it just that people don't like the idea of their property getting flipped ??

Indeed there are sellers that are perfectly happy to be paid their asking price or accepted contract price and do not care that you are marking it up via assignment or double close.  However, I've never encountered an agent aware of such a transaction that wouldn't care.  They will always advise their client against accepting such an offer. You've made the agent aware that there is at least one buyer out there willing to pay more.  This gives them confidence that they can get a better price and gives them something to reassure their client with. 

Kristine Marie Poe 

  Welcome back you were missed !!

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