Agent helping wholesalers

20 Replies

As a wholesaler how should I approach an agent for there help? Why would an agent help me if I'm not i interested in selling real estate or buying traditionally?

@Joshua Swanger If you have a genuine Buyers List and proven track record of closing Contracts with no hiccups, why WOULDN'T an Agent help you find motivated Sellers? (But if you DON'T have those two things, then yes indeed, why WOULD they help you)?  Cheers...

Updated over 3 years ago

As always, no legal advice given!

Originally posted by @Brent Coombs :

@Joshua Swanger If you have a genuine Buyers List and proven track record of closing Contracts with no hiccups, why WOULDN'T an Agent help you find motivated Sellers? (But if you DON'T have those two things, then yes indeed, why WOULD they help you)?  Cheers...

 This would be a reason an agent would not help him. 

(Pulled from the Ohio Division of Real Estate's newsletter)

BEWARE: Seminars That Teach Unlicensed Real Estate Activity The Division’s Enforcement section wants all licensees and the general public to be aware of individuals, groups, training seminars, coaching programs or otherwise, which may be providing instructions on how to circumvent real estate license law. (Please see R.C. 4735.01 for a list of activities which require licensure.) Beware of seminars that provide instructions on wholesaling and option purchase contracts. Language included in these schemes include: “tying up the real property,” putting the house in contract until a buyer is found, and placing the home in contract for the purpose of re-selling the property. Despite what is being taught at these seminars, a real estate license is required to engage in these activities. The seminar instructors advise attendees that they can place a property in contract or an option to purchase, at which time the attendee can then market and re-sell the property for a profi t. The instructors also advise attendees how to bring buyers and sellers together through the use of an “assignable contract” for a fee. It is the position of the Division that, pursuant to Ohio law, the aforementioned activities are those for which an Ohio real estate license is required. However, licensure requirements or the potential requirement for a license is not conveyed to attendees of these seminars, presentations or coaching programs. Pursuant to R.C. 4735.052, the Ohio Real Estate Commission may impose a civil penalty up to $1,000.00 a day for unlicensed activity. Each day a violation occurs or continues is a separate violation. For example, under most circumstances, if an individual is involved in unlicensed activity for one month, a civil penalty of $30,000 may be issued. You may ask, “I’m a licensed real estate broker (or salesperson), why are you telling me this?” R.C. 4735.18(A) (34) provides that discipline may be imposed on a licensed real estate broker or salesperson for authorizing or permitting a person to act as an agent in the capacity of a broker or salesperson who was not then licensed as a real estate broker or salesperson. Steer clear of any individual, group, organization or otherwise that is promoting unlicensed activity such as what is mentioned above. Be very careful you are not working with a person engaging in unlicensed activity, and if you witness this activity, feel free to notify the Division.

@James Wise That's the best bit of info I've seen on the subject yet! Many thanks. It caused me to update my post to include the "no legal advice given" comment that I usually make regarding such matters, as I am not an Agent or a Wholesaler, but go by what I have gleaned from other posts and other sources and yes, I have been guilty of attending the occasional seminar.

I wonder how this differs from other States, and how many Wholesalers (or Agents knowingly dealing with Wholesalers) have been fined, and paid up!?

You got my vote, James. Cheers...

I spoke with my attorney and assured me there it's no issues with wholesaling in California.  I do appreciate the advice and note know not wholesale in Ohio.

That being said I was curious if being friendly with them and offering them the possibility of having my buyer them is really my only sales pitch

I really don't understand why it is wrong to wholesale in Ohio. If a seller wants to sell his house for what ever reason and chooses not to use an agent, what is the harm of a wholesaler helping him find a buyer. Maybe it's the retail part of it. They way I see it, everyone thinks what they have is valuable-  that doesn't mean it is. As long as numbers can be crunched to verify the reason for not offering retail, what's the harm? They do it with cars everyday!!!!

It's about conducting a real estate license law activity without a license.

The state real estate commissions are not interested in wholesalers trying to make money. They are focused on protecting the interests of the general public.

Laws vary by state. The angle most use is that they are a buyer with an option or assigning the contract. The reality is a bunch of these folks simply do not have the ability to buy a property damaging a seller when the end buyer falls through. So the wholesaler is really not  a purchaser at all but a conduit trying to collect a fee. If they could actually show proof and ability to purchase if the end buyer didn't come through that would be different.

This reminds me of another situation years ago I heard about where brokers/agents would offer to "buy your house" if they listed and it didn't sell in XX number of days. There were cases where it didn't sell and even with the outs the seller met all the requirements. The broker/agent couldn't buy and the seller was damaged. This caused some state real estate commissions to require a certain level of funds in a bank account on standby to show the ability to purchase and honor the guarantee.

Joshua get your attorney to give you a written and signed legal standing letter to back up what you are being told verbally.

Verbally is generally unenforceable in a court of law and the verbal party will say you misunderstood what they said etc. If they will not stand behind it in a written statement the opinion is worthless.

No legal advice given.   

That's super lame on Ohio!

This topic gets brought up a lot and the debate about being licensed or unlicensed eventually starts. I'll give my quick opinion and hopefully it's useful for someone. 

To answer your first question about finding an agent, I can't imagine any competent agent wanting to work with a wholesaler. Most of your deals should come from off-market properties where the agent isn't going to earn a commission. They would basically be running comps for you and that would get old very quickly if they aren't making money on the deals. 

My opinion is that getting licensed is the way to go. If you conduct yourself ethically and disclose to potential sellers that 1) you're licensed and 2) you plan to make a profit, you should be fine. I am not saying that a complaint will never happen but I've done hundreds of deals with a license and have never left a closing table with an upset seller, much less a complaint. I am also very fair to sellers, I don't need every deal to be a home run and I don't take advantage of people. In addition to having MLS access, the other huge advantage is being able to earn commission on deals. I don't market myself as an agent but made over $20k last year just doing retail deals for family and friends.

Originally posted by @Joshua Swanger :

As a wholesaler how should I approach an agent for there help? Why would an agent help me if I'm not i interested in selling real estate or buying traditionally?

Joshua, I would not approach an agent for help with doing your day to day wholesaling business - or real estate business - in the beginning. Starting out...focus on building your own buyers list, and finding your own deals. If you see an MLS property you want to buy, to either keep, fix/resale or even wholesale (note I advise against wholesaling too many MLS deals...that turns off buyers)...then approach an agent who will draft a contract to your terms, assuming you don't know how to do contracts.

However you will do business with agents over time. With my real estate business...they bring me properties for me to buy, help me sell my properties and also lease my properties.

You are essentially asking an agent to help you do what they do, but without a license to do it. Would there be enough room to pay both of you on a typical deal?  BTW, the DOL has cracked down on wholesalers in WA as well.  Doesn't bother me as a buy and hold guy, but thought I would mention it.  

Thank you all for the great advice.

I like the comparison with the selling a car doesn't mean you have to be a car salesman Lol. But as a Wholesaler, is it wrong to HELP a list of fellow associates find off market motivated sellers looking to sell their property? And get a finder's fee? 

In my opinion its all about the intent and being upfront.

@Joel Owens Playing devil's advocate, but don't conventional owner occupied seller deals fall through all the time even when there is a licensed seller's agent and licensed buyer's agent involved...financing, concessions, repairs, appraisals, job losses, title issues, etc...?  I'm sure it isn't any wholesalers agenda to not be able to put the deal together, as they would be wasting their own time by doing a lot of work for no pay.

Note that I'm not a lawyer or offering legal advice, but merely expressing my own opinion.  I  guess a wholesaler could run into a legal issue depending on how he represented himself or verbally promised a seller or buyer.  I prefer upfront honesty when dealing with all parties involved.  As Account Closed mentioned, I want everyone at the closing table to walk away happy.

I'm not a licensed realtor, nor do I plan on being one, although I do see both the pros and cons of getting a license.  It's simply a business decision for me not to pursue it.

I wouldn't ask a real estate agent to run comps for me because I don't think it's beneficial for them to perform that day to day work for a wholesaler in hopes of the wholesaler forwarding leads to them.

I think both real estate investors and realtors sometimes look at the other one in a negative light.  I try not to worry too much about what others are doing and focus on networking and helping any way I can.

I guess if everyone is honest & has integrity, then there is a place for all types of different niches in the real estate arena.

Hey Wes,

The issue here is the role is clearly defined for a broker/agent that they are putting together a transaction. They are doing a real estate activity to earn a commission. Technically the commission belongs to the brokerage and whatever the agreement is the agent gets the residual when it closes.

A wholesaler often times is presenting themselves as being a CASH BUYER when 90 plus percent of the time it is smoke and mirrors. That is the problem I see is that they are selling something they are not to try and seem legit to get a start.

If the wholesaler stated that 1. If the end buyer pulls out the seller is SOL  2. They are a wholesaler with no cash to close themselves 3. They will be using hard money, transactional funding, etc. to try and close the deal  then the seller likely would not be excited about it.

The whole deception thing just doesn't sit right with me. Just be honest and upfront and if the seller in writing says they understand and are okay with that then fine you made full disclosure.  

Of course there are bad brokers/agents out there so no facet of real estate or niche is immune to the bad apples. The professional wholesalers are few and far between which is why I think based on tactics the mass wholesalers try it turns off other people from wanting to do business with them. 

If a wholesaler brought me a really good deal I would look at it for me or my clients with commercial. I haven't found a deal yet submitted from them. Just a bunch of overpriced garbage. Sellers tell wholesalers if you get them this price they will pay a fee etc. and then these wholesalers go around slinging mud everywhere hoping someone will bite on a bad deal. 

I am doing some wholesaling and have talked to agents. Working with agents is great they have great info and we have good business. I tell them the truth when i come to them and they either choose to work with me or not, most of the time they do so there is no problems.

Wow, this makes me want to distance myself from my an real estate agent now. I have been in several talks with a real estate agent out here in LA and he doesn't come across that way at all. He is motivated to help me look for a place that I can fix and flip or even to wholesale. He has already shown me a couple of houses that are in pretty bad condition but the asking price is way too high which is why they are still on the market. He has also shown me ways on how to approach making an offer. I take it all as a learning experience. 

~just my two cents~

@Andrea Tolver and @Paul Samuels thank you I was really more curious if it was even with my time to speak with them and share my business interests thank you

From Joel Owens post:

"Laws vary by state. The angle most use is that they are a buyer with an option or assigning the contract. The reality is a bunch of these folks simply do not have the ability to buy a property damaging a seller when the end buyer falls through. So the wholesaler is really not a purchaser at all but a conduit trying to collect a fee. If they could actually show proof and ability to purchase if the end buyer didn't come through that would be different."

The second property I purchased as an investment was exactly this scenario. Some jerk came along, tied up the property, and then simply walked away after having screwed over the homeowner for 60 days. When I contacted the homeowner about a sale, they kept saying they didn't know if they could trust me. After they relayed why, I understood. If you want to "wholesale" CLOSE on the property and then do with it as you please. Misleading sellers, not having funds, and broken promises are really very bad ways to do business and treat people.

There is another thread going on HERE It has some info in it that those in this thread may find interesting.

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