Does anyone have experience with putting a Realtor's property under contract and assigning it to an end-buyer?
Tomorrow I'm going to do a walkthrough of a property with a two-story SFR and two 1200 sqft apartments in the back. The owner is a Realtor, who owns other rentals and needs money to complete the rehabs on the other properties.
Will he be getting commission at closing? Do you think he'll have an issue with me collecting an assignment fee on a property he could have sold himself?
If you've done this before, was there anything significantly different about the wholesale process because of the seller being a Realtor?
If the seller is a realtor they will most definitely pocket something. If you already have the end buyer under contract you should be good to go.
I don't have an end buyer under contract already. The walkthrough is tomorrow, so I don't even have the property under contract yet. I was just wondering how much of a difference it makes that the owner of the property is a Realtor. Since I plan to wholesale it to an end buyer.
Why would they be willing to let you tie up the property and attempt to sell the contract? What if you cannot sell the contract? Will you close on the deal or walk if you cannot find a buyer?
You are the buyer of the property. If you can't assign it - then you will have to close on it. As an agent, I wouldn't let someone tie up my property with what is technically an option, without coming to close. Now if you are using your contract (which allows you an out) and the agent will allow you to do it - then more power to you...just not sure why they would do that.
If the agent is selling their own property - it is unlikely that they will take a commission. If they do, it is really not material to the deal because whoever you assign it to is only agreeing to pay the purchase price (how the money is distributed after that shouldn't matter).
The agent is a seller...the numbers of the deal is all that matters and they won't change just because the seller is a licensee. The only difference is the agent is presumably more savvy about selling than an unsophisticated, distressed seller.
No reason for an agent/owner take a commission on the sale of his own house? He/she then has to split (or pay other fees) to his broker on the deal whereas an agent can typically just sell a personally owned property and keep the proceeds which won't likely be subject to commission split with his broker.
I think you're going to go look at a over priced or barely marginal deal. Depending upon how good and savvy the agent is they may try to take you for your EMD if they realize your trying to wholesale the property.
But why would a licensee not run their own numbers, market a property to sell, or let someone wholesale their property? Not saying it's not possible, just might not be any meat on the bone for the deal from my POV
I just wholesaled a duplex that was owned by an agent 3 weeks ago. She was very pleased that I was able to get the deal done in 9 days. She got her price and that was all she cared about. She even took some of my cards to give to other people!
@Elliot Smith It's possible and the process flows in the same way as a wholesale deal where the owner is not a Realtor. Thanks for your response. That's all I needed to know.
I haven't bothered anyone on my buyer's list because I've not taken any pictures or made the list of repairs needed. I plan to do that before ever making an offer. Using the BP calculators, comparable sales and several formulas given in the forums here, I'll come up with a number that makes sense & let that be the max. If it's not a good deal, oh well. On to the next lead.
If it does have good numbers, it's not my business why a Realtor wouldn't do the work himself. All I know is he called me twice and left two voicemails about selling & still asked me to come look at it after I told him I'm looking for discounted properties. It's off-market @Ralph Pena . He acquired it years ago in a package deal and it hasn't been occupied since - money out of his pocket. It has good bones and is walking distance to a college campus, so at the right price I'm certain cash buyers in my area will be interested. The seller's out of money to finish rehabs started on his other rental properties in the same neighborhood. There's the motivation to get rid of the one I'm going to look at tomorrow.
I had a similar situation here. The agent and a former partner bought some properties a couple years ago. After the partnership broke up he got stuck with one which he didn't plan on rehabbing. He owed some back taxes. Wholesaled it for the taxes owed plus my fee.
With a Realtor you had better be upfront. You need to be able to close if you can't find a buyer. They are going to notice your and or assigns etc. As a "wholesaler" one of the benefits I have is my large network of buyers. On top of that I can close if I can't find a buyer.
Where it gets tricky is why would they let you market it for more than your contract price if they could do it themselves?
He's knee deep in two other fix & flips and ran out of rehab money so he's willing to sell the property I went to look at - which has been vacant and pulling money out of his pocket since he bought it. My exit strategy depends on the price we agree to in contract & the contract states that I have to have seller's written permission to assign. In addendum, there's a clause that has to be initialed by him giving me that permission. So we'll see.
Also, there's so much repairs needed that it would most likely just sit if listed at a price he wants. Because I got to him before anyone else knows he's selling, I can offer quick disposal without all the showings, tire-kickers, etc. but at a price that helps him complete his other rehabs & that affords me a good deal.
Not to mention buying season coming up so he probably wants those other two rehabs complete ASAP.
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