Pros & Cons of Listing a Property on the MLS vs Wholesaling

8 Replies

I'm a licensed RE Agents in the state of Texas and I was curious as to what the pros and cons might be for listing a wholesale type of property on the MLS the traditional way vs. "wholesaling" to an investor?

For example, say I find a motivated seller that wants to sell distressed relatives house that was left to them in an estate. The house needs considerable rehab, but has the potential to be flipped for a substantial profit. If properly disclosed to the seller, what would be my advantage to wholesaling the property vs listing it the traditional way on the MLS. Secondly, would there be any advantage to the seller to wholesale the property? I'm assuming the main advantage to the seller would be a quicker closing if I were to find a cash buyer, but I could also do that via the MLS.

Thanks all!

You cannot practice real estate without being under your broker and it would be illegal for you to sign contracts with a buyer without brokers approval. Plus you can run foul of all kinds of laws of disclosure ,net listings etc Talk to your broker and he can fill you in on his policy and state laws 

In addition to being a potential violation of State law in Texas ( I know it is in Ohio) wholesaling that property would also be a violation of the NAR code of ethics. A better solution is to do a good job of explaining your value to the client and charging them a commission to help them sell the home. You can charge as much commission as the seller will agree to pay (assuming your broker is OK with that) and assuming you do a great job of explaining your value to them, you should be able to charge as much commission as you would earn wholesaling the house. This way, you and the seller are on the same side of the table and you are working together for a win-win outcome.

Really just depends on how you want to play your game. You can do it the way @Aaron Mazzrillo does, or @michael quarles does. Both are licensed but are on either side.  Aaron wholesales, Michael wholetales. So really, you just have to figure out what you want, and how you want to go about it as long as you follow the rules. 

"Wholesaling" is just a fancy word used in the investor community, it changes nothing between an agent and buyers/sellers. Your broker should have their procedures of putting a property on the MLS or not and the owner also has a say so of course.

Originally posted by @Rodney Henson :

"Wholesaling" is just a fancy word used in the investor community, it changes nothing between an agent and buyers/sellers. Your broker should have their procedures of putting a property on the MLS or not and the owner also has a say so of course.

 Wholesaling is more than a fancy term used in the community. It is the art of convincing an owner to sell his property for 30% below market value  minus any repair costs so that the wholesaler can put the property under contract with the ability to assign or sell the contract to an investor . I do not think that would be a proper of legal activity for an agent .

The only correct answer is what @Account Closed said that you need to discuss any wholesaling plans with your Broker since they are responsible for your actions

Listing on the MLS- Since you are not in title to the property, most MLS rules do not allow

Charging a higher listing fee-  Really bad idea and this could be construed to putting your benefit above the seller

Net Listing- Only allowed in Texas if the seller requires

There is no rule against an agent wholesaling a property if it is properly disclosed including disclosing the comps on the property.  I would encourage you to find away to close on the property then it is yours and you can proceed however you see fit

Correct me if I'm wrong but Michael Quarles has got a ruling (or judgment, whatever) in California that says a property can be listed on the MLS if you have "equitable interest". I believe this is how he wholetales a lot of his properties. Once he has a signed contract he immediately puts it on the MLS before the purchase is even final. My memory is fuzzy but this is close enough. I like the idea of wholetale because you make significantly more money than you do wholesaling and you don't have to rehab everything. I have no interest in wholesaling by the way (but would consider it if necessary), I am a licensed agent and plan to get on title for everything. Take the OP's deal for example, could have made 15k instead of 5k by simply buying it then listing and selling it himself (minus commisions).

You can typically save some costs and to you r point close more quickly on your own. On the other hand, the MLS and brokers definitely have value, depending on your needs and expertise.