Seller's Agent at my Open house... Problem?

Question

Russell Brazil · Answer

If you are holding an open house...that seems to me more like you are trying to provide brokerage services without a license as opposed to wholesale the property.  As a wholesaler, you should be trying to sell your contract on a property, not sell the property itself.  Holding an open house seems to cross the line to me.  Check with your state laws, as I am not familiar with them, but I dont think that would fly in any of the states I am licensed in.

Account Closed · Answer

Seems like a hot mess.  I'm not sure you set the deal up right if your thought was to wholesale, at all.

First question:  who says the Seller's agent has to be at the open house?  The Seller?  Is that in your contract somewhere with the Seller?  If not, you are not bound by what the Seller wants.  More importantly, why does the Seller want that?  The Seller obviously is uncomfortable with you and the whole arrangement which goes back to my initial comment above.

Second question:  is the Seller living in the property?  If not, what you do is none of the Seller's business.

Third question:  Why are you holding an open house?

Fourth question: You said you have a lot of money tied up in the deal, how?  For what?  Usually, all you have at stake is your EMD in a wholesale deal.

Fifth question: Are you prepared to close on this property yourself if you don't find a new buyer?

Sixth question:  If the answer to the fifth is no, then why not?  Is it not a good enough deal that you would do it yourself?  If not, then what makes you think it is a good deal to wholesale?

You are the Buyer.  However, you are coming across as an agent, and from what I read, acting like an agent.  If a complaint is filed about what you are doing with the Commonwealth Division of Real Estate that you are acting as an unlicensed agent, the way you have this set-up, you would have a hard time defending yourself.

Reading books and listening to podcasts about wholesaling is not training.  If you were professionally mentored or trained, which I doubt because I can't imagine even the worst trainer setting up a situation like this, you need to go to your trainer/mentor for the solution to this.

If you just decided to go out and "try wholesaling" and this is where you ended up on your first deal, then seek a seasoned professional wholesaler active in your area, bring him or her in on your deal, and have them bail you out.  The destination of your current path is a train wreck.

Next, invest in professional training so you know the right way to conduct a wholesaling business.  Despite what you read or hear, you can't learn how to wholesale in those books or podcasts.  You only learn what wholesaling is.

Russell Brazil · Answer

I would be very careful too about showing the property as an unlicensed person. In many states that would also be illegal. Check your local laws, maybe consult with a real estate attorney or the real estate commission to see how you can legally wholesale a property in your state.

Brian Gibbons · Answer

@Clarissa Nesbitt

If there is listing agreement with the seller, get an addendum that seller can sell with agent or she can find a buyer herself.

See

"Exclusive Agency Listing"

An exclusive agency listing  is similar to an open listing except the major difference is the broker  will represent the owner. The owner still reserves the right to sell  the property herself and not pay a commission.

The broker is free to cooperate with another  brokerage, meaning the second brokerage could bring an able buyer whose  offer the owner accepts. Typically, the broker is paid a listing  commission that is shared with the selling broker, so the owner pays  both fees.

Sarah Ziehr · Answer

I would also find out if the seller has an agreement with the listing broker, because the seller may not understand what you are doing and how everyone intends to get paid.

Sarah Ziehr · Answer

The agent being there is actually good for you, because legally you are not the sellers agent and there is a tenant living there with all their worldly possessions.

Is it possible to do a lease option with the current tenant?

Clarissa Nesbitt · Answer

@Sarah Ziehr Thank you for your perspective and advice.

@Brian Gibbons @Mike Cumbie @Russell Brazil

Looking at it now the open house was definitely a bad idea. Maybe I should just call it a viewing. I don't know how else to sell the contract with out showing the house and the agent has to be involved anytime I go to show it. Well luckily no one showed up to the open house any way. After having multiple potential buyers want to look at the home- because the comps look great and I have it under contract for a great price- but then not even willing to come view the property because there is a water renewal plant across the street (I know, what was I thinking), I have hit a road block. So now what!

As I said before I am past the point of no return so I have to get this done. So I called the zoning department for this property and found out it can be zoned for commercial use. Since most of this area is zoned for commercial use now and it is in the airport zone I think this may be the best route. The house comes with over 4 acres of land and could be used for mini storage or something like that (get creative). Maybe the house can serve as an office or be torn down completely?

Mike Cumbie · Answer

Hi @Brian Gibbons,

"The owner still reserves the right to sell the property herself and not pay a commission".

That may be true but having the agent at an open house I do not think would be considered "Selling herself"

Seller's Agent at my Open house... Problem?

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