Wholesaling as a real estate agent in California

San Diego, CA · Member since 2012 · 4 posts · 1 vote

Hello everyone,

I am new to being an agent and would like to start being an investor but I need some clarification. For the purpose of wholesaling, what do other agents/investors do in regards to their commission as an agent? Would they get commission plus the assignment fee?

Thank you in advance.

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Lee S.

Northern, CA · Member since 2014 · 674 posts · 444 votes

@Jay Hinrichs I am licensed and what I said was I don't have to disclose in my advertising (Direct mail), yes I disclose in my contract. I also said I don't plan to wholesale but that it is legal as an agent. So far I've closed on everything I've done and plan to do so in the future but I can see it happening where I can't close on one for whatever reason and I would be open to wholesaling it, which is legal for me because I have a license.

I'm honest with people and tell them I'm buying their house to make money and I feel it also is a good negotiating tactic to push them to list it (not with me). I tell them that is how they will get top dollar. It tends to have the opposite affect however and makes them more willing to negotiate because they don't want to go through the listing process for whatever reason, that is why they called me in the first place.

I have no need or desire to be a shady wholesaler.

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Kiersten Vance
Real Estate Agent · Redlands, CA · Member since 2016 · 253 posts · 115 votes
9y
Hello Juan. If you are wholesaling the deal, there is typically no commission. If your seller wants you to list the home on the MLS and market the property then you would have a listing agreement specifying the commission due when the sale closes. I would consult a real estate lawyer if you are hoping to low ball sellers as an "agent" and then sell their home off market to a flipper. That can get very messy as you can easily violate your fiduciary duties to your client. They expect that since you are a real estate professional, you will guide them and offer the best market advice. I'm not saying it isn't possible, but definitely get some legal advice before you get yourself into trouble.
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Lee S.
Northern, CA · Member since 2014 · 674 posts · 444 votes
9y
@Juan Montero you can wholesale as an agent in California. I've looked into everything and spoke to CAR legal. We are a net listing state and we don't need to disclose on our advertising if we are acting as a principle. I haven't wholesaled and only plan to do so if necessary (funds tied up in other transactions) but I looked into everything just in case.
I send direct mail looking for properties and refer my non investor leads to my Broker, he tries to get listing and I get referral fee.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
9y
@Lee S. not that it matters much but if your unlicensed your broker friend is not allowed to pay you a referral fee.. that's a violation.
And what I did in all my years in CA.. is I simply close on the deals then resold.. and you NEED to disclose your a principal and licensed.. and that's no biggee one line in the contract..
but I think a lot of this is situatational.. if you had an agent telling little old lady here nice clean Rancher in Santa Rosa that is worth 600k is only worth 400k and you resell with doing little to nothing and make 200k.. that will be frowned upon.
You take a house that is falling down extreme hoarder bare land other types you can be more liberal with value interpretations. and unconcienable profits.
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Lee S.
Northern, CA · Member since 2014 · 674 posts · 444 votes
9y
@Jay Hinrichs I am licensed and what I said was I don't have to disclose in my advertising (Direct mail), yes I disclose in my contract. I also said I don't plan to wholesale but that it is legal as an agent. So far I've closed on everything I've done and plan to do so in the future but I can see it happening where I can't close on one for whatever reason and I would be open to wholesaling it, which is legal for me because I have a license.
I'm honest with people and tell them I'm buying their house to make money and I feel it also is a good negotiating tactic to push them to list it (not with me). I tell them that is how they will get top dollar. It tends to have the opposite affect however and makes them more willing to negotiate because they don't want to go through the listing process for whatever reason, that is why they called me in the first place.
I have no need or desire to be a shady wholesaler.
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Franklin Romine
Visalia-Fresno, CA · Member since 2009 · 1k+ posts · 863 votes
9y
Your commission is the assignment fee. Want more commission? Increase the assignment fee. The first layer of protection in any real estate transaction is by doing business with sound people. A sound person is not always predictable but we are playing a game of odds. Frank
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Juan Montero
OP
San Diego, CA · Member since 2012 · 4 posts · 1 vote
9y
Thank you everyone for you input. From what I have gathered:
1. There would be no commission as an agent just as a wholesaler.
2. Just be upfront with the person and let them know their options and what you can offer as a wholesaler.
3. Let them know it might be assigned to confirm if they would be willing to this so that the assignment using the CAR purchase agreement doesn't have any issues.
Any other information on this would be greatly appreciated.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
9y
@Lee S. as a licensed agent commissions are negotiable..
no need to assingn.. simply raise your commission from the get go.
I started in land sales in Mendocino national forest.. from Clear Lake Ukiah areas up to Covelo and over towards Garberville... those properties were and are tough to find.. it was a specialty I charged 10 to 30% commission right up front.
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Lee S.
Northern, CA · Member since 2014 · 674 posts · 444 votes
9y
@Jay Hinrichs I get that commissions are negotiable but I think your missing my main point, I'm not a wholesaler! I simply like to have as many exit strategies as possible so I did my homework. I hope to close on everything but I could see a situation where I come across a few deals at once and I'm spread thin on funds to close or funds are delayed, this is a situation where I could do the occasional assignment.
Even if the money is equal or near equal, when I work as an investor I'm working for myself. When I list a property I'm working for the seller, no thanks. This is why I refer potential listings to my broker rather than take them myself.
I'm still new to investing, bought, rehabbed and rented two properties last year and I'm hoping to ramp that up more this year along with buying/selling a bunch more. My issue right now is I have the ability to close but no deals in the pipeline, I haven't been actively looking for the past 9 months while I finished the other properties.
You convinced me long ago not to buy pigs in the midwest, I only invest locally in California.
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