CA Realtor, how do I wholesale properly?

5 Replies

Hello everyone, I am a Realtor in the state of California. I am trying to wholesale a property I have identified already. The seller understands I wont be acting as a broker in the transaction and have found the potential buyer to assign the contract to. The hardest part is the contract. Can I use my Zip forms? If so do I just leave the Broker information blank? Do I write an addendum to explain that I am acting as a principle not a broker? Do I fill out and sign the Seller Non-Agency Agreement or the Buyer Non-Agency Agreement even though the Real Estate Purchase Agreement does not have me listed as a broker? I spoke with my compliance department in my company and she addressed how difficult it would be to separate myself from my real estate knowledge and from my responsibilities as Realtor. I was thinking of putting someone else as the buyer but my compliance department said if I guide them in any way or tell them what to do I would be acting as a broker. Furthermore, if the seller or buyer were to come after anyone I would be liable, I wouldn't be properly protected, put my company at risk, and Zip forms are proprietary documents with an intended use, and the California Association of Realtors could come down on me for improperly using their documents. How do I protect myself from the worst case scenario? How do I wholesale as a California Realtor?

It was a long time ago, 23 years to be precise, since I took my first real estate courses for my license. However, as I recall, the teacher at the Ca. School of Real estate said probably 100 times during the course a realtor can not buy a property from a seller and then sell for more money to a buyer if they are representing the seller.  If I am remembering this wrong I apologize. If there is another agent representing the seller then I have no idea. Anyway, I suggest you call CAR and ask them how to do it legally.

@Oscar Lopez

The first thing you need to do is confirm with your broker if they will allow this. He/she needs to know you are wholesaling a property and not selling it through his/her agency. If your broker is OK with it, then I would review the next steps.

Will your activity be covered by your E&O insurance?

Remember that as an agent disclose, disclose, disclose!!

I know wholesaler's use their own contracts that are drawn by attorney's, themselves and so forth.  But the bottom line is as a investor dealing with a seller without brokerage involve, the best thing you can do is disclose that you are a lic agent and that you are looking to assign the contract your end buyer, investor for a fee.  You may want to research wholesaling and tons of info will come up

Originally posted by @Oscar Lopez :

Hello everyone, I am a Realtor in the state of California. I am trying to wholesale a property I have identified already. The seller understands I wont be acting as a broker in the transaction and have found the potential buyer to assign the contract to. The hardest part is the contract. Can I use my Zip forms? If so do I just leave the Broker information blank? Do I write an addendum to explain that I am acting as a principle not a broker? Do I fill out and sign the Seller Non-Agency Agreement or the Buyer Non-Agency Agreement even though the Real Estate Purchase Agreement does not have me listed as a broker? I spoke with my compliance department in my company and she addressed how difficult it would be to separate myself from my real estate knowledge and from my responsibilities as Realtor. I was thinking of putting someone else as the buyer but my compliance department said if I guide them in any way or tell them what to do I would be acting as a broker. Furthermore, if the seller or buyer were to come after anyone I would be liable, I wouldn't be properly protected, put my company at risk, and Zip forms are proprietary documents with an intended use, and the California Association of Realtors could come down on me for improperly using their documents. How do I protect myself from the worst case scenario? How do I wholesale as a California Realtor?

Eh? You're a licensed real estate agent. You passed a background check, a test, and maintain your license in good standing. You don't have to wholesale it. You just can sell it like normal. "Pocket listing" it if you wish to double end it. 

Same reason doctors don't (or shouldn't, IMO) sell Vicodin in alley ways... they went to medical school, they don't need to. They can push drugs above board, all day long, without having to enter what is (at best) a legal gray area.

Two suggestions:

1) Don't try to use the CAR forms. They're written with a very specific type of transaction in mind, and this isn't it. Trying to add enough addenda and modifications to force it to work will give you a butchered, hard to read contract. I don't have an alternative to suggest, but you're probably better off with any boilerplate contract for purchase you can find out there that has some sort of explicit assignment clause.

2) Check with the California Association of Realtors legal hotline. I wouldn't expect them to walk you through doing this transaction the right way, but they ought to be able to give you guidance on what things to avoid doing in order to keep yourself in good standing with CAR.

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