Wholesaling with a realtor

9 Replies

@Lydia T. It’s gonna sound foolish because it is but basically i disclosed what i would be doing with the property, bring the information to my investors figure the numbers out and get the best deal we can or close to it and if there’s more than enough profit I’d give her a bonus for her efforts.

@Xavier Nguyen ok please dont be offended by this....THAT IS A TERRIBLE IDEA!! ESPECIALLY FOR A BEGINNER!!!

a realtor has a fiduciary responsibility to their client (the seller) and they will absolutely not work with you if you tell them that you want to put the property under contract for significantly less than what its worth and then try and sell it to someone else for more money. Also, you dont pay them so again they have no incentive to work with you. They make money from their commission when they successfully sell the property. Also, any halfway decent realtor is going to ask for a proof of funds which Im assuming that you dont have. So long story short, workin with an agent is not the way to go if you are trying to wholesale. You need to do your own marketing and find off market deals. Stay away from properties that are listed with an agent. There are much better opportunities out there.

@Xavier Nguyen Also, why would your investors pay you if the property is listed on the MLS?? They could just contact the agent or property owner directly and make an offer. There is no reason for them to pay you in that scenario

@Lydia T.

I 100% agree

And i was definetly asked for proof of funds and i definitely don’t have it. At this point of time.

Since I’m still new and haven’t mad any humongous mistakes yet. I figured id step back, still continue to market to HOMEOWNERS and save over the year and then invest in myself. Get a realtors license, brokers license so i can really get a grasps on this real estate language.

@Xavier Nguyen that sounds like a good idea. Keep in mind that once you are a licensed agent you will need to speak with your broker about wholesaling to make sure that they will allow you to do it. Definitely take some time to educate yourself.

@Xavier Nguyen There are a lot of moving parts here.  I don't know where you are located, but here in MA and in many (probably most) other states, putting a property under contract and selling your position in that contract is a license-required activity.  That's the usual model for wholesalers.

If you actually close on the property, you're free to re-sell - but otherwise, wholesaling as it's commonly practiced is unlicensed real estate brokering.  In other words, illegal.

There's an additional risk.  A wholesaler is causing someone to enter into a contract that they have neither the intent nor the ability to perform to. That seems to meet the textbook definition of "fraud in the inducement".

If you do get your license, you face another challenge.  Even if you close and re-sell, that's virtually indistinguishable from a "net listing".  That's a listing where the seller agrees to a certain price and you as the agent get to keep anything above that.  Net listings are illegal in most states.

Here in MA, a net listing will at least get you some serious fines and will probably get your license suspended or revoked.

As I understand it, those kinds of laws aren't universal.  I believe wholesaling is legal in TX and although they're discouraged, net listings are legal in NC.  

As to working with a Realtor, that's a non starter. My job when working with someone who wants to sell their home is to get them the most money and best terms. That means exposing the property to the widest pool of buyers and that's always done with an MLS listing and an aggressive marketing program. Wholesalers by definition need a below-market price.

The bottom line is that instead of listening to gurus, Youtubers or bloggers, research and read your state's real estate laws and you'll avoid trouble.

Originally posted by @Xavier Nguyen :

Wholesaling with a realtor, can it be profitable and worth it? A lot of YouTube videos say yes but I’m still nervous. Working on a deal right now.

Non starter man. Even though you don't know it yet you are actually trying to be a Realtor yourself. Wholesaling as it's taught is a myth. You need a license to Broker real estate. That's all wholesaling is, it's brokering real estate except instead of being up front & telling the distressed seller that you'll sell their property for X amount & take X amount as your commission / fee you are taught to lie to the seller & pretend you are going to buy the property while you secretly attempt to "assign" your contract.

It doesn't work. Nobody has any respect for wholesalers. Whenever a wholesaler contact me I simply get the information about the property & reach out to the owner myself cutting the wholesaler out of the deal entirely. If you do business above board as a licensed agent that won't happen to you. The only people making money wholesaling are the guys selling the education.

Now that we've got the above out of the way let me explain to you that brokering real estate or connecting buyers and sellers as a licensee is a pretty lucrative job if you are really good at it. Things you would need to focus on to excel at it are as follows.

  • An in depth knowledge of the market.
  • Marketing skills.
  • Sales skills.
  • Negotiation skills.
  • Accurately estimate rehab costs.
  • Understand how to much time it would cost to run a renovation on the properties you are presenting.