How to price deals?

Question

Considering selling some homes to my network.
Some are rented out, some are being repaired but not rented yet, and I would also like to help these people with traditional wholesale deals by helping them make the purchase and move them along the process of buying, fixing, renting.

I just don't know how to price my services appropriately.  What are "standards" across the industry?

J Scott · Answer

You said that you want to help people "make the purchase" and "move them along the process of buying" in return for a fee.  That would be brokering real estate, and you need to have a license to do that.

As for the fixing part, you'll want to check the laws in your state to determine whether you need to be a licensed GC in order to manage rehab projects for a fee.

And the part about helping get the place rented for a fee may require a license as well -- it depends on exactly what you're doing for the client and what the laws in your state are.  In my state, that could easily be construed as property management, and you need to have a brokers license to legally do that.

John Stevenson · Answer

If you are selling properties that you already own then that qualifies as a FSBO and you do not need a license. If you are selling other properties then you are acting as a real estate agent without a license and could be subject to severe penalties.  If you are only passing along information or tips to your network then you would be acting as a bird dog and could rightfully ask for a small fee for this service. Just make sure you do not step over the line into the realm of a sales agent.

Bill Gulley · Answer

This is sounding rather odd to me, "people in your network" are they all beginners in investing? Sounds like you're not wholesaling but retailing helping them making a purchase and moving along.

J. Scott is correct, not only for GA, but in all states.

Henry M. · Answer

J Scott,

I wasn't referring to you specifically but in general (on my last post)... I'm sure you agree that the entire internet as a whole usually will have the big debate of investors selling real estate (w/o) licenses vs. Realtors.

Needless to say, I was just defending that stance for all investors - new & old, when it comes to the mentality of what you "can" vs "can't" do - i.e. "You cannot sell real estate w/o a license."

It usually will end there w/o suggestions from Realtors as to how the investor could sell real estate w/o a license... Now I'm sure you know where I'm going.

Anyways as usual - Always

Big Henry

J Scott · Answer

Henry,

Nobody is arguing that there isn't a legal way to do what the OP wants to do.  We're simply pointing out that the way in which he describes how he wants to do it is illegal.

See my second post in this thread (the second by me, the fourth in the thread).  It clearly indicates that what the OP is proposing would be considered brokering a deal.  Nobody ever told the OP that what he wants to do isn't possible, just that how he plans to do it not legal.

Perhaps you can provide some advice to the OP on what specifically he should and shouldn't be doing to keep things legal?

John Stevenson · Answer

Sometimes we focus too much attention on the "illegality" and not why the Federal government wants those who practice real estate to be licensed. It is not to "persuade their agenda or prevent those from moving forward in their endeavors in real estate" or "give the other man the benefit of the doubt in their intentions" as Henry M. said.

Rather real estate licensing is mainly to protect the uneducated consumer from us in the real estate field that know the ropes well enough to scam someone. (Don't get upset, I am not saying anyone in this forum is doing this - but we have the knowledge, if we wanted to use it.) Real estate licensing forces those in the profession to conform to a set of ethical standards and gives the consumer the legal recourse if they do not.  It is an established system of checks and balances.

It is the same in the medical field.  I know a lot of "educated" friends that are willing and able to tell me how to treat this or that. But if I have something seriously wrong, do you think I will trust my physical health to someone who is unlicensed? No way. The same can hold true with those who entrust us with their financial health. If someone does not know what they are doing, you could kill someone financially.

It is good to every now and again step back and look at the bigger picture.

Henry M. · Answer

Finally Fellas,

Now I am feeling better that we have some positive dialogue going... I just get worked up when anyone dismisses by stating the obvious.

It always seems fear is being used to persuade their agenda or prevent those from moving forward in their endeavors in real estate.

Never say never and do not deny anyone from their ambition.

When it comes to the Realtor License issue, I despise when the assumption is worst case scenario (illegal)... I would hope as professionals we give the other man the benefit of the doubt in their intentions.

I don't want to hear about bird dogging, wholesaling, flipping or double closing is illegal.

Is it possible you can attempt to do it illegally? Sure, but at this day and age it is very difficult. The title companies are paranoid and then you have some Realtors who don't have a creative bone in their being, and lastly, nor many investors with close mindedness on certain subjects are the same.

A prime example I heard plenty of resistance in the past was subjects like the use of trusts. If you know how to use them, they can offer dozens of benefits with ease. Yet most attorneys were uneducated on the subject.

Guess what? I still closed.

The bottom line, where there is a will there is way and it doesn't have to be illegal.

Big Henry

John Stevenson · Answer

This is a common thread topic here in Bigger Pockets. Investors say that they do not need a real estate license to sell property and realtors who insist that those who participate in real estate without a license are breaking the law.

There is an interesting blog article here in Bigger Pockets that discusses the pros and cons of both side.  Might want to check it out. http://www.biggerpockets.com/renewsblog/2010/02/24/should-you-get-your-real-estate-license-investors/

That being said, if you as an investor are absolutely sure that your actions are not in violation of your state licensing laws, then do what you think is best for you and your clients.

Account Closed · Answer

There is always a way, that being said most of you guys shouldn't be trying to skirt the law.    Sure, you might even get away with it for awhile, but if you build any sort of business worth having someone may decide to "turn you in" and cause you some serious grief.

I don't understand the mentality of not wanting to get a license for people looking to play with other people's deals.    Why are you trying to reinvent the wheel?    Afraid of drinking a few sips of kool aid?

Also how are you protected in these transactions to actually get paid.   Up front?    Doesn't make sense to me.   Don't expect to be on any hud's.

With that said, Henry keep in mind the platform of this forum.    Sending some newbie down the road with really REALLY advanced styles of doing something will only end up with them smashing into a major problem.     Can you find a pot of gold at the end of the rainbow?   Sure in theory, should these newbies dig at every rainbow's end...of course not.

J Scott · Answer

Of course you don't have to be a real estate agent to market/sell real estate.  You can also have an equitable and/or marketable interest in the property (depending on the laws in your state).  Investors can sell their own properties all day...

But, if you try to market/sell real estate where you don't have a real estate license and/or you don't have equitable/marketable interest in the property, you are breaking the law.

If you know another way, please fill us in...

How to price deals?

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