Advantages of Real Estate Agent

4 Replies

My sister and I started an real estate investment company in August. We started out with wholesaling however my sister recently became a realtor. How do we use her being a realtor to our advantage. We have found below the market deals on the MLS and we have interested buyers but how would we get paid from bringing a buyer to a sellers agent.

Thank you

Stephen so she would still get a commission even if shes not the buyers agent. Shes just bringing buyer to the table but shes not actually representing him. Hes a investor that she knows. 

I guess my thinking is if shes not in contract with the buyer than shes basically helping out the sellers agent for free. Is my thinking wrong? I'm trying to think from a agent's point of view and not a wholesaler 

@Nyaisha Cummings you and your sister have buyers for deals that you found on the MLS, right? Then @Stephen J Davis is correct your sister will get whatever the commission split is offered to the buyers agent by the broker. 

You will only be allowed up to $50 in a referral fee, since you are not an agent. 

Wholesaling works best with off-market properties. 

At least you're finding deals!

@Nyaisha Cummings.  If your sister is licensed and is actively looking for off-market deals and finding them, as @Cameron Tope just pointed out, GREAT!

Regarding the question of, "... so she would still get a commission even if shes not the buyers agent. Shes just bringing buyer to the table but shes not actually representing him. Hes a investor that she knows."  No, not unless she and the buyer are contractually bound, which then means the business relationship has been papered properly and she is allowed to negotiate on behalf of and represent the buyer.  Even then, ANY monies paid to your sister MUST come from her broker, unless it is a personal transaction.  The problem is, as a licensed agent, for most employing brokers, there is no such thing, because anything she does could reflect on their license, so they want to be in the middle or at least be apprised of what she is doing, even for a personal transaction.  I'm nearly 100% sure that her employing broker will require it. 

Also, be advised that "referral fees" are not advised, especially if a licensed agent is the one paying it to someone else. Have your sister check with her broker, as well as the rules with your state's real estate commission before paying anyone anything outside of a structured title company closing.

As a wholesaler, who is a licensed agent, she has disclosure requirements that take priority compared to where you, as a team, were before your sister obtained her license. As such, assuming her broker is plugged into the situation and approves, you need to disclose to the seller what you are doing up-front, or most certainly at same time you submit your offer, so that the seller is fully apprised of your plan and can consider your solution before they accept.

Then, assuming you have a contractual arrangement with your buyer, just represent him/her as fiduciary and the seller as Customer, in a normal brokerage transaction.

The other option is to just put the property under contract, then assign the contract, but again, this needs to be fully discussed in advance with her broker, then fully disclosed to the seller, so they can't come back later and sue you for making "too much" on your transaction fee.

I strongly suspect that your sister will be required by her broker to use standard contracts and forms made available by your state's real estate commission.  Why, because licensed real estate agents do not practice law and therefore are not allowed to write contracts.  Absent this, and with her broker's approval, she could use a real estate attorney to write contracts and associated amendments or addenda.

Sorry to be a wet blanket with the broker and commission talk, but just trying to keep your sis and you out of trouble.  Best of luck with it!