% of Wholesale Assignment Fee to Real Estate Agent

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% of Wholesale Assignment Fee to Real Estate Agent

Nina Grayson
Real Estate Agent · Los Angeles, CA · Member since 2017 · 67 posts · 54 votes

BP Community, 

Do any agents in CA receive a % of an assignment fee from wholesalers for finding properties, and if so, how do you have it written in the/a contract?  Are you also a buyer on the contract?

As an agent, I have a fiduciary responsibility to my buyer or seller in the purchase and sale of a property.  As a wholesaler, I am a self-represented investor, and as long as I disclose in my cover letter to the seller that I am a licensed agent, self-representing, that I have a financial interest in the transaction, and that I am not representing anyone else in the transaction, I can do wholesale contracts.  

I met a reverse wholesaler (has a cash buyer and is looking for properties) who asked me to work with her in finding properties and she would pay me a % of her assignment fee.  

In order for me to be paid a % of the assignment fee, I (or my LLC) would have to be one of the buyer's in the contract. Otherwise, receiving a property/seller finder's fee on a contract other than a commission is not allowed as an agent.

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John Thedford
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
8y

Everybody is a "buyer" even if they don't have a dime:)

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  • Charlie MacPherson
    China, ME · Member since 2014 · 3k+ posts · 4k+ votes
    8y

    @Nina Grayson CA laws may dictate something specific, but you need a contract between you and the "reverse wholesaler".  You need something to protect you against all the eventualities - like another broker stepping in and claiming "procuring cause" for the buyer.

    I'd talk with your broker and get an attorney to draft that agreement.   

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  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    8y
    A good way to put your license at risk. And so what......the guy “has a buyer”.....geeze, what’s so special about that?
    1Reply
  • John Thedford
    Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    8y

    Everybody is a "buyer" even if they don't have a dime:)

    2Reply
  • Nina Grayson
    OP
    Real Estate Agent · Los Angeles, CA · Member since 2017 · 67 posts · 54 votes
    8y

    @Charlie MacPherson and @Wayne Brooks

    Thank you both.  

    Yes, Charlie a contract is a given. 

    I was attempting to discern if the agent must be a buyer on the contract and must also have a contract, as a buyer, with the reverse wholesaler.  Based on my review of CA Agency Law, that is how this must be done.  And I must also provide a disclosure of self-represented agent licensee and financial interest.  All three of these protect my license and ensure I receive a portion of the assignment fee.  

    If I am not the buyer then I am acting as an agent under express or implied agreement by the wholesaler to find properties for their cash buyer.  Effectively, I would be acting as the buyer's agent, which requires a written agreement, and my fee can only be a commission.   

    So, the contractual solution?  

    I partner with the wholesaler in a Wholesaler and Wholesaler Partnership contract as buyers on a purchase and sale contract, and which describes the terms of the agreement and payment.

    I provide Real Estate Salesperson Licensee and Financial Interest Disclosure to the seller.

    Both myself and the reverse wholesaler are buyer's on the contract and we both have the right to assign.

    If anyone has more thoughts on this, please chime-in. . .

    Nina

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  • Walter Roby jr
    Rental Property Investor · Encino, CA · Member since 2016 · 324 posts · 178 votes
    8y

    When i work with agents who have buyers, I tell them to total price to them (my fee included) and add their fee on top (doesn't have to be % based) and just have your buyer agree to pay you for bringing the deal together. Just make sure whatever fee agreements you use clear with your broker and attorneys.

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  • Nina Grayson
    OP
    Real Estate Agent · Los Angeles, CA · Member since 2017 · 67 posts · 54 votes
    8y

    Thanks @Walter Roby jr

    That's pretty much how we planned to do the deal.  

    The Wholesaler already has a cash buyer but needed properties. The Wholesaler looked to me to find those properties and said they would add my fee to their fee.  However, as a licensed agent, I legally can only do the deal as myself, an individual, not acting as an agent to anyone; self-representing.  

    So, if I am finding the property for their cash buyer per their request, I would be acting as an agent for that cash buyer.  Thus, I would have to have a Buyer's Agency Agreement.  

    However, if I am self-representing as a Wholesaler, I would have to be listed on the P&S agreement as the Wholesale buyer with the other Wholesaler. Then put my skin in the game by finding the property. They bring it to their skin in the game, the cash buyer, and its assigned to the cash buyer with a fee that represents what they originally would have charged without me in the deal.

    So hypothetically say their original fee is $60k, add my fee, a % of their $60k, say 20%.  The total wholesale fee to the cash buyer would be $72k.  I would get $12k for finding a property and they would get $60k.  

    Bottom line, the legal way for myself, a CA licensee, to Wholesale is to self-represent as a Wholesale Buyer and provide disclosure of my license.  

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  • Walter Roby jr
    Rental Property Investor · Encino, CA · Member since 2016 · 324 posts · 178 votes
    8y

    Also you could put the property under contract to purchase as principle, write a joint-venture agreement with wholesaler that discloses the split (reviewed by an attorney), then assign your interest in the contract to the buyer for the assignment fee.

    1Reply
  • Nina Grayson
    OP
    Real Estate Agent · Los Angeles, CA · Member since 2017 · 67 posts · 54 votes
    8y

    @Walter Roby jr - Hey Walter, That's exactly what I wanted to do, but the Reverse Wholesaler brought in the Cash Buyer and she only wants to contract with her LLC as principal. She's new and is not very trusting. I'm not chasing after her for buyers - there are plenty of buyers in the world who want good deals and an agent (me) who is worth their salt in honesty, transparency, and the work they say they'll put into partnering with them.

    Thanks for the feedback/advice!

    Win-Win,

    Nina

    Love. Life. Property.  

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