Originally posted by @Account Closed:
I am a RE broker and really want to find and work with wholesalers. If you bring me a deal and the numbers make sense then I am all over it. I will pay you what ever you are getting out of the deal. But that being said I am really trying to figure out how I can wholesale and still broker deals. As a broker I have a fiduciary duty to my clients, be it buyers or sellers. So for me to "wholesale" a property is what the state of CA says is "equity stripping" and that flies in the face of trying to get the highest and best offer for my client. I guess I can disclose to them that I am getting an assignment fee but why not just get a commission. I think if most sellers knew how wholesaling worked they would get tweaked out more so than paying a commission. I guess its ok to make an offer on a house as a non broker that is below market but when you tack on an assignment fee you are essentially "brokering" that property and that is where I can see running afoul with the state law. At this point if you just want to be a wholesaler you might as well just become an agent. You do all the work maybe more and you do the hardest part and that is to find listings, and even harder you are finding below market listings. Most agents will take any listing just to get something on the wall and hope it sticks, they dont have to find another buyer to buy wholesale they get a retail buyer to pay the commission.
And let me say this the NAR[National Association of Realtors] lobby is big and powerful. And if they feel wholesalers are taking their commissions then the heat will be on legislators to legislate it. They have a monopoly. I remember 20 years ago saying why should I get my real estate license the internet is just going to disrupt the agent model just like travel agents. Well it has not happened yet and it might take another 20 years for the low cost listing services kick in but I think eventually they will.
The problem with the "equity stripping" argument is the question that I've asked twice on this thread, and countless other threads: do other investors offer 100% of what they're willing to pay when they buy a house? Just because you're an agent or broker, doesn't mean that you have to pay 100% of what you think a house is worth. There are so many factors that go into what a buyer is willing to pay and what a seller is willing to accept!
The piece of the puzzle that most are missing on the brokering activity argument is that the PUBLIC advertising is what runs afoul of brokering laws. If you're not advertising publicly, you're generally not breaking any brokering laws. At least in Ohio, the Division has drawn a distinction between private email lists and password protected websites vs. posting on Craigslist or public FB pages (or BP Market). There's a chicken and egg thing there, though, for people starting out. How do you build a private buyer database without advertising deals publicly? Lots of legwork finding people that have bought cash before and tracking down their contact info. Most people starting out as wholesalers don't have the work ethic to do that.
