All Forum Posts by: Burt L.

My overall market has about 1.5 million people and I want to send out my first 1000 letters to absentee owners. The initial list is important as its also the source for the follow-up letters and further marketing costs.

I'm not sure whether to exclude the original inner city, built around 1900 as some rehabbers will work there. I understand that rehabbers prefer homes build in the 1950's or later though. I live on the far west side but everything is within a 25 mile drive. There are also some local city jurisdictions within my larger metro area that have "more difficult" building departments and I wonder whether to exclude those. My choices will made by which zip codes to include or exlude.

The list will be for absentee owners with 10 or more years ownership (for equity) and for assessed values of 50K to approximately 200k, houses with 3/5 beds and 2+ baths, and will exclude trusts and corps. Many areas will be excluded based on assessed values.

This is the part where wholesaling isn't as "free" as some might suggest. I know J Scott didn't hit a home run with his first mailing, and I don't expect to either but need to do my best, based on the initial resources I have to work with. How can I better focus my areas and efforts in my first mailing?

I called to speak with a customer service rep at my state board of R/E, and asked them how to terminate my license as there is only a form for making a license inactive at their website.

I was told there is no way to terminate a license and I can only go inactive, until the rest of the three period expires- in two years. I am not a member of the NAR, as mentioned by Bill Gulley. So it appears that having an inactive license is all I can do for now, and will need to disclose I once had an active license, on an ongoing basis. Unfortunately, another real estate attorney said that having an inactive license may not be enough to avoid liability, but waiting two years isn't so appealing either.

In speaking with another former agent who made her license inactive to work with sellers directly - she said that not having an active license helped in her advertising, though I know that Monica Breckenridge said having a license didn't effect her marketing in our same state.

So inactive status is all I can do for now, similar to Missouri rules but different from Texas - until it expires in two years. I like Rob Gillespie recommendation to just work the lists and flip some contracts without a license, though this is as close as I can get for now.

That was exactly the follow up question - whether having an inactive license is sufficient or whether it needs to be relinquished entirely?

I much appreciate the input on this difficult subject for me. My takeaway at this point is that working with unrepresented sellers as an agent will likely create legal problems. Another issue is that a brokerage likely wouldn't approve a deal if the other side isn't represented and a broker can only be paid through a HUD-1 at closing. The brokerage I have spoken to about it wants 14 days before closing to review any wholesale deals. I also have read how important it is to get a non-refundable deposit from a buyer, and it doesn't look like an agent could receive this either. I would be doing off-market deals, as J Scott describes them, instead of the REO's and S/S he usually does with represented sellers.

The description by Bill Gulley about disclosures is also very helpful, particularly that having a license doesn't take away an agents ability to negotiate for their own purchases, but not necessarily to create a large wholesale fee. Getting a better deal for yourself isn't taking advantage, but getting wholesale fees from your negotiations probably is - I'm paraphrasing here.

I also put alot of faith in what Jerry Puckett has to say about the value of a license for wholesaling, though he hasn't taken the time to get one - and I provide a link to a similar thread he responded in.

http://www.biggerpockets.com/forums/93/topics/66017-wholsaling-and-listing-as-an-agent

Maybe I'm just too nervous, due to my many earlier CPA ethics classes and think I would like to begin wholesaling without a license, and so am leaning hard toward making my Agents License inactive. I obtained a license to do rehabs and retails, but found myself making "Bigger Pockets" for a long list of doctors instead and have to start over. This decision has been standing in the way of contacting a yellow letter provider and getting underway with direct mailings.

As is said, "when you're in a hole, its time to stop digging." Maybe I'll have a license again when I can do different types of deals.

The option of listing wholesales on the MLS or doing listings on properties which don't work as wholesales - or the many other benefits of having a license are all appealing, but I get the strong sense they aren't worth the potential liability if you can't disclose away the higher standard an agent is held to when working with unrepresented sellers.

Now I won't have to admit I'm an agent either....or take home the incremental savings.

I've seen a few different views on this and it remains unclear for me, so I offer my apologies in advance if its repetitive.

The brokerage I spoke with about wholesaling said its alright as a realtor if doing REO's and HUDs, but not if working directly with sellers instead of banks and government agencies. It would probably be difficult to find a brokerage that allows this, as there isn't an economic benefit in it for them.

A local real estate attorney I spoke with said that the worst likely thing that could happen is having the board take your license, and since you could still wholesale as an investor and aren't making a living from sales commissions, then its a non-issue. Not so sure I'm comfortable with this recommendation although I would like to be able to leave it at that. I would be concerned about having a judgement, if a realtor can have a judgement against them beyond what E&O insurance is - I didn't get to that question during the meeting with the local real estate attorney. I don't plan to do anything differently than any other ethical wholesaler; I hope that isn't an oxymoron.

I would like to do wholesales directly with sellers and then build back up to the ability to do rehabs and resales. I also realize I would need to disclose having a license to sellers, and having a written disclosure that I am not representing their interests and not trying to get them "highest and best". My understanding is that sellers don't care as much if one has a license if they have a distressed property that has to be sold and you put a contract before them.

A recent thread talked about listing your own wholesales on the MLS as a Realtor - if you have closed them - which gives a much larger buyers list audience, and at higher profit levels for the wholesaler. Other benefits of course are MLS access, easy access to properties, and saving commissions if you can resell on the MLS.

The issue of having a realtors license and working with sellers directly, while working under a brokerage still isn't clear. I want to appeal to the BP nation on this gray area.

I thought Denver worked very well, somewhat central in the US, and easier for the organizers to focus on the convention without out of state logistics.

Living here also makes it a favorite, of course.

[b]Michael Quarles wrote:

I remember a seller who had a for sale sign which read "I will not work with agents". After knocking on the door and him answering I let him know I was an agent as well.

What a great learning thread - beyond the OP question being answered, matters included are the listing of wholesales on the MLS before the first closing, the bewildering reasons some sellers are distressed, and that wholesalers often don't learn the real motivation for selling until further into the process - despite that being one of the first questions to ask. Many people are of course great "poker players" about financial matters and their true motivation.

In the above quote, Michale Quarles made the agency disclosure just as I believe its supposed to be done - at first physical contact though doing so on the phone isn't required. Being an agent can be a real turn-off to some sellers - is there a way to be further in the process and make the disclosure as K. Marie Poe had mentioned in an earlier post, after building some rapport? Wholesaling as an agent seems to have some extra hurdles and stereotypes to overcome.

@michael quarles Zowie Kapowie - sounds like a new wholesaler wades through all the insulting phone responses to get to the gems listed above. I knew cat-pee houses were profitable, but sending mass mailings looking for that special porn collection or husband beater does take a special dedication that has to pay well.

Strange I"ve never seen anything in the Wholesaling Programs marketing about this.........thanks for the heads up and gut check. Wow.

I'd still like to learn how Michael Quarles gets the deals with the Agent Haters (Example 9) while being one. Thats not an easy sell.

K. Marie Poe Thanks for the further explanation. I believe the value is then in the assurance that M. Quarles will close the deal himself if not sold thru the MLS or another avenue, within the specified period. I was unable to distinguish how it was harder to deal with a full-service agent than a wholesaler but see a few things better now.

My understanding is that M. Quarles is a licensed CA agent, so I don't think it was a dislike of agents that helped him get the wholesale deals but some of the other situations you mentioned. It must be that the CA MLS allows listings with an equitable interest; I believe my state of CO does as well. Makes one think about closing wholesale deals with hard money and listing for a period before doing a rehab - Better a quick nickle than a slow dime, some might say. Thanks for the clarification - there seemed to be some confusion about the technique being used, through the thread.

The FSBO's I have closed were income properties for myself and not distressed properties - at least they covered it well if they were distressed and the properties cash flowed well. The "distressed" term has alot of different levels to it and your are correct that I haven't been a distressed seller, not yet anyway.

I don't think there is any doubt about the OP's original question, before the issue of listing wholesales on the MLS came up - that marketing dollars spent finding sellers is more profitable than marketing for buyers. Buyers are relatively easy - its the deal itself that's harder to find.

So often its said that you have to keep your buyers happy, but you can push the deal harder with one-time sales to people on the MLS in the situations you've mentioned.

I'm trying to follow why a seller would allow a wholesaler to list their property on the MLS - something they could do themselves and cut out Michael Quarles profit (described as HUGE) from their net?

Under what scenario(s)would sellers allow this? I guess I'm operating under the false assumption that sellers are somewhat reasonable and have a desire to maximize their net.