REI newbie wondering about realtors wholesaling for themselves

[Michael Kingston]

New REI wondering why many books talk about working with licensed realtors to find deals. Wouldn't they wholesale themselves if they find a great deal? Any reasons they wouldn't? Please help. THANK YOU!

[Charlie MacPherson]

@Michael Kingston As a Realtor myself, I would be VERY reluctant to wholesale, assuming I'm following the usual pattern of wholesaling, i.e.: 

1. Find a person or property in distress.

2. Promise to buy their house for 65% of actual market value (without the intent and/or ability to follow through).

3. Assign my contract to someone else with a $10,000+/- markup fee for me.

4. Hope the seller doesn't figure out that they're getting screwed before it's too late to blow the deal up.

First, I know I can get more money for the seller by listing it on MLS and doing a proper marketing job. If I have a contract to represent that seller, I'm their fiduciary and the method described above is an utter violation of my obligations to the law and to that seller - and a very fast way to lose my real estate license.

Second, unless I have an "Exclusive Right to Sell" contract with the seller, I cannot even put the property on MLS (per our MLS rules). That means selling it to someone off market, which means a lower price and again, a violation of my fiduciary duties.

Some may not like it, but the stone cold fact remains that MLS is the source of the overwhelming majority or property listings in the USA. That's where buyers gather to look for property and because of that fact, that's where the vast majority of sellers go too.

Anything else is a compromise - even if you have the fanciest bandit signs in town.