Working For Yourself Or A Real Estate Company...?

Question

Hello BP,

As I'm in the process of getting my license, I've been considering that upon completion of the course I would try and get employed with a local real estate company. I was wondering if it's legal/ethical to work under your own company and a real estate company, or how that works. The reason I asked is because my initial intention was to just wholesale before I even considered getting my license. Now that I am getting my license in addition to just being able to flip a contract or assign it out, I may be able to collect a commission from the seller/buyer on these sales.

The catch is the marketing that I've done. I've got my own business cards, paper ads, bandit signs, car magnets, and direct mail campaign running, so I how would I separate when I am working for myself, or when I am working for the real estate company?

If someone could clear this up for me, as well as whether or not you take commissions when "wholesaling" as an agent or still take a flat fee for the contract, I'd appreciate it. I did plan on offering to list for homeowners who's houses I cannot quickly turn around and sell to a buyer (or myself), so this is important to me.

Regards,

Jason Eyerly

Shanequa J. · Answer

I would think that you should not have to split commissions unless you market the house on the MLS.

Jason Eyerly · Answer

Thank you @Adam Gerig and @Shawn Holsapple for your input. I will be looking into those when I am closer to completing my broker course. I will personally go to the office as well as check with Investor friendly agents that I can get any recommendations on. Thank you as well to everyone else who contributed.

-J

Adam Gerig · Answer

@Shawn Holsapple you're more experienced than I, but I would think and feel free to chime in.  That if @Jason Eyerly is working with a buyer he needs to get that property under contract.  He then has equitable interest it.  If you are an agent you need to disclose this, but if you aren't putting it on the market(and you'd need to clear this with the real estate company you were working with beforehand) there's no commission you'd need to pay to a broker.  It's an off-market deal and you have an interest in the property.  You have every right to be able to sell your interest if someone wants to buy it.

I've never held interest in a property that I didn't own myself like Shawn said before, but if I get to the point where I would want to "flip" my contract to another buyer I have every right to do that if I have equitable interest in the property.  I own the note and can sell that note or keep it or tear it up(if the contract allows).  I'd want to make sure I had an ironclad purchase option contract and assignment contract, but I don't see any problem in doing this.  If you are going to market it thru the MLS I would say that's a different story.

Shawn Holsapple · Answer

@Jason Eyerly , if a property is not listed and you do not have equitable interest in the property, as a licencee you can not be involved...

This is a gray area and can be touchy.  Proceed with caution.

Remax - you need to call or visit the office you're interested in working at and ask if they have an investor specialists.  If they do, talk with that person and see how they like working there.  If not, speak with the principle broker and see if they are interested in working with you.   Note: Most RE offices are NOT interested in working with investors!  They think we are a bunch of low balling fools that waist everyone's time.

I would suggest talking to some local investors and find out who the investor freindly agents are and seek them out instead of going for a particular franchise.  This is what I did.  I found the two biggest REO brokers and pursued them until one agreed to let me join their team...

Jason Eyerly · Answer

Shawn,

I was referring to getting a commission from a wholesale buyer taking the process from making the deal to closing, versus charging them an amount for the contract itself. What happens when you bring together a buyer and a seller, neither of whom have an agent? 
	    I feel like for my area I would like to "hang" my license (after I take the broker course) with ReMax, but there website doesn't have much information or an apply now button, so who do I contact?

Regards,

Jason Eyerly

Shawn Holsapple · Answer

@Stephanie Irto is correct.

In addition, starting this year, all Indiana agents are now going to be brokers.  You can still be an "associate" broker under a principle broker and do the split and be treated like a current sales person.

Some board of Realtor members frown upon a licensee "assigning" contracts. I just got in the habit of closing on all of my "wholesale" deals from the beginning and owning them before reselling. Of course, this defeats the general purpose of "wholesaling" with no money...

Either way, with your new license, you can technically open your own shop.  I wouldn't recommend this and would suggest you "hang" your license with an experienced broker in your area that is investor friendly.  In addition to getting advice, the broker will also take care of the mountain of paper work and other office duties that, I think, is well worth the commission split.

As far as getting a commission from a wholesale seller, most seller don't [or can't] pay a fee to sell their home.  That's why they are working with you to begin with.

I hope that helps a little...

Stephanie Medellin · Answer

Hi Jason,

If you are getting a salesperson's license, you will need to work under a broker to collect commissions and negotiate sales of other people's property.  If you are getting a broker's license, you can work for yourself to negotiate sales for others.  When working under a broker, there is (in most cases) going to be a commission split, where you and the broker will each get a percentage of the commission.  When working for yourself, you won't have to split your commission.  You probably know the requirements to get a broker's license in Indiana better than me.

When selling your own property, any time you're a party to a transaction and you're a licensed agent, you need to disclose that you hold a real estate license and have an ownership interest in the property, at least in California.  I don't know the laws in your state, but I am assuming they are similar.

I think much of what you're asking will depend on your agreement with your employing broker.  You will have to ask them if you can you list your own property without a commission split.  If you're simply doing your own deals on the side (buying and selling) without a formal listing in the MLS or a commission involved, you should be able to continue as if you didn't have a license.  If you are collecting commissions, it is really the broker who is entitled to the commission and you are entitled to whatever portion you've agreed to with your employing broker.

Working For Yourself Or A Real Estate Company...?

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