Agents working with wholesalers/off market investors

[Jeffrey Kops]

Hi everyone,

I'ma bit of a newbie, but thanks in large part to BP I'm building an investor friendly practice here in Tampa and I am looking for some guidance. Buying and selling properties off the MLS is fairly straight forward as far as commissions go, but if you are finding off market properties for your investors through wholesalers or other investors, how do you structure your compensation? is there a customary fee that the agent charges? and who usually pays?

Thanks in advance for your input!  

[Nick C.]

There is no customary fee that I'm aware of. Everything is negotiable. It's definitely something to ask about up front, whether there is room in the spread to get paid, or do you need to add your fee on top of their asking price. Remember you aren't protected by the MLS, so either do an assignment fee or make sure your commission is written into the contract.

[Jeff B.]

hmm; Feels like an oxymoron to me -- agent working off market deals? Would think the Broker would go 'postal' on this.

[Colin G Murphy]

Hi @Jeffrey Kops

It´s all negotiable and depends on how much meat is on the bone on each particular deal. Sometimes we put in a lot of sweat for a modest profit and other times we achieve a stronger profit margin with little or no effort. 

For example, if an investor wants a three bed single family with a 7% cap rate, then he/she shouldn´t care what your cut is as long as they are getting a property at a reasonable purchase price. 

Needless to say, transparency is very important, especially for licensed realtors. 

[Robert Curls]

tread lightly @Jeffrey Kops  Wholesaling in FL is a very gray area (and in my opinion illegal).  If you read the FL statute 475.01 you'll find that if you advertise a property on behalf of someone else and you don't have equitable ownership (title to the property) then you're brokering.  Per FL Statues 475.42 brokering without a license is a third degree felony.

Most wholesalers say they are selling a contract to get around this, however when I see the emails that come in they say "4/2 house"  or something similar.

By trying to get a "cut" on the purchase end of the transaction you're basically brokering without a license as well.  I'm sure the FREC board wouldn't look to highly on it if it were brought to their attention.

You're best bet  is to do a warm introduction and if the buyer is flipping the property get them to list it with you on the sell side.

Good Luck.