how to find a broker who allows investing activities

Question

Hi everyone,

Does anyone have recommendation to how to find a broker who is open for hanging my RE license mainly for investing in LA CA? Interviewed a few brokers in the traditional firms and most are more interested to hire “buying/selling“ agent with commission split. Is it a bad thing to have an investor on the side due to liability? How people who does investment started it? Or maybe I’m not Looking at the right place? If you have any referrals, please let me know!

I’m interested in residential multi units, Southern California market.

Cindy

David M. · Answer

@Cindy Gong

But, you won't be like any other agent, will you?  How many properties are you really going to buying/selling a year?  Look at the NAR Circle of Excellence criteria.  How many agents (by percentage) per year in a brokerage are meeting those various criteria?

Now, even NAR recently put out a statistic where some 50%+ percent of all transactions are being done by agents who just do I think it was 3 to 6 transactions a year.  These are kinda of part time or low producing agents.  But, are you really going to be doing that many of your own transactions a year?

Of course, I understand why you want the license.  But, you have to look at it from the Broker's point of view.  They are trying to run a business after all.  You might want to talk with @Jonathan Greene about how eXp leaves him alone and their benefits.  Like i said, eXp is a national brokerage, not  franchise so its a little different.

Marian Huish · Answer

@Cindy Gong - eXp Realty permits agents to process 3 personal transactions per year at 100%, however, wholesaling is not permitted.  Do you also plan to be selling to the general public?  If not, there may be some additional fees if that is not the case...  as mentioned above, the Broker needs to make some revenue from agent sales and liability to them is increased when investors are processing their own deals.

Steve Morris · Answer

Is it a bad thing to have an investor on the side due to liability?

1) You do have a cost for E&O and some admin and office space.  You've already said you want to pay the principal the bare min.  Why would he do this instead of hiring a earner?

2) Main reason, principal is as responsible for your shady actions as you are, if not more.  Why would he place his license at risk so you can do your own thing?

David M. · Answer

@Cindy Gong

No problem.  If you want to chat about brokerages and being a realtor, send me a direct message.  I’d be happy to talk this through with you

Cindy Gong · Answer

Marian Huish thank you so much Marian. makes sense and I do hope I can find my own path soon :)

Cindy Gong · Answer

xxx

Cindy Gong · Answer

Wayne Brooks David M. @David M @Wayne Brooks.  both of you are right. I am interested in buying and holding so not that many of transactions in a year. Guess I just compared myself w. average or below level agent LOL. But hey you have made a really good point. if it's business, and indeed it is business, we want to max ROI. Coming from a finance background, I am definitely supportive! exactly why I post it and asked for help here `cause no one wants to make a bad business decision. :)eXp sounds interesting. looking it up~ Thanks @David M.

Wayne Brooks · Answer

@Cindy Gong Are you going to buy 15-30 properties a year for yourself?   I doubt it, so no, you won’t be generating commissions for the broker “like any other agent”.  Brokers, like any other business person, need to allocate their resources for the best return.

Cindy Gong · Answer

@David M. Thanks David. I want to start w. some multi-units, flip if good opportunities present. And longer term I am thinking to get my own broker license, but need to start somewhere like holding a sales person license for 2years before I could even apply for broker license.

liability and insurance definitely make sense. but if I can produce commission/paying the broker through  my own investment activities, it can be just like any other regular agents, right? And of course, following rules just like everyone else does.

Mostly, having the license really allows me to check the property whenever and wherever I want without coordinating w. another agent (such a pain for both parties!  for agent who wants to make sales as quickly as possible, for me who wants to make a sound investment as wise as possible). I Do find it awkward to represent myself and I haven't done it! and maybe there are other ways around for folks who have been doing this long time.

again, thanks :)

David M. · Answer

@Cindy Gong

Don’t have a good answer for you...  you might try some of the new national brokerages like eXP that is more cloud based...

You mentioned “...burr/seller agent with a commission split...”. What are you looking for?  Just to be able to represent yourself?

Brokers basically just make money off the backs of the agents.  The trend is changing over the decades. ReMax broke the mold back in the 80’s or 90’s or something.  And the newer cloud-based ones like eXp are breaking it again.  It’s not for everybody.

Realize also that for franchises (eg ReMax, Coldwell banker, Weichert, bhg, etc) it does cost the broker to have you.  They pay a franchising fee for each agent regardless if they produce.  Also, there is the opportunity cost of if they had hired a producing agent.  I know have quotas for the number of agents (they can’t apparently have “thousand” agent to an office) allowed to an office.

Maybe an independent brokerage wouldn’t mind as much.  You wouldn’t be costing them anything if you didn’t produce (depending on their arrangement).

Their is some cost/liability component.  If you screw up, it goes against their E&O policy.  Now EVERYBODY’s premium (each agent still pays it themselves) goes up.  This would of course be the other side filing a claim against you since you can’t file a claim against yourself.  Some brokerages don’t quit fully understand this exclusion so their require another agent to represent you for your own deals — silly...

You are still representing your brokerage.  It may not want to look bad.  Remember,  company appearance is important in this business.

I hope this helps.  I’m just throwing out there what I can think of, seen, been told, etc.  I’m sure some CA agents on BP will chime in.  Good luck.

how to find a broker who allows investing activities

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