Broker/Agent/Investor Dillema

[Attila Bertalan]

For the past few months I placed investing on hold to study for the California RE License.

My excitement of receiving the license in the mail is abruptly turning into disappointment. I got my license mainly for MLS access. The past few days I've been researching a Broker to hang my license with. After a multitude of turn downs for Brokers in the Sacramento area due to the fact that I want to be an investor and not an Agent, I found (thanks to BiggerPockets) an online broker (REeBroker) that seemed to fit my needs well. After talking with the Office Manager, they made me understand that once I hang my license with them, I have to run all my transactions through them. If I consider a Lease Purchase as an investor I still have to run the deal through their Broker first. Because I have to place the Broker's name and license # and my license # on all my RE marketing and, because I'm using the MLS through them I have to get the broker's approval for all transactions involving RE, whether as agent or not.

I'm very new at this, but, if the above is true, I just don't see how an active license is beneficial. I don't want to depend on a broker's approval as an investor. Can someone, please, clarify this? Is there a way around all this nonsense? Does anyone know how I can use my license to get MLS access without constant broker supervision?

I'd really appreciate all and any help in regards to this.

[Karl Krentzel]

Originally posted by @Attila Bertalan:

For the past few months I placed investing on hold to study for the California RE License.

My excitement of receiving the license in the mail is abruptly turning into disappointment.... 

... they made me understand that once I hang my license with them, I have to run all my transactions through them.... 

Because I have to place the Broker's name and license # and my license # on all my RE marketing and, because I'm using the MLS through them I have to get the broker's approval for all transactions involving RE, whether as agent or not.

I'm very new at this, but, if the above is true, I just don't see how an active license is beneficial. I don't want to depend on a broker's approval as an investor. 

Can someone, please, clarify this?

Is there a way around all this nonsense? Does anyone know how I can use my license to get MLS access without constant broker supervision?

I'd really appreciate all and any help in regards to this.

 Fear Not! 

You are in the right place! 

That is quite a "can of worms" you've opened up!  

The reality is, as a licensed agent/investor you are just now breaking into the primary reason why people won't get a license. 

It's this misunderstandings about how this can work to your favor, and how this all fits together!  If you will allow me a brief minute, I will see if I can "clarify this!"

Seems like from reading the above questions, they revolve around three main points.  

1.  What advantage does the license provide if I have to go through the hassle of the Broker?

2.  How do I remain compliant with Local, State, and Federal Law with regards to disclosures (Agency, Broker ID, etc) and still remain powerful as an investor

3.  Is all this really necessary, and is there a better way?

Answers To Your Questions

To answer your questions 110% quickly, YES, you can get MLS access as a team member, or assistant, or some associate capacity, but that does not relieve you of the obligations of the Broker knowledge. BUT... There is an answer!

While it is true, for any AGENCY type of contracts (Listing contracts, Buyer Agreements, etc) where the Broker is responsible for overseeing the contract, then yes, they need to see the contract.  

On any contract, the problem is NOT having the Broker see it.  That's not what you are probably worried about.  You are probably worried about how to explain it, or the money involved, or having to disclose the amount because you fear that he/she will "have their cut."

This is where by simply educating yourself about the process, you will discover that nothing is further from the truth.  As a Broker myself, I would simply want to know that you aren't doing something that is illegal, nor attaching my name to something.  

Since Wholesaling and Investing on your own as a Principal is not illegal or unethical (National Association of Realtors® Code of Ethics Article 4), you can ethically invest on your own as a rehabber, landlord, or wholesaler.

Special Advantages as Wholesaling/Agent

As an Agent who Invests, a traditional wholesale (aka "Assignment of Contract") is considered personal property.  Not REAL property.  As the equitable interest is transferrable amongst parties and is not considered real property, then it is not subject to commission splits.

Let me reiterate this.

A 100k home... with a buyer broker agreement offering out 3% for any buyer you bring will pay you $3000 BEFORE your split.

A Wholesale transaction however, with a 3-5-10k Assignment Fee closes much faster than the traditional Buyer Controlled sale, and is not subject to splits with your broker.

Now I know that sounds impossible to believe.  To prove this... feel free to show me anywhere where an assignment is considered real property.  It is no different than selling a car.

Disclosures 

Yes, According to the National Association of Realtors Code of Ethics, you need to prominently display the fact that you are a principal in the transaction.  

This actually works to your advantage.  One obvious reason is that in a competitive situation, if all things are equal, the one who is a wholesaling investor/ Realtor® will have an obvious advantage over the Wholesaler from a bandit sign.

Do not be afraid to let people know you are an Investing Agent.  After 19 years, three things I have learned. 

• Sellers dislike listing agents. If they could wave a wand and sell their home.. they would.
• Buyers consider agents necessary evils.  If there was a way to find a home and get it bought quickly without all the hassle.. they would.
• Sellers love, Love, LOVE Agents who BUY property.... They naturally (perhaps unfairly) assume it is safer.

So don't be afraid to show the fact that you are an agent.  Why not?  Use it to your advantage.  Use your company's resources to dominate your market. 

Is There A Better Way?

Is there another way to get MLS access? Of course. Do you need to be a Realtor® to be a great investor? No. However, believe it or not, if you remain open minded, you might just find out as I did, that by going through the hassle, and finding out the reasons WHY..

More important than why... HOW to make them work for you.. you will find as I did that you are far more powerful with a license than without.

Have a Powerful Sales Day!