Wholesale Question - Can a Realtor Assign a Contract in Georgia?

Question

Can a Realtor, who is also an investor, assign a purchase contract between themselves and a seller to another investor in Georgia, if the conditions below exist?

- The Realtor discloses to the seller that they are a Realtor.

- The contracted property is not listed with another agent/Realtor.

- The Realtor’s broker is cool with the assignment.

If a Realtor can assign a contract in Georgia, what else should I know?

Thanks!

Eli

Mike Cumbie · Answer

Hi @Eli Rose,I'm not an expert by any means but, why wholesale it instead of just sell it. You are adding a contract in the middle of the deal when you are an agent already. So instead of setting up a house at 50K and selling a contract off for 5K so the end buyer pays 55K. Sell the house for 50K and a 10% commission and the buyer pays 55K? Commissions (at least in my state) are completely negotiable between buyer and seller. Asking for a larger commission on a lower priced/harder to sell/bad condition/need updating house is not unheard of and would make sense.Plus if you did it that way and threw it on the MLS (or not) offers may even come in higher which raises your commission and the price your client gets. Make it a cash only/quick close only deal.Just my thoughts on it. Good Luck!

Adrien C. · Answer

Ditto for IndianaEveryone says get a license to wholesale but when asked if there are any restrictions once licensed- all I hear is birds chirping. The wholesale police throw out their legal jargon and threats yet offer no advice to doing it legally outside of getting a license which has it's own issues.

Jack Tucker · Answer

Cici Mercer of Timmons Warnes Mercer LLP is a solid real estate lawyer. I hold a real estate license in Georgia and I have wholesale dozens of deals through her up here in Athens and plenty of other area attorneys.

Eli Rose · Answer

Ethan Atkinson - Thanks for the response and info. Do you have any recommendations for a good GA real estate attorney who charges a fair consultation and contract review fee? I'm good with them being in the Athens area. Hopefully, I won't be visiting them much, no matter where they are located.

Renee Cato · Answer

@Eli Rose-- When wholesaling as an agent, you are acting as the principal in the transaction...and you state this in the special stips as well that all parties acknowledge Buyer is a licensed Realtor and is not representing the seller, etc. I would also include the GAR form where seller signs the customer acknowledgement form (as an extra level of CYA).Assigning the contract shouldn't fall into the net listing category because the agreed price in the purchase agreement with the Seller should include your assignment fee. On the assignment agreement, your assignment fee is stated on there (which is the cost your buyer is paying you to "buy" your interest/contract from the seller) . So in essence, you're not changing anything originally agreed to in the P&S agreement with the Seller. I hope this helps.

Joel Owens · Answer

Additionally the GREC could care less about the REALTOR designation. That is a third party affiliation by the NAR.The GREC governs licenses laws and protecting the interests of the general public for GA.You can be a broker or agent in GA and not be a REALTOR.

Joel Owens · Answer

"- The Realtor discloses to the seller that they are a Realtor."Eli you didn't mention the POINT of the disclosure which is key and also the language that has to be used per the GREC.So when you make contact and the statement of disclosure needs to be correct. The GREC does not generally interpret legal matters and will always say NO to err on the side of caution.If this is going to be a big part of your business you might want a legal opinion letter from an attorney standing by the structure and disclosure they are telling you to use. Attorneys will not do this for free so plan on spending money. The brokerage you join might have their own legal counsel already to help with this.Generally regular brokerages will not like investors trying these things because it might not be covered by their E & O policies. When you get licensed you can't play dumb like other investors say they didn't know with contracts etc. Brokers and agents are held to a higher standard dealing with the public being trained on contract law and best practices etc.No legal advice given.

John Thedford · Answer

@Eli Rose that is what I believe. If he purchases the house, it is his to do with as he pleases. Assigning contracts as an agent might be viewed as a net listing by regulators. I am going to see if I can get an answer to this question from FL state regulators. I believe there are many illegal practices going on by agents that they are not aware of. I don't want to be one of those agents singled out:)

Eli Rose · Answer

@Mike Cumbie - I have not considered selling a property as an agent and asking for a higher commission that could produce the same amount of profit as an assignment fee. Very creative! How would adding a broker (who also must get paid) into the equation impact the amount of money the seller receives, the amount of profit I make and/or the amount of money the end buyer pays for the property?

Eli Rose · Answer

@John Thedford - Great suggestion! My intention is to never walk on a contract unless an honest reason is driving the decision to do so. My business' purpose of existence is to to solve real estate problems for my clients, not to make their real estate problem worse. Doing everything possible to avoid walking out on a contract should be a fundamental practice in every wholesalers business; however, I understand not everyone shares this vision. If differentiating myself as a wholesaler is as easy as doing what I say I am going to do and letting good morals guide my decisions, I am in good shape.