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Updated almost 8 years ago, 02/17/2017
Wholesaling and MLS Arrangement
Ive recently been looking at getting in to wholesaling and one of the opportunities that came up was, a friend recently got her realestate license and has access to the MLS.
She has agreed to list for me for a flat fee to be paid after the sale.
Im wondering what are the pros and cons of this arrangement ? What are some things to look out for? And would you do it if you were me? Thanks
@Jerimi Hoffhines Are you saying that you and your friend have an agreement where she will list the properties you get under contract to sell them and will collect a fee at closing?
@Amber Forkey I would pay her her fee after Ive collected mine, or if absolutely necessary when she lists.
Originally posted by @Account Closed:
@Jerimi Hoffhines Are you saying that you and your friend have an agreement where she will list the properties you get under contract to sell them and will collect a fee at closing?
@Jerimi Hoffhines It sounds almost as though you're playing the middle man between the seller and the agent. In this case instead of paying the 6% to the agent, it's whatever amount you two have agreed upon already.
So, she's going to be marketing it on the MLS trying to find you buyers? I was unaware that you could list properties you have under contract on the MLS. I've never heard of this being done before so I'm confused as to how this would work.
Originally posted by @Account Closed:
@Jerimi Hoffhines It sounds almost as though you're playing the middle man between the seller and the agent. In this case instead of paying the 6% to the agent, it's whatever amount you two have agreed upon already.
So, she's going to be marketing it on the MLS trying to find you buyers? I was unaware that you could list properties you have under contract on the MLS. I've never heard of this being done before so I'm confused as to how this would work.
As I understand it there would need to be a listing agreement signed by the seller. The rules vary from area to area. And its confusing us a bit as well.
@Jerimi Hoffhines This was helpful, but I noticed it mentioned closing THEN listing it on the MLS. So I want to find out if it's possible to list the property while it's under contract.
https://www.biggerpockets.com/renewsblog/2012/08/07/mls-sell-wholesale-properties-buyers-list/
Hello and welcome to BP! The MLS might be a good place to sell but not usually a good place to buy because it typically lists a place at retail. It is not really worth having from a buyer point of view unless you just happen to buy something as an expired listing. There are so many sources available to find a house "For Sale". You just have too be willing to do that. Most action can be from a County search from probated to tax due For Sales or you can do door nocking, it just matters what you are in the way of bravery and conversation with a possible "motivated seller".
Knowing your goals and your budget associated with that would be helpful. The best deal are because of luck and referrals. The more you learn the more confidence in yourself be better. From my reading in the Robert Kiyosaki (RichManPoorMan) series education is essential that teaches what you do and financial abilities and understanding what you might have. Marketing abilities and sales knowledge and its abilities are essential. You have to treat all physical (people) things as a business owner and not personally.
Staying in control of everything you are responsible for is critical and do not trust anyone until you know them well. Local investment properties (in state) are the best way to go. Investing out is state is better with turnkey companies that have rehab/repair and property management experience can be the best way to go out of state investing. Dealing with fiends is not usually a good thing. The learning thing is good but the selling part is very tough. In the beginning just keep it simple and average for that neighberhood. Be patient and do not fear mistakes. Do not let failure cause you to quit. Just keep on going. Most of the successful people sw are by Mentors. Local investing club and events that are not just sales fronts will usually help you.
Be careful on the Internet, there are many crooks out there making emotional sales to you and others looking to prosper. Since real estate people have money to throw away it is more attractive to bed investing. By the way, I am 60 years old and I have been learning about real estate investing for about 19 months while I am recovering medically. Plan for bad things that might happen in the future and be ready.
Good luck to you!
When I started wholesaling I went through an agent for when I needed, but when I saw the commissions they were getting I went and got my license:) So I'd say it's fine to pay a small fee at the beginning, but to consider getting one yourself once you know you're in it for the long haul.
Originally posted by @Brett Snodgrass:
When I started wholesaling I went through an agent for when I needed, but when I saw the commissions they were getting I went and got my license:) So I'd say it's fine to pay a small fee at the beginning, but to consider getting one yourself once you know you're in it for the long haul.
Went through your website. Good stuff.
Thanks @Jerimi Hoffhines
@Brett Snodgrass So you're saying that a property under contract CAN be listed on the MLS? Does the seller have to be aware of this? I also checked out your site, tried to get the ebook but kept getting "403-forbidden error" when I submitted my info.
@Account Closed
A property can be on the MLS if you are the full owner (not assignments) of the property, either through you listing it through an agent or being an agent yourself. So, if you are listing it, and it's under contract for you to sell then yes you can have a property under contract with it being on the MLS. I don't assign.
It's better to have a license because you have access to the MLS to run comps, and you can save on commissions because you're the agent representing yourself.
If you're assigning things, you shouldn't have it on the MLS or on Craigslist because you don't own the property. If you have the owner's permission then your fine, but if not you're marketing a property for sale that you do not own. Technically you're supposed to simply market the contract you have to it.
And thanks for letting me know about the error. It should be fixed now.
@Brett Snodgrass You said that if you're assigning things, then you shouldn't have it on the MLS or Craigslist. Why shouldn't you be marketing the property on Craigslist? I can understand the MLS part because the wholesaler is not the owner, however I'm not grasping the Craigslist part.
People can do whatever they want, but I personally wouldn't market a property I don't own because it can get messy legally.
Other people do it all the time, but for me it's as if I were to walk up to you and say, "Hey I want to buy your car at $10,000 but I need 30 days to get my funds in order to do it. . . does that work for you?" and then after you tell me yes, I then go on Craigslist and list your car for sale as my own, but instead of $10,000 I'm asking $15,000.
If the seller finds out you've done this, (like going on Craigslist and seeing your ad) they're going to get mad and most likely not do the deal and could technically press charges, because you're selling something that is not yours to sell.
Now if you do it with seller permission, it's a totally different story.
If you told the seller, "My goal is to help you find a buyer for your property. I have built up a large pool of investors who buy properties in any condition, any location, and I know that if you give me 30 days I can find you a buyer. The only thing I'd need is for you to give me permission to market your property on sites like, Zillow, Craigslist etc. and allow me to get your property under a purchase agreement with my company, because how we do business is that I charge my buyer's for the rights to the contract of purchasing your property. It doesn't actually cost you anything!"
Then you won't have any problems with advertising. . . though if you do this without a license you might run into issues of functioning as a seller's agent without a license but. . . yea.
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#4 All Forums Contributor
- Lender
- Lake Oswego OR Summerlin, NV
@Account Closed because when you put a home on craigslist for sale with the appearance that you are the owner.. then you are selling real estate without a license...
If you think about it if it was OK for anyone to bring buyer and seller together ( like a wholesaler does) with no licesne requirements.... then why do we even have a real estate industry and licensure.. its not needed because anyone can sell real estate to any one else... Like in China were there is no RE industry.
most other states and countries have a RE industry and very defined laws ... wholesaling is taking advantage of grey areas and such.. but there is so much of it.. really depends if a state is going to crack down or if you get a complaint against yourself.
Like Michigan tons of flipping contracts there.. .. there is a thread on BP were a seller got miffed at wholesaler... filed complaint with MI real estate commission and now this wholesaler gets a cease and desist.. the seller does not honor the contract kicks her out of the closing and sells direct.
so this person does all this work spends all this money only to realize you cannot sell RE without a license.. wholesalers and coaches stand behind equitable interest .. which is fine.. but the second you advertise the property the address the bed bath and you don't own it your cooked....
this includes websites e mail blasts etc etc... states that are starting to crack down are
OH FLA CA OR and probably more just have not heard of them.
wholesaling is a very very advanced strategy to do right and 99% of those who think its a starter to real estate rich's simply blow most of their money and fade away
- Jay Hinrichs
- Podcast Guest on Show #222
