Licensed real estate dude as wholesaler in NC?

Question

I can't find the discussion, but I recall reading recently someone's opinion that a licensed real estate broker in NC could not legally be a wholesaler--or would find it difficult.  Can a licensed person tell me the reasoning here?

Brian Corbett · Answer

As far as I am aware, there isn’t an issue as an agent or Realtor with you being a wholesaler as well as a licensee.  I would just advise of FULL disclosure when working a deal with a seller on your intentions and their ability to possibly get more for the property on the open market.

With that said, often times the sellers don’t want to or can’t deal with waiting to sell, repairs, etc. which is why a wholesaler gets the deal in the first place.

Just document that your are a licensee and that you intend to wholesale the property for a profit.

Robert Ombres · Answer

There is no law saying a licensed agent can't be a wholesaler. Licensed agents don't have much of an ethics code. Realtors do.

The argument is that a wholesaler isn't looking out for the sellers best interests. If they can sell the contract as a wholesaler, they are likely not being honest about how.much the property could sell for "on the market."

Of course, not everyone is interested in receiving top dollar and netting the most money. There are other goals out there- like selling faster, not having to do repairs, shorter escrow time, etc.

But to argue those points, those terms could be found "on the market" too, while likely netting the seller more money.

My opinion is that wholesalers generally aren't interested in meeting a clients goals. Most of them aren't great at getting a contract sold eirher- they're typically morons these days with no knowledge of the property, zoning restrictions, local regulations, etc. Their ARV and renovation costs aren't data supported and usually wrong. They can't answer questions. They bring zero value to the deal.

In those cases, the home owner would have benefit from listing on the MLS with an agent.

What reason would a licensed agent be a wholesaler? We know properties sell at higher prices and quicker when listed on the MLS. Wait, quicker? Yes. If you take the lower price point "deal" the wholesaler could have sold for and listed it on MLS at that point, it would sell quicker too. And the seller could choose the offer that best meets their terms.

So back to your question- legal in NC? There isn't anything from the North Carolina Real Estate Commission that says a licensed agent can't be a wholesaler.

I don't believe the Board of Realtors specifically denies it either, though they may. Not my chair not my problem.

I simply see very little reason for an agent to work that way. I believe they could provide better service and results to the seller acting as an agent and make more money themselves. You also don't have to worry about potential lawsuits from angry sellers after they find out they could have sold for more.

Jimmy Poole · Answer

I am a licensed REALTOR in NC and I specifically work for two companies, one that does acquisitions and one that is a real estate firm. They are owned by the same people, but work as two different companies. I have spoken to the commission about this exact question. It is not against any rules as long as you disclose that you are a REALTOR when meeting with a prospective seller. I start the conversations explaining that I am a REALTOR and I am here on behalf of "company" as a buying agent for them to offer you a cash deal. If there is no possible way for the cash side to work as a win/win for both sides, then I do offer the listing service option to them. Most of the homeowners who reach for the cash offer hate the normal listing process and having people in and out of their house all the time for showings.

The times that I have to be very careful is when I go to a house that is listed and they are asking for a cash offer. I always call the agent before I go and explain to them what I do and let them know their client is asking for a cash offer.

Hope this helps!

John Thedford · Answer

I see no problem with it as long as the seller is FULLY INFORMED. When I view a property that I want to buy I tell them what I would list it for and what I would pay cash for a quick sale. You would be surprised at the sellers that opt for the quick cash method rather than letting me list it. I purchased one property that I offered to list at 158K or purchase for 120K. The seller actually brought 70K to the closing table. This is what I purchased for 120K.

BTW--your broker must agree to wholesaling and all fees must pass through them and then a portion to the agent.

Charlie MacPherson · Answer

@David Browning  As I understand it, in NC net listings are allowed, but strongly discouraged.

For the rest of us where net listings are illegal, a licensed agent wholesaling a property would be indistinguishable from a net listing.  Even if he were to double-close and re-sell without doing any meaningful work to improve the property, I could see a case being made against him.

Of course, the other component is ethics.  State real estate laws and Realtor Code of Ethics aside, the MA Consumer Protection Act requires fair dealing.  That law in MA allows for up to treble damages, so a wholesaler could end up on the hook for three times the equity they stole from the seller.

Brian Corbett · Answer

I have had the “I’ll buy it quickly” conversation with sellers before and gave them an Option A&B scenario.

Option A is a quick close, as-is condition, me making a profit, etc

Option B is listing the property and all that goes along with that so they are aware of both possible scenarios.

Either option is a win-win just depends on what they want to do.

David Browning · Answer

My intention as an honest REALTOR(r) would always be full disclosure.  I would never cheat anyone.  But the potential conversation about the seller's highest objective and the agent's intent is both useful and very ethical.

David Browning · Answer

This is a very well reasoned reply.  Thank you for that.  And thank you for understanding that I know the difference between real estate agent and REALTOR(r).  In my own case, I'm only considering ways to make money that don't involve calling strangers and begging for business.  And believe me when I say the idea of cheating anyone is totally anathema to me.

I don't have any investments now, and haven't done any investment deals, but in the end I want to retire at an appropriate age.

Licensed real estate dude as wholesaler in NC?

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