Wholesaling vs RE agent

[Gary Dubovick]

Heyy everyone!!

After reading mutable posts about how getting your RE license will help in any area of RE you get into, I decided to invest the time and money to get my NY RE license. Before this decision I wanted to start out wholesaling and doing fix-and-flips in order to build up some cash and then buy and hold multifamily rental properties. After reading a different post and some thought on the topic, it dawned on me that wholesaling and earning commission as a RE agent is nearly the same thing, is it not? You are bringing a buyer and seller together and earning money on it. I was only introduced to this industry about a month ago, so I know others have thought of this before. Anyone contest or agree with this? Thoughts?

Thanks and Happy Holidays to all!!!

[J Scott]

Being an agent and wholesaling are very similar business models. That said, there are some differences. As an agent, you have a fiduciary responsibility to the seller -- this means you need to focus on maximizing THEIR financial success in the deal, not your own. Also, as an agent, your profits are dictated by however much commission is customary in your area.

On the positive side of being an agent, you have a chance to build a strong reputation and get word of mouth referrals to your business, as well as repeat business (this is possible as a wholesaler, but much rarer). Second, as an agent, you are dealing with mostly retail buyers (though you don't have to) -- this means that you'll likely have fewer tire kickers and fewer convoluted situations (though you'll still have some).

The other thing to consider is that wholesaling can quickly overstep into agency, and as a licensed agent, you have much more liability wholesaling than if you didn't have a license. Though without a license, you're limited in the strategies you can employ to help sellers (you can't represent them in an agency relationship).

So, yes, the two are similar in terms of business model -- hooking up buyers and sellers -- but their are lots of intricacies and nuances that make it more complicated than that.