ON-market with Agent vs. Off-market?

Question

As a wholesaler, what do I need to do and not need to do with an MLS property that the agent will take care of? It seems like most are going for Off-Market deals mainly due to competition and price. But for an ON-market deal, the agent draws up the contract with agreed upon terms, deals with the title company, and seems to do a good amount of due diligence. So assuming NO issues arise, once I find a property, all I have to do is negotiate terms with the agent/seller, review and sign the contract that they draw up, have a cash buyer/agent lined up with agreed upon price, then execute the assignment. I'm not trying to oversimplify, but theoretically speaking is this correct, or am I missing any steps as far as filing paperwork or legal steps, and do I personally have to put down an EMD?? Thank you.

Rick Albert · Answer

The reason why Realtors will make it difficult is because it makes them look bad.Their job is to get the Sellers the highest price possible. You are asking them to lock up at one price and you find another buyer paying a premium. The Realtor now has egg on their face because they should have sold it to the end investor to begin with.Stick with off market.

Jerryll Noorden · Answer

Off-market is where the motivation is.A lot of people, especially the big influencers on social media simply don't understand motivation and thus teach others wrong.Someone wanting, needing or HAVING to sell their house for cash, REALLY quick NOW NOW NOW, are NOT motivated sellers.Someone whose priority is to get most for their house, is not a motivated seller, or at least, your definiteion of a motivated seller shouldn't be that.A motivated seller is anyone willing to accept an offer below market value, no matter the reason.THAT is what you should target. Now that said, a motivated seller doesn't care about money. They care about getting rid of the house to be relieved of everything that comes with owning said house.As many have said, you need to focus on throughput. It will take you forever to get this deal IF you get that deal. By the time you have that deal done, I would have 14 deals done. The complications associated with doing what you are trying to do just aren't worth it. The more people involved the more complicated.

Lydia R. · Answer

First of all, with an on market deal the agent represents the seller and their best interest not yours. So they are going to write an agreement with terms favorable to the seller. Its like asking your teenagers to decide what time they get to come home. Are they going to pick a reasonable time or are they going to say 2am sounds good? The agent does not work for you and has zero interest in your profits so you cannot assume they will work in your best interests. Yes you are missing some steps. EMD and POF to start. You will need to put up EMD for your agreement and the standard for listed properties is 1% of the list price. The agent will also want to see POF and if you are claiming to pay cash then agent will want a bank statement showing you have the actual cash to pay for the property. If wholesaling listed properties was as easy as the gurus made it look then everyone would be doing it. There is a reason that most wholesalers stick to off market deals. Actually there are multiple reasons. After you put the property under contract you have to show it to your buyers. Which means explaining to the seller and the agent why you are bringing people through the property AND it means trusting that your buyers wont try to speak directly to the agent or the seller while they are walking through the home. You will also have a hard time finding buyers who will be willing to pay an assignment fee for a listed deal. Especially if your asking price is higher than the list price. In order to make the MLS deal attractive to an investor it needs to be deeply discounted. Last thing you need to think about is title. Yes in theory you hand all the paper work to the title company and they handle everything BUT all title companies are NOT created equal. If the agent has opened title at a NON investor friendly title company you are going to have a heck of a time trying to assign a contract using a title company that has no idea what an assignment is or how to close an assignment deal. And since the listing agent chose the title company, changing companies is going to be a tough sell. There is a reason most wholesalers find off market deals. Have you figured out why yet?

Marian Huish · Answer

Apologies as I just reread your question and see that you are a wholesaler… But again, it depends on your area and MLS rules regarding how this is handled.

Marian Huish · Answer

@John Kim it depends on your market and level of experience and yes, you personally pay the EMD. Based on your question, I would recommend working with a Realtor and learn what they do and then after you have more experience decide whether you want to work directly with wholesalers. As a buyer, you seldom pay the Realtor and because they are licensed, they are working in a regulated environment. Wholesalers are not licensed. It depends on your risk tolerance and willingness to do the work yourself. If you don’t know what you’re doing, you can expose yourself to legal issues in addition to financial loss.

Jonathan Smith · Answer

I am looking for a wholesaler in Broward / Dade County

Luis Maqueira · Answer

Jhon,As a wholesaler, what do I need to do and not need to do with an MLS property that the agent will take care of? You can't rely on any agent to do or not do due diligence. If you want to make money you need to do the work, don't expect anybody to do their thing.I buy all the time from wholesalers but when is an off-market deal.If it is in the MLS dealing with two people in the middle going in different directions... not easy.Each deal is different just be in control of all the transactions and things will be ok. Good Luck

Bob Stevens · Answer

Realtors will make your life miserable, Just find off market, I have done 100s and 100s never using a realtor or ON market, or better idea, just buy one from a wholesaler. Let them do all the work. I do ZERO marketing, ZERO cold calling, and can get as many as I want. Ok so maybe a I would save 5- 10k, but it takes a lot of work to get deals. As long as the numbers make sense to me ( 20%ish NET cap cash buys ) I do not care about getting it for 5- 10 k less. So if this is for you, just buy from a wholesaler, and save yourself all the aggravation. Good luck

John Kim · Answer

yes, I understand dealing with another middleman could potentially be a headache, but it is accurate to say that they take care of a lot of the paperwork and things I mentioned above? Meaning I don't have to write up contracts, deal with title company, don't have to worry about escrow, lawyers, etc. This is assuming I have a cash buyer ready to go that can close in a week.Im basically trying to learn the detail steps and legalities involved in both off and on market that no one seems to talk about when comparing the two.Appreciate you.

Eliott Elias · Answer

You can wholesale property on the MLS. The reason why it is avoided is because realtors make things very difficult. You are dealing with a middleman, not the sellers themselves. They won’t let a long option or low earnest money fly.