Real estate agents and wholesalers?

[Schneider Lincifort]

Hello everyone. I am a new real estate investor in the Columbus area. Quick question, would it be a bad idea to be a wholesaler and a real estate agent as well? Is that illegal? I'm a wholesaler and I was thinking about becoming an agent as well. My wife is an agent and I think it would be beneficial to me as well to be one. Maybe 'the dynamic duo' of the central Ohio region!! Lol

[Christina Carey]

Let me expand on what @John Horner just said: looking at ORC 4735, defining a real estate broker, the key words are "for another". I would strongly suggest that any wholesaling you do involves a double close. It's the people who are putting things under contract with the express and obvious intent of assigning the contract who are under serious scrutiny. At the very least, you need to make sure you have funds available to close the deal yourself, even if it's transactional funds (it cannot be your end buyer's funds though).

As far as getting your real estate license goes: if your wife is already licensed, unless you intend to do retail sales, there really is no need to have the additional expense and liability of two licenses. You already have access to the MLS, which is what most wholesalers are after anyway. My husband and I are both full-time investors, but only I have a license. He does plenty of wholesaling, and it is a rare thing for him to assign a contract, but if he does, it's not because he couldn't close the deal himself.

But let's say you do want to also be a traditional agent representing others. It is a fine line to walk with sellers, and it needs to be explicitly clear which hat you're wearing from the outset. If I am dealing with a seller as a potential buyer myself, my first obligation is to disclose that I am a licensee, while making it clear that I am not representing him or offering to list his house for sale. In making an offer, I would also be clear about what I thought he could get on the market if he chose to list it for sale - in other words, full disclosure, always.

Conversely, if you are dealing with a seller in an agent capacity, and you've signed a listing agreement and set a list price at $100K because that's what the market says it's worth. You now have a fiduciary duty to your seller. Then your seller says, well it would be great if I could get $100K, but if someone comes along and offers $80K, I'll take it and run. (Let's assume $80K is a great deal that you could wholesale for the purpose of this discussion.) I personally believe it would be highly unethical to then say, "well Mr. Seller, I can give you $80K right now" without giving the seller a chance on the open market since that was the plan was to start with, and also because the seller was confiding in you as his agent and may not have said that otherwise if he knew you were interested in buying yourself. I think that crosses the line into taking advantage of someone, and I think the Division of Real Estate would agree.

Bottom line is, if you choose to wear both hats, you have to be clear as to your intent in any situation to ensure you cover your hind end, as well as your broker's.