Wholesaling with an RE license?

Question

Just curious, does anyone hold a RE salesperson license for the  benefits it provides--but also also does wholesale deals with private sellers or even via the MLS?  Has it ever been a problem, or no? How do you phrase the disclosure part? And how does your broker feel about possible WS deals done on your own that you don't list?

Braden C. · Answer

I am a licensed Broker however my biggest source of income comes from wholesaling. I always deal honestly and fairly with everyone I talk with and if I feel their best option is to stick the property on the MLS through a Realtor, I tell them. So, although there is a chance someone might come back and complain, it's highly unlikely.

When they choose to go with me, I make sure I disclose in the contract that I am a licensed Broker and not representing them and I also have them sign a no brokerage relationship notice as well.

Account Closed · Answer

This is something I think a lot of people miss.  The purpose of the disclosure is not to disclose that you are a licensee, as I keep hearing over and over again, it's to disclose that even though you are a licensee, you are NOT representing them.  It's nice Braden to see a clear statement of just what the disclosure is really about.

Michael Ruark · Answer

Account Closed  Hey Braden, just trying to get started in wholesaling myself.  Held a real estate license in Maryland and just moved back to North Carolina.  I was originally planning on getting my NC license right away but it seems it could be a hindrance to your profit wholesaling.  I know if you have your broker's license and your own shop it doesn't matter, but how does it work if you have your license hung with someone else?   I just don't quite understand, if you assign a contract to another investor, wouldn't your wholesale fee be considered a commission that should be shared with your broker?  Or is that only the case for houses listed on the MLS?

Vonetta Booker · Answer

@Braden C. How much was the fee you paid to your broker before you opened your own brokerage?  Since I’m just now in the process of getting my license, I’ve been used to the non-licensed process of simply keeping one’s wholesale fee.  I’m concerned that if I’ve been marketing on my own, I’ll be required to pay the brokerage a commission even still.  Is that the way it usually works, or is that negotiable?

Thanks for everyone's replies!

Wayne Brooks · Answer

Agreed, it will be state specific.

Account Closed · Answer

Wayne Brooks: This is very much state dependent.  I should have qualified it by saying in CA there is no requirement to disclose that you are a licensee when acting as a principal, but, although not required, it is advisable to disclose that you are a licensee NOT representing the other party.  It could really get sticky if the other party thinks you are representing them in the transaction ... fiduciary duty and all that.  Braden's disclosure sounded like something you'd see in CA.

Wayne Brooks · Answer

David, not exactly.  The purpose of the disclosure IS to acknowledge that you are simply a licensed agent.  The idea being to let a non licensed individual know that you are likely more knowledgable in RE dealings than they are.  The disclosure about "not representing" them is a further extension of the basic requirement.  A licensee who may be a partner in an entity who never has any contact with the other party, and may not even be required to sign any buy/sell agreements must still make the disclosure to the other party.

Braden C. · Answer

Chris Martin For me, it doesn't matter since it's my firm but before I had my own firm I did have to pay a fee to my broker. I only paid a fee when a commission was earned, so when I assigned contracts there was no fee to the broker.

I worked with a 100% commission structure company before and that's how I have mine setup. You basically pay a small monthly fee and a transaction fee when you have a closing. This is the best option in my opinion for wholesalers.

Chris Martin · Answer

Braden  C. quick question. When you wholesale, does the broker firm get any compensation or do the fees go directly to you? I guess if you are the broker in charge or own the brokerage firm, it really doesn't matter to the bottom line.

Rene LiVest · Answer

Ohio law permits a real estate agent and brokerage to represent the seller and buyer in a real estate transaction as long as this is disclosed to both parties and they both agree (dual agency). As a dual agent, a real estate agent and brokerage represent two clients whose interests are, or at times could be, different or adverse. As a licensed RE Associate, I suggest that all deals be done on behalf and in conjunction with your Broker.

Wholesaling with an RE license?

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