Family member selling home - what are my options?

Question

My grandparents are selling their home in a very hot market (Katy) and they said that I can be their agent, only problem is I’m not an agent and it will take too long to acquire the license because they want to sell ASAP. As a loophole to get involved with the deal, can I take a wholesale approach and sell the contract to a buyer? (Regular buyer who is buying market value)

What are my options here as I am very eager to get involved with the deal for the experience and getting paid on it is a bonus. I would like to get about 3% of the contract price as an “assignment fee” since if they were to use a realtor then it would be around 6%.

Kyle J. · Answer

I read your post several times, and I’m very familiar with the wholesale process having bought wholesale properties myself and also been a private lender on wholesale deals. And it doesn’t work like you think it does.

It’s not like you can take a $200k house and the choice is either A) Have a Realtor sell it for $200k and your grandparents pay the Realtor a 6% commission, or B) Have you sell it for $200k and they pay you a 3% commission. First, in a “very hot market”, it’s highly possibly that a Realtor who properly markets that house could end up with multiple offers and your grandparents could end up selling the house for $205-$215k.

Whereas you, with no experience or buyers, and no ability to list on the MLS, are going to have a much tougher time reaching a wide market. And the buyers you do get are not likely to be retail buyers. They’re more likely to be flippers looking for a discount so they can also make a profit. So would your grandparents really come out ahead if you had to sell to someone at a discount, even if you only charged a 3% commission?

And let’s say you somehow found a retail buyer. Who’s going to pay the buyer’s agent commission? If it comes from your grandparents (because it’s not likely to come from the buyers), well then you’re right back at 6%. (And by the way, if you don’t pay it, good luck getting any retail buyers with an agent excited about seeing your grandparents home.)

I could go on, and explain things like how a retail buyer’s loan wouldn’t cover your “commission” because you’re not a licensed agent so it’s not really a commission (which means they’d have to pay that out of their pocket!). And so much more. But hopefully you get the idea.

I wasn’t trying to offend you. Just educate you. Take the advice, or don’t.

Kyle J. · Answer

@Chandler Howell Sounds like this is all about you. (You want to wholesale it, you want the experience, you want to get paid, etc). What about your grandparents?

From an outsider looking in, given the facts you presented (they’re in a very hot market, they want to sell ASAP, you’re not licensed, etc), the advice you should be giving your grandparents seems clear...have them list their home with a licensed Relator who can put it on the MLS and expose it to the most amount of potential buyers.

I’m guessing you don’t even have any buyers lined up, and the reality is anyone who buys from a wholesaler is typically looking for a discount. Does that sound like it’d be in your grandparents best interest?

Rick Pozos · Answer

@Chandler Howell you gotta listen to others who know better. The above is so true. You want to be a service to others, not a hindrance. Find a good agent and let THEM help out grandma. That would be the best thing that you could do for her. They will appreciate you finding them a professional that will help them tremendously.

It sounds like you are learning and they dont need a beginner to help them with their property.

I know when I was starting I wanted to do every deal, but I couldn't. I have realized that when you refer people to THAT agent, they will be grateful. That might mean that they will refer some business to you in the future. BUT dont ask for a commission from their commission!! THAT is how you get in trouble.

Look at how many posts and votes other people have and you will see that they are willing to help, but you gotta take the advice.

Paul Falbo · Answer

@Chandler Howell

How about doing a for sale by owner and handle the entire deal for your grand parents! Take 2% and place the the house on MLS with a flat fee broker.

You can make some money to get you REI company off the ground and save your grand parents alot of money!!

Good luck

Paul

Chandler Howell · Answer

@Kyle J.

Thank you Kyle, I appreciate the information your time!

Looks like it may be best for them to find them an agent in the area

Chandler Howell · Answer

@Allan Smith

So it looks like they would still have to pay 6% either way if I were to take 3% since the buyer agent would take 3% as well so what I’ll probably do is drop it down to 0% because I think I could find retail buyers pretty easily in this market and I could put around 20k back in their pocket.

Chandler Howell · Answer

@Kyle J.

Kyle maybe you should read my post again, I mentioned using the wholesaling approach to be able to sell the home since I am not a realtor. Selling at the same price they would with a realtor but taking less than 6% which is the average commission for a realtor. So 3%, which will put more money in my grandparents pocket, my question was if this is an even feasible approach because wholesaling is usually for distressed homes not homes that are in good condition.

Thanks for the input buddy!

Allan Smith · Answer

Yes you could wholesale it. Just make sure they know what you are doing and are okay with it.

I think the better plan is to buy it yourself and rent or flip.

if it's in really good shape, you probably won't be able to do any of these things.