@Ron Hetor
I've had so many of the same questions since getting my license, so I feel compelled to answer them for you. Here's what I have found out.
1. There haven't seem to have been downsides to being licensed so far, you just have to be much more careful. Every deal you do, you have to disclose your status as a licensed real estate agent. That's very simple, however. Use your broker and/or other agents in the office as resources. Rather than doing it outside of the brokerage, tell your broker, and have them review what you're doing.
2. I was afraid to bring up my first deal to the brokerage because it was a private purchase and no commission was being paid. I was afraid if I wasn't bringing in a commission, I might have to pay the broker's portion myself. However, like you, I wanted to do everything by the book. Telling them was the best decision I could've made. They did not require me to pay a commission, just a small transaction fee that is paid on every deal. My compliance offer said these investment deals where agents are also the purchasers is an especially risky area for agents, so it should definitely be done through the brokerage and reviewed for my own protection. That's what I did. And when I had questions, I felt a lot better knowing I could ask rather than guess because it was being done behind their backs. An even better plan is to discuss this topic with brokers when you're deciding who to sign with. (If you want more tips about picking a broker, direct message me and we can talk).
3. I haven't had the experience of doing a double close yet. I can't imagine why that wouldn't be done in MD. From a financial standpoint, it's definitely better to assign a contract, but towards the end of the standard MD contract for sale, there is a non-assignability clause. It says you can't assign the contract without written consent of the buyer and seller. This, however, implies it can be done as long as you and the seller agree in writing. I'm actually working on a wholesale deal now, and will be talking to my broker about it soon, so again, direct message me, and I can give you updates. However, it seems the caveat is that if your end buyer fails, you are still responsible as the original contract you signed. Thus, you should be prepared to buy the property in the worst case scenario or at a minimum, forfeit your earnest money.
4. The MD contract is as simple as it gets. You don't have to worry about doing anything illegal if you stick to the standard MD contract. Additionally, I think using the MD contract actually does the opposite and instills confidence in your seller. From the seller's perspective, the MD contract looks legitimate, it's standard procedure, and the seller doesn't have to worry that you drafted a shady contract of your own with "fine print" or weird clauses that could be dangerous for them to sign.
5. As previously discussed, talk to your broker up front and ask them their policy. Some brokers will allow you to do personal deals commission free. If your broker ultimately doesn't, it still may be rather cheap for you to sell through the brokerage and do everything by the book. For example, at my brokerage, the minimum commission we can accept is pretty low. Plus if I charge that minimum commission, I still get 70% of it. So the fee to the brokerage ends up being nominal, I have the protection of doing it through the brokerage, and I have my compliance officer look over everything to make sure I didn't make any mistakes.
Always err on the side of caution. Real estate transactions are a big deal and carry big liabilities. The downside to messing something up is always worse than the upside of trying to save a couple bucks. Feel free to get in touch with me anytime. Maybe we'll have the chance to cross paths soon.
Regards.
Derek
