All Forum Posts by: Drew K.

Cold calling sellers is not illegal. Getting paid a commission (%) out of a real estate transaction without being licensed to sell real estate is. It's all about how the payment is structured. If you are licensed you can collect $ in this fashion but it will go through the broker first - you cannot get paid directly. Without a license you can certainly charge for making calls or even for providing a list. You cannot charge a commission from a sale without a license. 

I have been working with an L.L.C out of Tennessee prospecting portfolios for them. If a deal is made and closed they pay me a percentage of the purchase price. To be clear all I do is call and find out if owners are interested in an offer. Once that is done I bring it to the L.L.C. and they handle the rest. I am about to test to receive my license but I have a lot of confusion on the legal boundaries of wholesaling and what I can or can not do. 
I have read I must now disclose I am an agent upon passing my exam, but also confused do I need to include my brokerage information every time as well & how or if the brokerage, me, and the L.L.C. could do this without any legal trouble for any of us. 
Any information or guidance is appreciated

As a broker, I can say I would never bring in an agent that also wants to wholesale. Too much of a gray area and it's the broker that will take the liability for all of this. Just no way. BTW you are already illegally practicing real estate without a license. A true wholesaler personally puts the property under contract and then sells the contract, which is much different than collecting a fee for the sale of property (which in every state requires a real estate license).

I have never had a deal or anything go through, but the way that I would call and if the firm was interested in purchasing the property and then I get paid for finding the deal is illegal? To be clear, I was told to prospect for portfolios, cold call, and see if people would be interested in an offer and that is as much as I've done. 

Serious question new to this and appreciate any response. 

Hey @Drew K.,

I have been through this same situation. There are a few things you can do.

1) Make sure your broker is cool with you doing both. It really should not be an issue if you are upfront and honest, basically the rules are put in place so nobody gets taken advantage of.

2) Would not be a bad idea to consult with an attorney and have some contracts written up that protect you from any lawsuits when you are wholesaling. 

I have tons of connections if you need anything or have any specific questions just let me know. Not sure where you are at in FL, but maybe we can connect if you are local. 

Best of luck.

Your local laws may vary, so reading the actual real estate laws will be crucial.

First, what you have been doing so far very likely falls under the definition of brokering real estate without a license, so you might want to rethink that.  Florida has been cracking down on this.  @John Thedford has written a lot about this and has been turning wholesalers in to the state.  You might want to search the archives for him.

Second, yes, you probably will have to disclose to a potential seller that you are a real estate agent.  That's true in every state I know of.

Third, any compensation you receive once licensed will have to run through your broker.

Fourth, your broker may tell you that you cannot continue that work, but have an open, honest conversation with them to be sure you're operating above board.  Your broker will also tell you exactly what you have to disclose.

 Got it, appreciate the clarification on that.  Depending on the deal, I actually may be able to help with that along with some of my partners I work with on similar deals which we can do either cash or financed.  I'll send you a DM and we can catch up to see if we might be able to work together on it. 

If you have the funds, providing a bank statement with the balance intended to be used on the deal can be used.  Or are you partnering up with other investors with some or all of the funding?  If so, similarly, you could get the proof of funds from your partner's statements.

I am basically looking for a cash buyer for the deal and hoping they can provide proof funds if they think the numbers are right for them.