Yes, Realtors® can Wholesale Houses Too!

By
Real Estate Agent BR506231000
https://activerain.com/droplet/5fZk

If there's one thing that I've learned in my journey as a Realtor®, as well as an Investor, it is the common misconception amongst the public about everything a Realtor® can do.   

 

The National Association of Realtors® doesn't always help.  Most of the pictures you see displayed on television or other ads depict a friendly smiling Realtor® showing houses. 

 

It would be natural for us then to assume that for the majority of the public, the thought of a “Wholesaling”  or Investing Agent would be an anomaly.  

 

While using my Realtor skills; locating property, negotiating for myself, and writing contracts I’ve noticed something. It is increasingly  apparent to me that the public at large does not know that Realtors® can, and often do work on their own behalf.

 

As a Realtor®, doubtless you have heard of Agency. It is the founding principle under which we provide our services. The fiduciary responsibilities that we have to our clients cannot be discounted. 

 

Yet where do we draw the line when we are seeking to represent ourselves when we choose to Invest for ourselves?   As Realtors® we are in the enviable position to be looking at homes all day!  We talk to people who need to buy and sell all the time. Unbelievably, the answer comes to us from the National Association of Realtors® Code of Ethics; Article Four.

 

For those non agents who are unfamiliar with Agency.. Simply put, Agency is the mechanism by which one person represents another, ensuring that the rights of the client are held in higher esteem than those of the practitioner.

 

So while it is common practice for Realtor® to represent one party or another (or perhaps even both) in a transaction the Laws of Agency are very clear. At no time can the practitioner put his or her interests above those of the clients.

 

 

Which leads us to the curious state of being a “Principal”.  Right back to Article Four.  

“Article 4

REALTORS® shall not acquire an interest in or buy or present offers from themselves, any member of their immediate families, their firms or any member thereof, or any entities in which they have any ownership interest, any real property without making their true position known to the owner or the owner’s agent or broker. In selling property they own, or in which they have any interest, REALTORS® shall reveal their ownership or interest in writing to the purchaser or the purchaser’s representative. (Amended 1/00) “

 

 

Acting as a principal who is licensed gives you some unique benefits. If you are a Realtor®, (from a financial point of view) a wholesale deal is financially more lucrative in terms of time than a listing. 

 

If listings are the name of the game, then wholesaling is the cream of the crop! In no capacity is wholesaling illegal, And in fact should be encouraged.

 

Think about it, right now in your marketplace, there is a poor homeowner who needs to sell their home. Your job is a Realtor®, is to find them and help them. 

 

The problem is, many of the public feel that they cannot afford a commission. Sometimes this is true, sometimes it is not. Either way for many practitioners this is an objection that they simply cannot overcome due to their experience. 

It is not their fault, if they were properly trained, had enough time in the field, and experience than they may be able to overcome these objections. But sadly, the average practitioner does not have the time, exposure, or training necessary to handle such a situation. 

 

So what is this Homeowner to do? If their local Realtor® is not an option to sell their home quickly, then they are left to the whims of the market. I personally believe as a Realtor®, you are commissioned by the state to protect the public. And if you have a skill, that would protect the public, and do not use it; but how is that it any different than malpractice?

 

So from this point of view, the Realtor®/Investor brings a lot to the table.  If you are an experienced agent, then so much the better.  You are able to define market value is more accurately, handle contracts, escrow, answer questions were effectively, and more.

 

As a sales person, who is currently an independent contractor, you have the ability through your marketing to attract this business, as well as other business that comes as a derivative. For example, marketing for motivated sellers, often times leads to listings.

 

Investor driven, or investor friendly marketing will also work out to the practitioners benefit through having a ready supply of cash buyers. One thing I have learned however, in my dealings with wholesalers, and investors over the past few years is that it isn’t always easy to find out who the REAL buyers are!

 

As a listing agent, sometimes I found it to be very troublesome to work with Investors. Usually because their demands were so ridiculous.  However, after I learned how they (Wholesalers)  were taught some of the things they were taught, it became apparent to me that it is not the “investor" who is at fault. 

 

Often, what lies at fault is either Language, or Pricing.  

For example, in expressing what they are doing, the Wholesaler will sometimes say that they are “flipping” the house, or will “put it under contract while looking for a buyer.

 

While this activity generally falls under the term of “unlicensed activities”, more often than not, the reality is far less malevolent.  However, certain States are starting to take notice and apply more stringent enforcement of their laws regarding practicing without a license.

 

(See related article Ohio V. Wholesalers!)

 

Many times the new Investor simply does not know the correct language to use to express or articulate their position.

 

Most Investors who are unlicensed that are new, are these “wholesalers”.  This practice is nothing more than “assignment of contract”.  However, it isn’t sexy to hold a weekend “Boot Camp” (as their guru’s like to call it) and call it a “How to Assign Contracts on Real Estate without Cash or Credit!”

 

My suspicion is that the class with that name would have very few attendees.  Therefore, the “flipping houses with no cash or credit” classes go along. Teaching assignment of contract (aka wholesaling) to the masses. 

 

So back to our unwitting homeowner.  They have no agent who is familiar with Real Estate to assist them in this time.  Until a Yellow and Black “We Buy Houses” Sign appears on the telephone pole near their home.

 

They call the unlicensed person who just graduated from said “Boot Camp”.  Many times, this person has no real estate experience, and as you can imagine, the results are disastrous.

 

So what then is the answer to this dilemma?  The knowledge that you, as a Realtor® are in the best position to bring safety and accountability to this business of Wholesaling. 


If you are a Realtor® who likes to help the consumer, but does not appreciate the tediousness of Open Houses, showing buyers, or caring for listings then Assignment of Contract, aka Wholesaling can help you  

 

If you are tired of having your commissions reduced, disrespected and your time wasted, then Assignment of Contract aka Wholesaling can help you.

 

If you are ready to help the consumer in yet another facet of your business. Then Wholesaling is for you.  Visit us at www.TenMinuteSkill.com for Agent Specific ideas on how!

 

 

 

 

 

Posted by

Teaching Investors the Sales Skills for Success!

Visit me at www.TenMinuteSkill.com

Karl L. Krentzel, ABR

Associate Broker

Realty Executives Tucson Elite

 

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Rainer
189,526
Ted Glover
Alderman Classic Realty, LLC - Moultrie, GA
ABR in Moultrie, Georgia 229-854-5422

Wow Karl you said a mouth full with this article. There is a lot of truth within the depths of this article. Yes both buyers and sellers do need representation. I don't see what state you are working in but another way is an "option". This can work for someone with a difficulty with a property. Have a great day.

Aug 09, 2014 01:05 PM #1
Rainer
36,835
Karl Krentzel
Tucson, AZ
Thanks! I am a Broker/investor in Tucson AZ.
Aug 09, 2014 02:30 PM #2
Rainer
26,381
ROBERT ORRIGONI
Orrigoni Group - Midvale, UT
Residential Real Estate

Great article.

Dec 15, 2015 09:24 AM #3
Rainer
3,225
Trey Crusey
Home Buyers of Alabama - Gadsden, AL
www.homebuyersofbirmingham.com

Yes great article. I keep hearing people say you cant do both because it's a conflict of interest.  If that was the case I don't think anyone could be an investor and Realtor at the same time.  The important thing is disclose disclose disclose! I always get a signed release as part of my wholesale business saying I am not acting as a realtor in this transaction and include my broker in there as well just in case something happens down the road. If you're actually out to help people and not just take advantage of them this shouldnt be an issue in the first place anyway...

Jun 14, 2019 01:08 PM #4
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Rainer
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Karl Krentzel

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