Here is a copy of a great question a listener named Mike sent in! Thanks for sending it it Mike!
I recently got my RE license and am a newbie wholesaler.
I want to go full-time as a realtor while wholesaling houses on the side, but I am unsure how I should approach the broker relationship with the whole thing.
I want to join Keller Williams for their great training and exposure, but want to wholesale houses outside of the brokerage while bringing in listings off my wholesale marketing.
I have yet to do my first wholesale deal and I am unsure if this is really something I should discuss with my potential broker and/or how to approach it.
I was hoping to get your opinion/advice on how I should approach this.
P.S. Love the podcast!
This is an excellent question. Thank you for asking it. My thought? Be honest. Let them know that you are intending to sell real estate in large quantity by “any legal means necessary!” I personally would choose the dialogue to say something like this..
“Thanks for the opportunity to work here at the company! Before I sign on the “dotted line” however, I just wanted to be honest and upfront with you… I am going to learn to specialize in being a listing agent with an emphasis in Investments. I will assign my interest, flip properties, all that. I just want to keep you in the loop and make sure there were no problems with that on YOUR end.”
The good thing is that many people who are in Real Estate in a resale capacity are not aware of the great opportunities that wholesaling provides. Your brokerage may have some requirements in terms of splits or Errors and Omissions insurance for regular transactions. However, your Wholesale deals do not (in my opinion) fall under that.
You would be hard pressed (from a brokerage perspective) to lay claim on any money that an agent made through a wholesale deal as assignment rights are considered personal property. Much like a car. Your broker could no more take your assignment fee or any portion of it than any amount they could take from your car sale.
Where the challenge is however, is the explanation to all the parties. Generally speaking, your broker does not have too much concern over your activities, (it’s not like a real job in that sense) other than to make sure you are doing things legally. Simply show him/her our disclosure that we promote agents using, along with our HouseFlippingAgent Blog post about the necessity to disclose your now “New and Improved Status!”
Congrats on your license, and by all means, be open with your broker in the beginning, and it will result in a lot easier transition! I look forward to seeing you join our Business Coaching where I can teach you more about how to bridge that gap!