Can Real-Estate Agents Wholesale Properties?

Can real-estate agents wholesale properties? As a real-estate agent, you probably come across deals that would be ripe for a wholesale deal. Maybe the seller just wants out due to a divorce, nasty tenant, or they are in the early stages of foreclosure. I’m going to give you solid tips so that you don’t lose your license, because it is extremely dicey what is right and wrong. BE VERY CAREFUL.

Check with your brokerage
Before even considering wholesaling a deal, check with your broker to see if the company allows it. In my case, I work for Coldwell Banker and wholesaling deals is not allowed because the brokerage itself does not receive income for the real-estate activity,

2. Check the paper work

On most purchase contracts, assignment deals ARE addressed. Does the contract you have allow assignments? If so, what are the stipulations?

3. Disclosure

If you’re brokerage allows you to wholesale, ALWAYS disclose the market value of the property if listed through a broker. Make sure the seller knows that they are electing for a cash deal.

Dangers of wholesaling as an agent

Stigma of wholesaling
The vast majority of real-estate agents don’t perceive wholesalers as ethical. In real-estate, your reputation can mean everything and being know as a wholesaler could be damaging to your reputation REGARDLESS of whether you are/aren’t ethical.

You are seen as “realtor” which is supposed to be of the highest moral/ethical real-estate professionals
As a real-estate agent, you are entrusted to be ethical and be a source of information for the general public. Wholesaling a property that could possible bring a client more money isn’t protecting the public.

So much “grey area”
I’ve personally witnessed two people lose their real-estate licenses from wholesaling. There is so much grey area it’s very difficult to decipher what is ethical and what is not.

Lawsuits
In one scenario where a real-estate agent wholesaled a deal, the seller actually came back and tried to sue the agent. The real-estate agent had attached addendum of the seller accepting the lower purchase price, BUT that’s not something you want to deal with.

5 thoughts on “Can Real-Estate Agents Wholesale Properties?”

  1. My training instructor told me that it's technically not illegal or anything but just like you said, there's a LOT of gray area regarding the subject and you can absolutely get in trouble since you're not ethically looking out for the client's best interest.

  2. Hey could you make a video on thoughts of joining a discount brokerage. I like the idea that some give me the option to give the client full service or cut my commission and offer a "different level" of service.

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