I got a very scornful email from a Realtor® who also happens to be a Student. She was ranting on about how I could allow Students to advertise properties without having them under contract. She made it sound like I was the Devil incarnate and even promoting this strategy even when she had been in my Program and should have known better.
What she had seen was a rival wholesaler of ours who had a property for sale in her neighborhood and she checked with the listing agent about it. The listing agent must have said the “rival wholesaler” said they would send in a contract after they did their inspection, but they never did an inspection and went ahead and advertised it for sale.
Advertising a property for sale when you don’t have an “equitable Interest” in the property by contract is illegal in our state. Frankly, I don’t know if another Realtor® can re-advertise a listed property to his “pocket listings” or not but I don’t really care as I don’t want to be a Realtor®. I know this rival wholesale group uses this strategy a lot and maybe it’s because they are Realtors® – I don’t know and I don’t care.
The second property that we were actually advertising was in the same community and it had been listed for 110 days and obviously not sold. Our Student approached the seller and secured an Option Contract on the property good for approximately 30 days. The listing agent for this property was fully informed so you couldn’t ask for anything more. Apparently the Student/Realtor® who contacted me didn’t take the time to talk to the listing agent of our property – just the listing agent of the other property.
I personally advocate this strategy for higher priced properties when they are not selling on the MLS® and the homeowner will not renew the listing when it expires. I have used it to SAVE DEALS for Realtors® who have had no showings but when I knew I could find a buyer. Typically I sat down with the homeowner and the listing agent and discussed the strategy including that if the listing agent got a higher offer during my option period, I would cancel the option contract. This is a win-win for everyone involved.
Unfortunately, the majority of Realtors® lump investors into one group of know-nothing bottom suckers who only do things illegally. If they could only look at their own brokers to see just how many “investor deals” they were doing. I know because we sell and buy wholesale deals from tons of brokers and they tell us they don’t want to tell their agents so there is less competition.
Once the Option Contract was signed, the Student had an equitable interest in the property and then he signed a Partnership Agreement with us, giving us an equitable interest in the property and the right to advertise it. This issue of equitable interest in a property must have been left out at the Realtor® training academies. It crops up all the time with agents shouting obscenities about our defrauding the homeowner and we will be going to jail and goodness knows what!
We have been audited by the State Department of Business Regulation on a few occasions because of similar allegations that we were selling something we didn’t own or we were receiving commissions and weren’t licensed.
The auditors came away saying that they get these complaints from Realtors® on a regular basis and someone should explain what an equitable interest means and why wholesaling is not receiving commissions. Having said that, they also have found some wholesalers who re-advertise other wholesalers’ deals and sell them without a Partnership Agreement in place which is illegal and they have fined these investors.
In summary, I am not sure why this Student got so riled up all the while knowing we won’t advertise a property without first seeing the seller’s signature on the Purchase and Sale Contract. If a Student isn’t doing the work we asked of them they sometimes strike out at us as an excuse and saying our Program doesn’t work. The Program hasn’t worked for this Student because she won’t work it. I guess I shouldn’t wait for an apology.
To your limitless success!