Real estate agents and brokers can be the ultimate real estate wholesalers. This is one of the reasons why, after many years of investing without a real estate license, I decided to finally get licensed. Let me explain.
Let’s take a look at what a typical wholesale deal might look like for a real estate investor that is not licensed. You find a deal and get it under contract from the seller at a price that you can sell it for and still make a profit. Then, you start marketing the deal to your contacts, which include other real estate investors. You also market to the general public to find new investors or maybe a retail buyer who will live in the property.
In many cases, as a real estate wholesaler, all you have is a contract to buy the property at a fixed price and you are looking for someone to assign this right to purchase the property to for a fee.
Well, isn’t that similar to what a real estate agent does? There is a contract with the seller where the seller has agreed to sell at a certain price (the listing agreement). The agent then tries to find an investor buyer or simply a home-buyer interested in purchasing the house. The “wholesale” fee that you get from selling the house is the agreed upon commission.
Now, if you are a real estate investor, you are probably thinking, but the commission is only a couple percent and my wholesale fees are usually much more than that. I will concede to you on that, but, and it is a big but, as an agent you have hundreds of houses that you can wholesale and not just the ones that you get a contract on yourself.
You can, with a real estate license, go out and sell any house that any other real estate agent has gotten the agreement of the seller to sell for them. This means that you have a lot more inventory that you can decide to market so that you can spend more of your time building your buyers-list of investors and retail homebuyers and spend less of your time putting houses under contract.
Alternatively, if you like hunting for houses to tie up, then spend your time trying to list houses and let a network of hundreds of other real estate agents and brokers sell your properties for you.
This is how I look at the role that a real estate agent/broker plays and why I ultimately decided to get my real estate license after all of these years. Cairnhill 16