Flipping As A RE Agent?
I'm just getting started in RE investing and would like to Wholesale a few properties to build some capital. I also just passed my RE salesperson test and I'm wondering if I do hang my license with a broker if there is any laws against a licensed agent flipping properties?? I live in the Kansas City area.
KREC 86-3-7, 86-3-19
Could you elaborate on that as I don't have my law book handy?
You must disclose that you are an agent to anyone you are offering to buy from or sell to, it must be part of any contract, and included in any advertisement you do.
Your broker will probably not want you to purchase from his listings to avoid any appearance of conflict of interest.
I'm not nor have ever been an agent or a broker, just a guy who buys junk houses, so take that into account when determining how much value to place on my input.
I'm shocked that you didn't learn this stuff during your 30 hour course or subsequent studies. I'm surprised that you didn't have an arrangement with a broker prior to taking the test, you can't get licensed without a supervising broker to sponsor you. That broker is the one who could give you the bottom line answers to your questions as he will be the one responsible for you.
I have six months to sign with a broker so don't be so shocked!! As far as having to disclose that I'm an agent was not my question. I asked if there was any LAWS that specifically say that licensed agents can't flip homes!!!!
In Texas it is illegal for agents to flip properties. One agent I know though has his Relocation Company actually buy the property, pull the equity out, and sell it. Doing these deals without a company protecting you to some degree seems foolish whether you are licensed or not. If you are licensed you do have more to lose though. By law agents are supposed to get their seller maximum price and it is a direct conflict of interest.
My Advice:
Consult with a real estate attorney.
Shield yourself with a C-corp or LLC.
Don't get greedy.
I am curious. Are you getting licensed only to save on commissions?
If you are getting licensed only to save on commissions then what's the whole point? I can do that as an individual and I only pay to my agent what I agree to - not what the going rate is. And I won't allow them to get me into a double agency situation - ever! It's unethical and in a sense, that is just cheap. Law firms could never do this.
Remember: Everything is negotiable. Otherwise my personal opinion is that this route is only a little cheaper and not worth the hassle. If you don't want to pay them, then don't use them. Why adopt a "if you can't beat them, join them" attitude?
And I run into "Investors/Agents" all the time who are cocky because they got licensed. My response is well good for them. But that doesn't give them any kind of edge over me. If anything it ends up blowing a potential deal because they think they are smarter than me and end up demanding too much thinking they're better at the deal than me. I don't think Sam Zell and Donald Trump are licensed....Hm....
the LonghornDB
I respectfully disagree with the above post. There are advantages & disadvantages to investing with or without a license. Personally, I find the license very valuable.
I have never heard of a restriction on brokers/salespeople flipping property. It is not illegal in my State.
Here in California, to the best of knowledge it is not illegal to Flip. Full disclosure to all parties involved is required.
Taiyo