I’m An Agent – Can I Do What You Teach Without Breaking The Law?
Many agents use my system because it brings in leads. Most of them start out with the concern that they might be breaking the rules if they invest with the methods I teach.
Here is how to do it so you comply with the real estate commission rules.
Here is how making a simple shift to “real estate investor” rather than “agent” changes the way you are viewed by your clients and brings you in, not only a lot of investment deals, but also brings you a flood of agency listings and sales.
This kind of thinking is a game changer for Realtors.
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Read Transcript for “I’m An Agent – Can I Do What You Teach Without Breaking The Law?”
“I’m a realtor. What are the rules for putting the house under contract with a motivated seller for the lowest price possible to flip to an investor without backlash from my principal broker or disclosure rules?” – Rodney Rhoades
Joe: First of all, you need to have a conversation with your broker and make sure that he’s okay with you selling properties. Some brokers want to take a commission every time you sell a property even if you own that property.
Joe: The way we’re doing these deals is as the principal in the transaction, not an agent, and if we have a license (which I do. I’ve had a broker’s license for over 20 years) then you just need to disclose that you have a license and that you are not representing anyone in this transaction except yourself and that you’re working as a principal in the transaction.
Joe: Now, if your broker is okay with that, then great – you can do the deals and make the profit. Most brokers are going to be willing to do that. If they’re not, then you need to find out why.
Joe: If you’re an agent, it usually makes sense to work with a 100% broker, which means that you pay them monthly and you keep all of your commission. There are a lot of franchises that do that. There are even small companies that do it. You can work with some old broker if you don’t have your broker’s license, or you can go out and get your broker’s license and be your own principal in the deal.
Joe: If not, you need to talk to them about it. They still have a purview over what you’re doing. They have the right to look at what you’re doing and approve it or reject it because their license is on the line, and their profits are on the line, so they may want a cut in the deal. If you’re a 100% broker, and you’re paying them monthly for a desk space or just to hang their license there, then you don’t have to worry about those things.
Joe: If you’re a broker and you’re doing this business, then it makes sense to keep people on a commission basis so that they’re giving you half of their commission, and then you can use the systems that I’m teaching to develop leads for them and take a piece of this action from them, and then also have them doing the work and taking a chunk of that income for yourself and your brokerage.
Joe: You’ll find a lot of people do that because a lot of agents out there don’t know how to develop leads; they don’t know how to bring leads in. That’s why so many are starving – they know how to do real estate, put a deal together, close a deal and help people find the best property out there, but they don’t know how to bring the people in in the first place.
Joe: Again, I’ve talked about this over and over and over again – the most important thing you can do in business is marketing – that’s the only profit center – everything else is just fulfilling the service that you’re getting paid for.
“What can a realtor do wrong in the ‘For Rent Method‘ and how should the deal be set up so everyone is happy? My office only does listings – that’s all they show me and that’s all they’re teaching me. I could care less about listings because I saw investing first. I feel they’ll frown on me for being an investor because they won’t make money from the listing and I’m expected to reach a $15,000 cap and all my deals are 100%.”
Joe: What I would do, first of all, is go have a talk with your broker. See if he can come to terms with what you’re trying to accomplish and how you want to do business and find out if they’re willing to work with you. You can bring in a lot of leads and if you give him a cut of what you’re doing, it can work out really well for you.
Joe: It’s okay to give him a cut if it makes sense for you but you’re going to find that if you’re driving the business and you’re the rainmaker and if all of the leads are coming from you, then you should get the lion’s share of that profit. That’s how you want to set up your business, whether you’re working with this brokerage or another brokerage or you become a broker yourself.
Joe: Keep all of these things in mind as you go through this process. This is one of the best businesses in the world for a real estate agent. So many of my students have been real estate agents who have been in the doldrums with their listings and sales, and suddenly they’ll start marketing using the system that we have here and then it brings them buyers and sellers constantly, people that want to sell their property but can’t.
Joe: And if you’re going to those sellers and giving them options saying, ‘We can do a lease option with this property. We can do a ‘Subject To’. We can do a land contract or we can do a cash deal, or we can do a under market cash deal, or, I can get you full market value cash deal by listing your property; I can do that as well’ – you can give them all of these different options and still make money in the transaction.
Joe: That’s the biggest problem that a lot of agents have – they go and they’ll do a listing appointment with someone and that person doesn’t have much equity or you have to take all of their equity in order to pay the commissions, and it’s not just you that’s getting a commission, it’s the co-op agent that you’re working with, so you may pay 6% commission but maybe only 1.5% of that goes to the guy who actually has the listing after he pays the broker and whatnot.
Joe: If you’re in that situation as an agent, you probably need to restructure your business. You need to think about how you’re set up and decide whether or not it makes sense to do that. A lot of agents stay with percentage brokers because they don’t want that monthly money coming out of their pocket; they’re afraid of that.
Joe: I know that when I became an agent, I worked as a 50/50 split with my company for the first five or six months, and then I sat down at the end of that six months and I looked at the numbers and I realized that I would have made three times as much money with the amount of deals that I did just as a newbie at the beginning. I wasn’t any hotshot agent at the beginning. I was just doing a few deals. But I would have made that much more money at the beginning if I had been with a 100% broker, so it made more sense for me to switch over to a 100% broker.
Joe: And, I also talked to my existing broker at that time and said, ‘What if we changed the way we do business together and we do a commission this way instead?’ They said no, so it made sense for me to go to a different place.
Joe: The difference between being an agent and being an investor is that when you start marketing as an investor, that is, as a buyer, it’s a whole lot different than marketing as an agent. Nobody wants to talk to an agent but everybody wants to talk to a buyer. And when you’re talking to sellers (who are the people who are going to give you your listings) you’re going to want to go to them as a buyer. Alright, I hope that helps. Good luck, Rodney.