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REIM 080
I just wanted to take a few minutes and answer some questions that I have been getting about working with Realtors when wholesaling lease options. “Do I work with a Realtor or not?”, ” What are they going to do for me?”,  “What and how do I pay them?”…. I get these questions all the time and others just like them.

Tune in to this video to hear how I address these types of questions and much more. Many feel that working with Realtors seems to go against the philosophy of what we do as real estate investors, but I’m here to tell you it doesn’t have to be that way. Take a few minutes to listen to what I have to say and you just might find that you have an ally in your REI business.

Watch and enjoy:


What's inside:

  • 01:35 – Why even work with an agent?
  • 02:51 – Why you need to make lists for everything you do
  • 04:00 – How using a vanity number will save you time
  • 04:34 – Are you prescreening your lease-option buyers too much?
  • 05:58 – How much should you share with the Realtor?


Mentioned in this episode:


Download episode transcript in PDF format here…

 Joe:    Hey, everybody. Joe McCall here. I'm just going to do a quick little video. I have a break. I am right now at the kids' Vacation Bible School at our church. It's the highlight of the year. There's at least 6,000 … Well, there's about 5,800 kids here over these 2 weeks. It's so much fun.

I just had a little break. I was going through my emails, and I got an email that I get asked a lot, and so I thought I would just do a quick video about it because I've got nothing better to do. Anyway, it's a question I get a lot about working with realtors when it comes to flipping lease options. I'm just going to answer this question as best I can real quick. The question comes in as “I have a specific question about realtors. When we outsource our marketing for tenant buyers to realtors, what are their exact responsibilities?”

One of the things I teach in this business is that you should either get your license or work with a realtor who is licensed when it comes to marketing and selling your properties.

Say hi to the kids. Say hi, everybody. That's just like 10 of the 6,000 kids that are here.

Anyway, so what kind of responsibilities and assignments are you going to give that agent to do for you, and why even work with an agent? Well, the reason is, is because there's issues with brokering without a license, as we all know, and I've talked about this in my course a lot. When you're finding a property for another person … Now, you could argue that's not what we're really doing because we're using an option contract. We have equitable interest. We're a principal in the transaction. I prefer just to play it safe, so I suggest if you're doing lease options and you're flipping lease options, either get your license or hire a realtor to market and sell the homes for you, okay?

If you do that, then what do you have the realtor do? Everything. Okay, so just make a list of everything that needs to be done, and then ask yourself this question: “How can I get someone else to do all of this for me?” That's how it works, okay? Now, what does a realtor do for me? They advertise the property, they put it on Craig's List, they do the bandit signs, they take the calls, they put it on my website, they give the applications out, they get the applications back, they collect the application deposits, they send them to the company we use to pre-screen the tenants, and then they handle the paperwork, and they help me with it. What do I pay them? I pay them usually one month's rent, half of a month's rent, just depends. In my course, I have a checklist that's pretty extensive, and it goes through it.

I'd encourage you to do the same thing. No matter what you're doing, even if you're not flipping lease options or just doing regular wholesaling, make a list of everything that has to be done, and then look at that list and say, “All right. How can I get somebody else to do all of this for me?” All of it. What I did is I created a checklist; I wrote down all those things, and then I made 3 columns. In the 3 columns I said number 1 was my responsibility, and then the virtual assistant responsibility, and then the realtor's responsibilities. All of my responsibilities were just to make sure that they got done, or the most important things I would check off to make sure that I did or reviewed myself. That's really important, all right?

Let me go to another question here, with my screen shut off. Okay, “Do they prepare the custom rent-to-own bandit signs?” Yes. “Do I have to provide them?” Sure, yes. “Do they put their own number on the signs?” When it comes to bandit signs and rent-to-own, I suggest you use a v-number.

Oh, hey, it's my daughter. Hey. Say hi, Lydia.

Lydia: Hi, hi.

Joe:    When it comes to bandit signs and phone numbers, yeah, use a virtual number that goes to voice mail because you're going to get a ton of calls, and you want to set that voice mail up where it answers the most common questions, and it drives them to a website that gives them more information.

Now, I did have a realtor work with me one time who wanted her cell-phone number on there because she got tired of playing phone tag all the time, so she wanted her personal phone number on there. Most of the time we put a vanity number that goes to voice mail, where they can ask … We try to make it where it answers all their questions, and it drives them to a website.

“If they take calls from tenant buyers, do they pre-qualify them to make sure they are rent-to-own candidates?” The only pre-qualifying we do is that they understand that the house is a rent-to-own, okay? It's not a regular rental property. It's not a regular rental property; it's a rent-to-own, so we ask them, “Is this a house that you want to eventually buy?” If they say yeah, then we try to get them into the house. I don't try to pre-screen or pre-qualify them too much because we just want them in the house. If they get in the house, and they love it, they'll find a way to get the money that they need.

Sometimes if it's a property that I'm expecting … I'm trying to get a lot of money as an option deposit or a sign-in fee, I might ask them how much they have, but if they tell me less than what I'm looking for, I'm not going to tell them, “Sorry.” I just tell them, “Well, typically, we try to get 3 to 5 percent, but why don't you go look at the house and see if you like it?” So we schedule a time for them to go and look at it. Don't pre-screen them too much. You want them to get to see it, right?

“Do they communicate directly with the seller to arrange showings for the tenant buyer?”

Hey, Luke. That was my other son right there. There's a lot of people here. Check this out. They're going from one place to another. By the way, if you want more information about Jump, go to jumpkids.com. It's really awesome. You'll see what we're doing.

Okay, so, “Do they communicate directly with the seller?” Yes. A lot of times, the seller shows the home, and so I just give the realtor the seller's phone number, and I have the realtor coordinate with the tenant buyer and the seller when the home showings will be.

“How do I describe to the realtor what their role in all of this is? What service are they doing for me?” Just give them your checklist. Give them the list of everything that you're doing, and tell them, “This is what I want you to do.”

“Do I tell the realtor that I'm not the actual owner of the property?” No, you should keep that a secret. Listen, they're going to know, so just tell them exactly what you're doing. You're not trying to hide anything from anybody. You tell them that you have this property under a lease option, you're going to find a tenant buyer for the property, and you're either going to keep it yourself, or you're going to wholesale it; you don't know. That realtor is representing you. They don't represent the seller; they represent you. Which brings me to another point; if the property is listed with a realtor already, this isn't going to work, right? A realtor can't work for you while another realtor's working for the seller. Those deals, you're just going to have to pass.

Cool, so that's it. That question was from Emilio. I hope that helps, and I hope you don't mind all the distractions. Go check out jumpkids.com. We're going to be taking this Jump all over the world. It's an awesome event. They've done it in Kosovo. They're going to be doing it in Albania, and then they're going to Paris, and then I've been talking to them about taking it to Prague in the Czech Republic. I talked to like the main guy today about it, and I think there's a good chance they're going to consider going to Prague. All right, guys. See you later. Bye-bye.

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    1. If you do it the right way, you can. Plus, if you get your license, I don't see any problems doing it. Do you have to have your license? I don't know – it depends. I would strongly suggest you get your license, but you don't have to. Clear as mud?

  1. Real estate agents in my state (NC) can't list a home for the person with the option. It's got to be the person who owns the home at the time of the listing. That's the way it is here, not sure about other states.

    1. Eddie – thanks for the comment. But I would politely challenge that assumption! 😉

      First, the Realtor isn't listing the home on the MLS. They're just helping you find a tenant for one of your properties. If you had to get the owner to sign something giving your broker authorization, go ahead and have something in your original contract with the seller that they are giving you permission to advertise it with a Realtor.

      Give a Broker the following scenario and see if they would be willing to work for you… "I am looking for a Broker that will find a rental property for me to buy. But once we get it under contract, I want you to immediately start advertising it for rent and help me find a tenant. I would like to try to have a tenant approved before I close. Can you do that for me, or should I go look for someone else?" If the broker told you no and refused to find a creative way to do that, then you are working with the wrong broker. There's nothing wrong with doing this. Nothing… You have equitable interest in that property. You are an "owner" in a sense.

      Think of it like a Sandwich Lease Option where you are going to stay in the middle. You may or may not assign your interest later on down the road… It all depends on the numbers… (Understand what I am saying?)

      Bottom line, you probably haven't talked to enough brokers. I have been doing this and teaching it for years, and have students all over the country. I have heard this objection many times, but have always found a way to work around it.

      Remember, you are principal and you have equitable interest in that property. You are actually one of the owners at the time you have it under contract. I would bet if you asked around long enough, you would find the right broker that would do this for you. You don't want to go to the big popular brokers. They most always tell creative investors "no" – that you can't do something that isn't the normal traditional way of doing listings.

      I once had a broker who worked for me that didn't want to be paid a "commission" on a deal because I wasn't the "real owner" yet. But they had no problem being paid as an hourly 1099, Independent Contractor. So I paid that broker an hourly wage to work for me. Not a big deal… We found a way to make it work. I paid the broker, and the broker paid the agent.

      There has to be some Broker who can help you there in NC. I bet you there are wholesalers in NC who are "wholetaling" houses on the MLS before they outright "own" them – guys who are doing traditional wholesaling and listing their properties on the MLS. Find those brokers and work with them.

      Hope that helps!

  2. Hello Joe. I am a licensed Realtor. I am interested in wholesaling lease options. Isn't it illegal to collect an option deposit and a commission for finding a tenant buyer?

    1. Tamika – If you are doing these deals as a Realtor, that's great. I would suggest just do the deals as a licensed agent & get them to sign a listing agreement with the 3% commission due when the Tenant-Buyer is placed, and 3% due if / when the TB buys the home in 1-2 years. Use the regular realtor agreements – a lease and sales contract.

  3. Hi Joe, how's it going?

    Just a quick question…

    So if I understand, when doing a lease option assignment, you do not have the agent list the property on the MLS, correct?

    Would you still need to sign an agreement with the agent though?


    1. I tell them that they don't have to list the property on the MLS if they don't want to. It's not a big deal. If they do, I tell them that I will only pay another agent 1/2 of a month's rent.

  4. Hi Joe,
    I am trying as rapidly as possible to catch up on your podcast series. I have started at 1 and progressed to 76ish pretty much event free. Somehow now when the podcasts are combined with a video option, I can no longer download the audio. Is there a fix for Android users or should I not waste my time this was intentional and there is no audio to download?

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