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This is a story that happened just last year and it's another fun one! I was representing my investors on a purchase from an out-of-the-area wholesaler on a local home. That in of itself is not unusual, many of these larger wholesalers cover a large portion of the state, if not the entire state. This was a smaller operation, but still nothing out of the ordinary. They were Brokers themselves, buying a house that was for sale with a Realtor and my clients were the second buyers. It's a little convoluted to explain, but a very common process and one I've done successfully and without issue many times in the past.
The house was cluttered and the photos we saw and that my client based their offer on were from the listing agent, the wholesaler had never seen the house. As is typical in these situations, the wholesaler was already under contract with the seller. We did our visual inspection and noticed several issues that were material in nature and had they been know, we would have came in with a lower number. After having discussions with the people we were buying the house from, we agreed to a repair request that would be presented to the seller.
Now is where it gets interesting. The wholesaler, who is licensed and should know better, cut the listing agent out of the conversation and went directly to the seller with the repair request. They ended up getting the full amount, but told my client a different number. When we saw the escrow instructions and the estimates, we saw that there was $15,000 credit more for repairs that the wholesaler was getting than they told us that they were able to get from OUR repair request. By this time Escrow realized that the listing agent was not in the loop on these conversations, which we thought he was, and brought him and his Broker in.
I ended up sending the wholesaler a very strongly worded letter, spelling out the contract in detail, citing lines verbatim, emails, texts, quoting the rules and regulations around real estate and threatening to get the District Attorney involved (whom I had brought in to speak to a class I was putting on earlier that year) that I got them to release the money to my clients.
In the midst of this, the wholesaler was having their transaction coordinator send out all the papers for the listing agent (without their knowledge or consent). We get some documents from the listing Broker to have signed and we call the agent and tell them we already signed them when the TC sent them out weeks ago. Well, turns out it wasn't their TC. I had a nice conversation with the Listing Broker, who I had worked with on prior deals and knew from the association, and we got it all worked out. I don't know if they ever filed an ethics violation or licensing law violation against the wholesaler, but I hope they did.
In the end, this had a happy ending. I got my clients the money they were rightfully owed and the house, plus I made friends with the listing agent along the way and hope to have more deals with him in the future.
