RE license and Sub2 - Posted by Luke Hoppel

Posted by Luke Hoppel on June 11, 2006 at 19:30:25:

Great Stuff! Thanks! I’m going to post the question now.

RE license and Sub2 - Posted by Luke Hoppel

Posted by Luke Hoppel on June 11, 2006 at 16:00:25:

Hey all, I have a quick question here. I’ve been hearing a couple of rumors that you can not acquire homes sub2 if you hold a real estate license. I’m guessing it’s for ethical reasons.
Has anyone heard of this? I’m assuming if it’s true, it’s a state by state law.
Any insight would be appreciated.

Re: RE license and Sub2 - Posted by Natalie-VA

Posted by Natalie-VA on June 12, 2006 at 09:18:00:

Hi Luke,

There was a discussion on there a couple of months ago regarding some law in California that doesn’t allow RE Agents to be involved in SUB2 transactions. I can’t remember the details, but you might want to look into that angle.


Re: RE license and Sub2 - Posted by John Merchant

Posted by John Merchant on June 11, 2006 at 18:25:00:

While I know of no state that by statute, prohibits its licensed RE Agents from buying sub-to, of course the professional licensee, be he lawyer or agent, has a high standard of care to live up to when doing so. And is in fact and by law, well aware of his duty to disclose everything possible to the seller.

He could not plead ignorance of the law (of course nobody can use this defense in a criminal case)if sued by a HO who feels he was taken advantage of…this is really what the Broker is concerned about as he’s the one with ultimate responsibility for whatever his agents do and all business in his office belongs legally to him.

I’ve seen a number of infractions by agents where I was sure the broker was blissfully unaware of what his agents was doing and usually a phone call to that broker stopped whatever bad actions the agent was doing instantly.

Then of course, there’s the always present bad apple broker or lawyer(we’ve got some in WA too) who’s out cutting every corner he can and with constant complaints to the RE Commissioner or Realtor’s Board about his sleezy actions.

Anybody can quickly see his own state’s RE statutes and RE Agency Rules online so as to be able to check out his own state’s laws and rules.

So go look and read your own laws and rules and decide for yourself if sub-to while licensed is per se illegal.

Re: RE license and Sub2 - Posted by gerald(tx)

Posted by gerald(tx) on June 11, 2006 at 16:35:51:

There’s nothing illegal about this that the state would get involved. However, a local broker may set this as a policy for his office.

By nature, Realtors are frightened to death of doing anything questionable that could get them in trouble with their local board or the state RE commission. Some offices have rules against their agents doing any investing, period. Thinking is this would be a possible conflict of interest.

Conversely, there are agents galore in my area who get plenty of Sub2s thru their expired listings and make more from these than thru commissions.

Their hook is, “if I can’t sell it in 90 days, I will buy it.” Guess how they buy it?


Re: RE license and Sub2 - Posted by vk60546

Posted by vk60546 on June 11, 2006 at 16:29:18:

you have to check with your broker (if you are an agent) and also check with a lawyer.

I’d look up agent owners in your MLS (those agents that sell their own homes) and talk with them.

In my understanding, there should not be any issues when everything is properly disclosed. But you may have a problem with your broker since he may not like you purchasing subject to.

btw, there is a good forum for RE Agents to ask questions like this at

Re: RE license and Sub2 - Posted by Luke Hoppel

Posted by Luke Hoppel on June 11, 2006 at 19:31:42:

Thanks John! Great points!

Re: RE license and Sub2 - Posted by Luke Hoppel

Posted by Luke Hoppel on June 11, 2006 at 19:29:21:

Thanks for that Gerald. That makes a lot of sense. I also am sending that question to my states real estate commission to see how they respond.
I’m pretty sure you are right though.
I’ve heard of the idea of teaming up with a good realtor and teach him how to use that line but you be the back man that actually buys it. They put in their contract that they will but it for 75 cents on the dollar or if there isn’t enough equity then they buy it sub 2.
Well thanks for the reply. I appreciate that.