Protecting Yourself as a Licensed Agent · The Cowboy Sales Process

This document breaks down a high-level conversation between two real estate professionals. It extracts the core strategies for protecting yourself as a licensed agent involved in investment deals and provides a playbook for handling difficult "dog" properties through novation.

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Part 1: The Licensed Agent's Shield: Radical Disclosure

As a licensed agent, you operate under a microscope. Your legal and fiduciary responsibilities are non-negotiable. When wholesaling, novating, or acting as a principal in a transaction, your license can be a liability if you don't protect it. The number one rule is aggressive, unambiguous disclosure.

Core Principle: Leave no room for interpretation. Disclose your status as a licensed professional and your equitable interest in the property at every possible step.

Your Disclosure Checklist:

The Purchase & Sale Agreement: Your contract with the seller is the first line of defense. It must contain clear language stating that you are a licensed real estate agent or that a party to the purchasing entity is licensed. This informs the seller of your professional status from the outset.

Pro Tip: Don't bury this in fine print. Make it a clear, standalone clause. Example: "Buyer, or a principal of Buyer's entity, holds an active real estate license in [Your State]."

MLS / Public Marketing: When you list the property on the market for a novation, your marketing remarks must disclose your position.

What to State: Clearly mention that you have an "equitable interest" or "ownership interest" in the property. This alerts other agents and potential buyers that you are not just a listing agent but a principal in the transaction.

Closing Documents: If you double-close the transaction, the closing documents require another layer of transparency.

The Material Relationship Disclosure: This document is critical. It's where you formally state that the seller of the property (your entity) holds an active real estate license.

The Bottom Line: Over-communication is your best defense. A complaint to the real estate commission can derail your business, even if you're innocent. Stacking layers of clear, written disclosure makes you a difficult target for any potential claims.

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Part 2: The Novation Playbook for "Dog" Properties

What do you do with a property in terrible condition that the owner thinks is worth a fortune? These "dog houses" are often impossible to wholesale traditionally. The solution is to leverage the full power of the open market through a novation.

Playbook

Playbook

The Strategy:

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The Seller Conversation Framework:

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Frame Your Value:

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2.Shift the Responsibility to the Market:

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3. Renegotiate from a Position of Strength:

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Cosmetic "Dog" House:

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Mechanical/Structural "Dog" House:

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Part 3: Creative Deal Structuring to Get to Closing

In investment real estate, problems are guaranteed. The best operators solve them creatively to save deals that would otherwise collapse.

Tactic #1: The "Pay at Close" Contractor

This is a powerful tool for handling inspection issues without paying out of pocket.

The Scenario: An inspector flags a required repair (e.g., rotten deck boards) for the buyer's loan to be approved.

The Execution:

Hire a contractor to perform the necessary work.

Negotiate with the contractor for them to be paid at closing directly by the title company.

The contractor's invoice is added to the closing statement (HUD/ALTA), and they receive their check from the proceeds of the sale.

The Benefit: You solve a critical problem that allows the deal to close without spending your own capital upfront. You can even pay the contractor a small premium for their flexibility.

Tactic #2: Masterful Use of Seller Credits

When repairs aren't required for the loan, a credit is often the cleanest solution.

The Scenario: A buyer wants a price reduction due to an inspection item, but you don't want to perform the work yourself.

The Execution: Instead of fixing the issue, you offer the buyer a credit at closing. The title company simply deducts this amount from your proceeds and credits it to the buyer. The buyer can then handle the repairs on their own time after closing.

The Benefit: It's fast, clean, and removes your liability for the quality of the repair work. The deal moves forward without delay.

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The Cowboy Marketer⁠

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