BiggerPockets

Hello, just spoke to a reputable attorney in Minnesota about wholesaling real estate. He basically said that if I did a few deals and someone "told" on me to the commerce most likely I would get a fine. I'm writing this post because as many of you know, wholesaling is not easy and if I was to put in all this work, I don't want to end up doing so much work for getting in trouble at the end. He also mentioned something about only able to buy/sell 4-5 houses a year without a license. If I was to get a Limited Broker's license would this protect me from the Commerce coming after me? Any advice would be greatly appreciated as I do not want to keep working this hard for nothing. Thanks

Thanks for the reply. What the attorney was saying that we are acting as the principle but if the commerce sees that we are doing this over and over they will see that we aren't intending on buying it in the first place therefore, they will see that we are only doing this to sell.

I have no idea about how the laws in MN are worded, or how this commerce department enforces them, but I can understand the justification for their point of view. Wholesaling is, after all, brokering real estate. Not in fact, because being a principal to the transaction means you're actually involved rather than just brokering. But in spirit, its tough to argue wholesaling is anything other than brokering. A property goes from seller A to buyer C with you in the middle collecting a fee. So, while we can argue its not brokering because you're a principal, I can see their argument that you're only doing that to avoid having to get a license and being bound by the licensing laws. Be interesting to see what happens if that point of view is widely adopted.

Their argument will be someone may well be getting hurt. Licensed agents are regulated in every state, and are bound by certain laws and overseen by some state government agency. By acting as an unlicensed agent, you're not necessarily following those same regulations.

You bring up an interesting point, Joe, on the time period. I'll be if you buy a house every month, then after five years, you start selling one a month, there would be no issue. On the other hand, if you buy one a month, and later the same day sell one house, sounds like they're going to go after you. So, what is the threshold?

Thanks Jon. And thanks jawsette, that shines a little bit of light on this. In my opinion, it is in fact the government protecting special interest groups at the expense of the freedom and entrepenuership of everyone else. RE agents often don't know enough about what we wholesalers do to justify complaining of lost sales. If they were better and more valuable than us in certain instances, they would get the sale and we wouldn't. Supply and Demand, yay capitalism. Instead of crying about being left in the dirt, perhaps more of them should learn to work with investors. If they brought the same kind of value that we did, there would be little need for us. But most of them don't, point blank. It's sour grapes.
Agents are great for what they do, but in a sense, we perform two different functions in the market. For them to cross over, there's a learning curve that a lot of agents don't seem interested in overcoming. Plus, we risk more than they do financially, often times.
The government could choose to regulate us too, if they chose, but to say that we perform the same function as agents or brokers without the license, to me anyway, isn't completely true, and that's why in my gut, I feel that this is a special interest group thing being more important than the common good and the spirit of this country as a whole, which is NEVER ok. I'm a newb, and I know ten times more about wholesaling than any agent I've spoken with, all of whom have never even heard of us.