Is Real Estate Wholesaling Illegal? 

by |

[Editor’s Note: Please be aware that this material does not serve as legal advice. To safely practice wholesaling, be sure to consult Federal and State laws specific to your area before executing any deals.]

One of the more “hotly debated” topics on BiggerPockets is concerning the legality of wholesaling. In fact, one of the most popular threads on the BiggerPockets Forums right now talks about how wholesalers in Ohio are getting fined by the State for their “illegal practices.”

Scary stuff for any wholesaler!

I am not a lawyer, and laws like this are very state-specific, but allow me to share my opinion on the subject. As with any business transaction, you should consult an attorney before engaging in any kind of real estate activity.

How to Invest in Real Estate While Working a Full-Time Job

Many investors think that they need to quit their job to get started in real estate. Not true! Many investors successfully build large portfolios over the years while enjoying the stability of their full-time job. If that’s something you are interested in, then this investor’s story of how he built a real estate business while keeping his 9-5 might be helpful.

Click Here For Your Free eBook!

What’s Illegal About Wholesaling?

The essence of the debate on whether wholesaling is illegal revolves around the term “brokering.”

Although each state has its own definition, a broker is someone who helps put a deal together.

Related: The Ultimate Beginner’s Guide to Real Estate Wholesaling

Here is how the state of Florida defines a broker:

“‘Broker’ means a person who, for another, and for a compensation or valuable consideration directly or indirectly paid or promised, expressly or impliedly, or with an intent to collect or receive a compensation or valuable consideration therefore, appraises, auctions, sells, exchanges, buys, rents, or offers, attempts or agrees to appraise, auction, or negotiate the sale, exchange, purchase, or rental of business enterprises or business opportunities or any real property or any interest in or concerning the same.” (source)

Here in Washington State (where I live), brokering is defined as the

listing, selling, purchasing, exchanging, optioning, leasing, renting of real estate, or any real property interest therein…” and “Negotiating or offering to negotiate, either directly or indirectly, the purchase, sale, exchange, lease, or rental of real estate, or any real property interest therein.” (source)

Those who argue that real estate wholesaling is illegal claim it to be illegal because the wholesaler is acting as a “broker” in the deal without being licensed.

Those who defend wholesaling without a license say that wholesaling is not brokering, but simply signing a contract and then assigning that contract to another, and therefore the law doesn’t apply to this situation. They are not selling a property, but simply selling the ownership of a real estate contract. (Check out this video on YouTube for more on that position.)

To further complicate the situation, there is the issue of “marketing” a property that you do not currently own. Most states also include “marketing a property” as brokering. For example, if Jim the wholesaler, who buys a property from Deborah and then sells it to Tom. Had Jim put the ad for the house on Craigslist or elsewhere, is he marketing the property? Most definitely! But what if he wasn’t marketing the property? What exactly defines marketing? If Jim knew the cash buyer Tom and told him about the deal, is that marketing?

If you were to ask ten different lawyers, you might get ten different answers.

However, I do believe the way many wholesalers work could be considered illegal.

Putting a deal under contract, marketing the deal all over Craigslist, and then assigning that deal is a fast way to get fined by your state government and get a nice misdemeanor on your record! 

As Dave J. asked in the forum conversation about Ohio wholesaling, “What is your intent and how comfortable are you if you have to defend that position if you find the local real estate commission asking questions?” 

The Right Way to Wholesale?

Therefore, how does one protect oneself from breaking the law? Here are a few tips that I believe (again, this is my opinion. You should talk to an attorney.)

1.) Get Your License: Simple. No one can accuse you of brokering without a license if you have a your license. Yes, this might cost you a couple grand, but it’s better than getting a penalty from the state for breaking the law!


2.) Buy the Property and Then Sell the Property: We’ll talk more about this process later in this post, but rather than “assigning” the contract, simply buy the property and then re-sell it (even if you only own it for 5 minutes, through a “double close”). Again, we’ll talk about this later.

Related: Is Wholesaling the Best Way to Get Started in Real Estate? An Investor’s Analysis


The truth about wholesaling is this: Whether or not wholesaling is illegal in your state, it definitely flirts with a line.

If you want to see how close to that line you can get, fine. That is your choice.

However, if you want to be sure that you are operating your wholesaling business as pure and solid is possible, get your license or physically close on the property, take title, and then sell it after. 

Thoughts? What would you add to the debate?

Be sure to leave your comments, questions and opinions below!

About Author

Brandon Turner

Brandon Turner is an active real estate investor, entrepreneur, writer, and co-host of the BiggerPockets Podcast. He began buying rental properties and flipping houses at age 21, discovering he didn’t need to work 40 years at a corporate job to have “the good life.” Today, with nearly 100 rental units and dozens of rehabs under his belt, he continues to invest in real estate while also showing others the power, and impact, of financial freedom. His writings have been featured on,,, Money Magazine, and numerous other publications across the web and in print media. He is the author of The Book on Investing in Real Estate with No (and Low) Money Down, The Book on Rental Property Investing, and co-author of The Book on Managing Rental Properties, which he wrote alongside his wife, Heather. A life-long adventurer, Brandon (along with his wife Heather and daughter Rosie) splits his time between his home in Washington State and various destinations around the globe.


  1. John Thedford

    Excellent article as always Brandon. Is that picture (the one with handcuffs) anyone from BP that listened to the wholesaler gurus? I want to make something clear: there is lots of room for anyone that wants to enter the business. IMO, as long as people are operating morally, ethically, and legally, there is room for all. Want to be a “wholesaler”? How can you sell something you don’t own? Close on the deal and resell it at a discounted (wholesale) price! Legal. Moral. Ethical. And HOPEFULLY profitable!

  2. Brian Gibbons

    Nice article, Brandon!

    That thread grew some legs, huh?

    I started
    Getting Busted in Ohio for Wholesaling and Practicing RE without a License

    Things are changing so rapidly with the RE Commission’s enforcement of brokering activities w buying and selling homes especially Ohio, Florida and California.

    Let’s say you’re not licensed and you get a list of expired listings, and knock on their door as an unlicensed agent.

    If you have a money partner / HML that will pay all cash quickly, and you offer the home seller all-cash quickly, and you do a double close, meaning you actually take title, there’s no problem there. To me that’s called flipping. No license needed. No Brokering.

    Now if you sign an option to purchase agreement or if you sign a sale and purchase agreement with and/or assigns at the top

    And you sell that agreement for a fee

    And you’re not on title

    a) if you’re licensed you’re fine

    b) if you’re not licensed in many states are not fine, you’re brokering contracts.

    I have heard many states are looking really hard at Ohio and Florida, and perhaps emulating their standard of requiring basic licensing to broker contracts, not houses.

    Deceitful practices by wholesalers

    So many seminar junkies or even BP readers think that they can lie about having a house on contract, put a picture on Facebook or Craigslist, and use that to build a buyer’s list.

    If you caught you probably are going to have a cease-and-desist letter from your states’ real estate commission.

    in some parts of the country there is a movement today is to get an army of people looking for houses while you focus on cash buyers, and you split deals.
    If you’re not licensed this is not legal in many states, if you are brokering without a license.

    lease option assignments, cooperative assignments, wholesaling lease options
    you’re brokering agreements, your enter into the lease and an option with the seller and assigning that deal for a fee, or you are charging an option release fee.
    If your licensed there is no problem with this, just disclose you are acting as a business principal in a transaction and not as an agent.


    Many people are recruiting “boots on the ground” and assigning contracts with a license and without taking title. That’s brokering. Could be a serious infraction. See Ohio’s 1000 bucks a day.

  3. Bryan Williamson

    I just met with another investor this morning and we discussed this very issue. He explained that it’s the low hanging fruit approach from the state boards. If you don’t have a license and are marketing, advertising “propety for sale” they will ding you everytime. However if you assigning a contract which you can do with anything( I.e. Contractor places a mechanics lien on the property and then assigns that over to someone else.) it isn’t illegal. Play with in the rules. If you have t seen the movie Life check it out . It’s mad funny but at the prison they don’t have fences they have the gun line. Cross if you dare.

    • Brandon- good articles about a touchy subject.
      Our association in an effort to try to be compliant discussed it in detail with the State Realtors Ass. legal department and ALL of what you say is correct but to further it a bit- assume it applies to other states to in a similar way:
      1. YOU MUST be able to show the financial ability to BUY said property if holding a contract.
      2 Advertising without a realtor or license is prohibitive. GET A REALTOR or a license.

      I feel it can be done but there is a right way and wrong way- which most operate in sadly to say.
      Good article that needs to be a resource for all new Investors to read and operate by!

  4. Deshan Kennedy

    Brandon – Thank you for the article and sharing your opinion as this topic has grown so much on the forums. Many people may not like it but this was the big push of how to get started in real estate with no money and now the topic is on the radar for us. Luckily, BP has members like Brian who are knowledgeable of the laws and provide feedback that we all need in this business.

    Thanks to the both of you.

  5. Tom Fields

    Can you clarify the relationship the licensed agent has to his/her broker, especially regarding indemnity, use of the brokerage name, and contractual obligations re fees? I’m curious about the representation being made by licensed agents, who if wholesaling “above board, as a licensed agent” change hats, act as a principal, and then assign a contract. Are you in or out of the brokerage doing the deal? If you are out, what is the standing of the license? If you are in, whom are you representing, and to whom are you beholden/accountable?
    I get the difference between selling a title and assigning your rights held in a contract. Just curious as to what role brokers play in wholesaling by their agents. Thanks.

    • N/A N/A

      I am a licensed Employing Broker in Colorado, as such I am responsible for all the acts of any Agents that hang their license with me. Everything an Agent does while hanging their license with a Broker is considered an act of the Broker.
      Aside from that in my opinion I would think it will just be a matter of time before the Colorado RE Commission takes a position on “Wholesaling”. The Commission was formed and is there to protect “the public”. Not Brokers, Agents, etc… I have seen some instances where a property is listed with a Broker and a “Wholesaler” comes in and offers cash via an Assignable Contract, once under contract the Wholesaler emails known cash buyers and offers the property at a higher price 20K +. This is harming the Seller in my opinion by “stealing” equity. Why should the Wholesaler be pocketing 20K+ of the Seller’s equity? Who is responsible for educating the Seller? The Listing Broker!!! I just think something is going to happen to cause some big changes i.e. No more options for contracts to be assignable (?)

    • John Hamilton

      Check your state laws regarding marketing a property that you are not on title or assigning a contract or performing as a broker.
      You could be told to stop, go to court, fined, or imprisoned from what I’ve read on this thread and other threads.

  6. Brian Gibbons


    If more people would read
    millionaire real estate agent
    Millionaire real estate investor
    and Shift !
    by Gary Keller of Keller Williams
    These people are millionaires like being real estate agents
    They have great training and have earned their careers in real estate

  7. In New Jersey as a realtor you can’t have what is called a net listing. I believe being a realtor and a wholesaler opens you up for more litigation, and a net listing is just one of many reasons why.

    • Darren Sager

      Yes net listings are illegal in NJ and in many other states. Still just as important is the fact on how you approach the homeowner. IF you’re a licensed agent here in NJ you have to let the potential seller know this up front. Some brokers will allow their agents to wholesale or purchase privately however the issue comes up for their broker with E&O (errors and omissions) insurance of which all licensed agents are required to carry. So I agree, it’s bad news.

  8. I have been a Broker for 38 years, licensed in FL and South Carolina, and now Virginia. It is definitely a violation of the law if you are unlicensed. Now if you have an equatable title whether it be Deed or Land Sales Contract, that is a different story. But I have always operated on these deals with a license, the I can “Broker”

    • James Beach

      Other states that do not use the “for another” language clearly identify specific exemptions in their licensing statutes. A good example is the South Carolina statute, which reads:

      “This chapter does not apply to:

      The sale, lease, or rental of real estate by an unlicensed owner of real estate who owns any interest in the real estate if the interest being sold, leased, or rented is identical to the owner’s legal interest”

      However, you must have an interest in the property before you sell it. In general, a contract to purchase property gives the buyer an equitable interest in the land. 27A Am. Jur. 2d Equitable Conversion § 10. Thus, if you have an interest in the property, you are basically exempt from the licensing regulations in these states.

      • James Beach

        I saw this below from another website, it seems to make sense.

        “Other states that do not use the “for another” language clearly identify specific exemptions in their licensing statutes. A good example is the South Carolina statute, which reads:

        “This chapter does not apply to:

        The sale, lease, or rental of real estate by an unlicensed owner of real estate who owns any interest in the real estate if the interest being sold, leased, or rented is identical to the owner’s legal interest”

        However, you must have an interest in the property before you sell it. In general, a contract to purchase property gives the buyer an equitable interest in the land. 27A Am. Jur. 2d Equitable Conversion § 10. Thus, if you have an interest in the property, you are basically exempt from the licensing regulations in these states.”

  9. margaret smith on

    One by one, the special tricks of the trade that the gurus have taught (still teach?!) are becoming potential traps for the careful investor. Speaking on behalf of rehabbers and their hard money lenders now…. We have to be lawyers now to understand the true potential consequences of our actions. I wish I could say that our legal beagles here in Florida knew the answers to these questions about what is a safe and acceptable way to acquire and dispose of properties, but alas…. throw a few thousand dollars at it and you will still not have a clear answer!
    The problem of the double closing, of course, is the cost- all those closing costs,TWICE!- that take most or all of the profit right out of the wholesale deal. Also, I find in working a deal with a wholesaler involved, the risk increases, the inspection times are cut to almost nothing, and the due diligence becomes much harder to do.
    I just had my rehabber/borrower opt out of a contract he had with a wholesaler, who had a contract with… a wholesaler! The rehabber’s 5 day due diligence was over, and he had no other exits in the all cash contract. But, when he took his third contractor out to refine that absolutely-essential due diligence, he balked– realized he would lose $$$ on the deal. What to do? He called the wholesaler, left his $2K deposit on the table, and walked. The wholesaler is threatening a suit. This is happening more and more, esp as potential buyers realize the problems out there with getting clear title. My borrowers are about at the point where we don’t want to buy from a wholesaler any more- offers nothing, takes profit out, increases risk, puts pressure on your timelines, adds another complication to the closings- Uggghhh!

    In the end, I would say to investors old and new– Buy from an actual owner, do full due diligence, negotiate with the owner if the profit estimates are too low, take the time to get clear and marketable title (that means get a survey, y’all!) and close once. This is the only way to be in control of your project.

    • N/A N/A

      Right on!!! Why would anyone want to purchase from a source that is not only taking equity from the Seller but from the Buyer as well…for nothing and it’s A LOT of money for A LOT of risk!!!! GREED…it will bite you in the butt in the end and it will be a hard learned lesson!!!!

  10. Brian Gibbons

    An interesting hybrid is having a LLC, with an unlicensed person marketing and a licensed agent selling to home sellers and buyers.

    Here is NJ list of what an unlicensed assistant/secretary can NOT do



    An Unlicensed assistant or secretary CANNOT:

    *Make cold calls by telephone or in person to potential listers, purchasers, tenants, or landlords.

    *In the absence of a licensee, host open houses, booths at home shows, malls or fairs, or distribute promotional literature at such locations.

    *Prepare promotional material or ads without the review and approval of a licensee.

    *Show property.

    *Answer any questions on listings, title, financing or closings from either the public or other licensees.

    *Discuss or explain a contract, listing, lease agreement or other real estate document with anyone outside the firm.

    *Work as a licensee/secretary in one firm and do real estate related activities with that firm, while licensed with another firm.

    *Negotiate or agree to any commission, commission split, management fee or referral fee on behalf of a licensee.

    *In addition, the compensation of a personal assistant or secretary should not be based on the success of their activity, i.e. a percentage of commission, but should be directly related to the duties the non-licensee is performing. If a licensee is using another licensee to act as their personal assistant/secretary, both should be aware that they are employees or independent contractors of their broker and compensation must be paid by the broker.

    *All licensees are cautioned to research and adhere to Federal and State Income Tax and Employment requirements.

    *Make telephone calls for the purpose of collecting or attempting to collect late rent payments.

  11. matt m.

    Brian Gibbons

    I’d appreciate hearing your opinion on Tom Field’s post above. He’s asked a very important question that I’ve been curious about myself. And, most likely, anyone considering getting their license for wholesaling or assigning options will benefit by the discussion as well.

  12. Brian Gibbons

    Matt M.
    Tom Feild said,
    Can you clarify the relationship the licensed agent has to his/her broker, especially regarding indemnity, use of the brokerage name, and contractual obligations re fees? I’m curious about the representation being made by licensed agents, who if wholesaling “above board, as a licensed agent” change hats, act as a principal, and then assign a contract. Are you in or out of the brokerage doing the deal? If you are out, what is the standing of the license? If you are in, whom are you representing, and to whom are you beholden/accountable?
    I get the difference between selling a title and assigning your rights held in a contract. Just curious as to what role brokers play in wholesaling by their agents. Thanks.
    I really do not know if Agent Allan can “indenify and hold harmless” Broker Bob, with wholesaling activity.
    Brokers are legally responsible for Agent’s behavior all the time I suspect.

    J Scott is an agent in MD, perhaps he has an opinion.

  13. Aaron Ramm

    I talked to my RE attorney about wholesaling legal issues when he presented me with a letter he got from the Washington DOL. I would like to post the letter here, but I don’t see an attachment button! Basically it said operating/doing RE deals without a licensed broker involved is illegal, so my attorney simply said to use him somewhere in the deal (like opening escrow or filling out a contract). In Washington state an RE attorney can do anything an agent/broker can do, so involving him in the deal is satisfying the law.

  14. Barry Smith

    I am licensed in California and liked the post of Tom Fields. Does anyone know any specifics about how to wholesale as an agent? Must you use a State contract, instead of a short one or two page form, to get the property under contract to assign when you are acting as a principal? Do your duties change when trying to assign that contract, as a licensed relator (other than disclosure)? Do you have to involve your broker and is the broker entitled to part of your wholesale fee? Is a possible solution to get your own broker’s license, not just a agent license?

  15. Brian Gibbons

    I want to bring this up as a possible solution. When you assign a deal department of real estate many states think of that brokering a deal

    And alternative would be to get an option to purchase agreement and cloud the title, and then offer an option release fee to the buyer.

    It’s not an assignment and you are collecting a fee to release your option or selling your option

    I know it sounds similar but it’s got to do with avoiding assigning documents

    Remember real estate is local and the code for every state is different so see a local attorney and have him review the real estate code for real estate agents and what defines brokering

  16. Marina Sud

    Can someone please explain the following to me? A licensed realtor wholesales as a principal does NOT use his license!!! If one did use a license for wholesaling transactions you’d have to give % of fees to your broker. None of this makes sense to me! Real estate agents go out of their way to disclose but NOT do wholesaling transactions as realtors.

    • Brian Gibbons

      Hi Marina,

      When you act as a principal buyer, seller, optionor, optionee, lessee, lessor, you are at risk in the transaction, and supposedly not brokering, and not getting a fee to broker.

      The problem that is happening is people are not funding transactions and getting on title, then reselling. They are promising sellers that the house will get sold with assurances, and their cash buyers do not buy.

      Now the Sellers are complaining to State Dept of Real Estate and to the Attotrney General’s Office.

      Squeaky wheel gets the grease.

      Dept of Real Estate in California allows licensed agents to assign option and sale and purchase agreements and act as a principal, not as a fidiciary agent.

      The Dept in CA does not like unlicensed people talking to sellers that are not actually planning to get on title. They do not like assigning agreements. They look at that as unlicensed brokering activity.

  17. kevin scott

    Before I make a small objection, this is a great post to get people to do research before they start any real estate endeavor. That being said.

    @Brandon Turner, I really think you should edit some of this article. It has some misleading information.

    First where you are pointing out how in the the Ohio thread shows that wholesalers are getting fined. I think you might reconsider the wording as that thread (although its a good topic to debate) fails to show any examples of wholesalers getting fined. There are cases of people getting fined for brokering but nowhere could I find proof that they were wholesaling. I actually believe a couple biggerpockets members researched a little more and found they were mostly acts of true brokering. Property management without a license etc.

    The other thing is your Washington law leaves out the first and most important part which is below

    (16) “Real estate brokerage services” means any of the following services offered or rendered directly or indirectly to another, or on behalf of another for compensation or the promise or expectation of compensation, or by a licensee on the licensee’s own behalf:

    That line in the RCW goes before the rules you mentioned. It is the defining of a broker service. All of what you posted is considered brokering if it is done “for compensation or the expectation of compensation” etc etc.

    When selling your contract or your property you are selling your property or rights to a property. IF that line wasn’t in there you wouldn’t be able to sell your house without a broker either let alone your contract.

    There is a similar statement in Floridas laws.

    I like that this article and the forum posts at least make people look into it a little harder or might make them consult an attorney. (Even attorneys are wrong though). But I think a little update might be needed.

    I do believe many wholesalers are making mistakes especially on how they market especially their wording good be a little safer. Try showing intent to purchase. I intend to purchase every house I put an offer on but sometimes I can’t for whatever reason.

    Wholesalers can do the same thing. They intend to buy and sell That is truly their intention, Even if they never intend to do a rehab they can intend to buy and sell. They might want to consider doing a rehab or at least applying for a hard money loan periodically to solidify their intent but even if they didn’t their intent is to buy and hold, buy and flip, buy and resell for a profit. Sometimes they get someone that they might already know to buy their contract. But even if they didn’t know the person and were marketing their contract (or their property but might as well be safer) the line in the law above clears them as long as they are doing it for themselves and not for compensation for work they should be fine. (Should because Im not a lawyer and even if I was I could still lose in court because everything is up for interpretation once in court). The more ways you show intent the better of course but a good lawyer would have a good shot of winning in any of the above mentioned scenarios.

    All the states laws that I have looked at (mostly the recently mentioned ones) have at least some definition that allows for interpretation that a wholesaler doesn’t need to be licensed.

  18. Darren Sager

    I have yet to come across a wholesaler who in my mind operated in a way that was ethical or trustworthy. They can be, in my opinion, sort of viewed as the the used car salesmen of REI. I’ve never come across a deal when shown by any of them that had anything realistic behind the numbers they show you. Most haven’t a clue and don’t add any inherent value to the system.

    Still they’re around and possibly always will be. I wish the states would step up and change the laws to banish the practice of brokering a deal when you have no ownership of a property.

    • kevin scott

      Really, you haven’t come across anyone who had a good wholesale deal? Id say you should try contacting more of them. The good buyers that resell at a discount are out there. FyI there are good used car salesman too, I own a dealership as well and my salesman are really not like the stereotype.) When you deal with people in with low income and poor credit you will get upset customers no matter what but there are ways to attempt to make things right.

      I have bought wholesale from investors (this is how it should really be phrased) on mutliple occasions. The deals were beyond great. So good that I probably could have resold without doing anything.

      I really see very little difference in someone that ends up assigning their contract vs someone that actually closes and resells. They are both negotiating a price that puts them in a position to make a profit.

      That being said, I do think buyers that fail to close or assign should reconsider out clauses and just forfeit their earnest money unless they show they made an attempt to get private money and that was their out or keep their inspection period realistic and if they can’t perform after the inspection period is up forfeit their earnest money.

      Getting rid of the ability to assign your contract could be a real bad deal. Its their for a good reason. A contract is an asset that imo should be able to be sold. Even if I didn’t believe that it still should be allowed. There is a benefit to the seller to get rid of the house and their are plenty of situations that come up for anyone putting a contract on a house where it makes sense to just sell the contract. Typically the sellers are in a distressed situation and a realtor or broker just might not be their best option.

      Most people Ive bought wholesale from even disclose to the seller that they might assign it if it makes sense. They also disclose that they are doing it for a profit.

      Not too long ago I had a situation on a hud home that I intended to buy but my hard money lenders failed to come through. It was a serious problem getting a hold of anyone to take a look at the project because it was the fourth of July and they were out of the area.

      I didn’t bother trying to wholesale it (mainly because it was hud even though I probably could have double closed) for me the 1000 bucks wasn’t a huge deal, but if that wasn’t hud and the seller was hoping to close (I would have let them keep the money as well) they probably would have been ecstatic that I Still made the deal happen even using another investor.

    • William Harris

      I thought I posted before but something must have happened.

      At my real estate club, I see the relationship work between wholesaler and buyer. I’m inexperienced compared to you guys. You might need to reach out to other wholesalers.

  19. Adrian Becoat

    I set my company up to do Wholesaling with the intent of moving into “buy and hold” “rehab & flips” in the future. This article and the more research I do makes me feel that skipping the wholesale process may be a better option. I keep coming back to this article hoping I’ll find a bright spot in the comment section but I cant help but feel that Wholesalers are the used car salesmen of the industry. I’m fortunate to have some priceless connections with (ol school) investors in my area and I think I’ll continue to learn from them about flipping & land lording verses throwing my company name into the wholesale arena………I gotta say guys this article has bummed me out about the wholesale world.

  20. maggie smith

    Adrian, I feel your nervousness! In general, I don’t like putting the rehabber in the middle. But in all fairness–Yes, there are many bottom feeders who are wholesaling and add nothing to the equation (see my remark, above). However, there are some wholesalers who are people of integrity, know how to find the good deals hidden from the rest of us, and leave enough profit on the table for a rehabber to take on a project. Some wholesalers truly do the rehab/landlord thing, and assign those contracts they just can’t perform on. These can be really good deals. In my area of SW Florida, good deals are harder to find- it takes time and a really good system to find something that is not already on the MLS, with those 6% agent commissions built in to the asking price. Really- pay an agent– or pay a wholesaler- or pay bird dogs- or go door knocking yourself. Time vs. money. Each potential deal has it’s pros and cons, so it is up to the investor to consider every deal carefully.
    Find a fair minded, transparent wholesaler who everyone knows and respects- or aim be such a wholesaler. The legality of it all? …. well, that is a different topic!

    • William Harris

      I don’t understand the angst. You just mentioned pay the realtor or pay the wholesaler. There are choices here. as i decide which role is best for me, i wouldnt expect the wholesaler to roll over so the rehabber can make a killing. likewise, ive seen rehabbers push back effectively on wholesalers. this is business people. business. period.

  21. Kenya McCormack


    I am a prior TN Realtor. My spouse and I are gearing up to do RE Investing, starting with wholesaling. I have heard all of the get rich quick spills and that you do not have to be a licensed Real Estate Agent. I don’t have a problem obtaining my license in Colorado if this is the best way to handle wholesaling.

    Question: If our sole focus is wholesaling and assigning contracts for the first several years, will any Broker want to Broker an agent that just wants to do this? What are the fees to the Broker for this type of transaction to be paid by the licensed agent? Also, I have read articles that you should take possession and actually close the deal, then double close, etc. This seems costly with closing fees, etc.

    We are so motivated and will succeed. I just have so many questions. Foremost, whichever methods are used, I want to be ethical and moral. Any suggestions for this newbie?


    • John Hamilton

      First of all, what is the reason, or reasons, you want to wholesale?
      If it’s to invest with no money or no risk, don’t believe it.

      Is it because you’ve been told it’s the easiest of the RE investing world?
      If you are a great negotiator (with sellers and buyers) and have oodles of time to find deals not on the MLS of distressed properties that can sell quickly based on their location and ARV, that’s half the battle. If you buy from other wholesalers, do they own the property or just have a contract? You want to buy ONLY from the actual owner, wholesaler or not.

      Have you done research for your state to know what the laws are concerning your investment strategy? Have you consulted a RE attorney?
      Just having a contract with a assignment clause may not be good enough, unless you’re in Georgia from what I hear.

      Getting a license doesn’t guarantee that it will be easy street for wholesaling. Plenty of arguments why that WON’T work, in my estimation, but do your own research. You already stated some good, valid questions and being a previous realtor, have some good insight to the realtor/broker world.

      Everyone who is in real estate should strive to have integrity and be ethical, otherwise your reputation could be at stake. Not to mention you’re despicable if don’t care for either of those values in your dealings with people. With that said, there are times you could make money on certain deals. I for one would disclose to the seller that I intend to resell for a profit, which could be considerable, but at some great risk. Whether I wholesale (assign) or fix and flip.

      I assume that when you said you were gearing up means you were spending the time to research, network, build your knowledge base, talk to investors (buyers and sellers), looking for a mentor (may or may not help, as in my case), joining REI clubs, online social presence (like this forum), talking to GCs for estimates/know your rehab pricing, etc.

  22. Janet Brown

    Thank you all for this thread. I appreciate this because I’ve been researching the concept of I’ve been researching the concept of wholesaling legally and doing it in a way that greatly benefits buyers as far as profits. I am serious and very ethical. I will definitely consult with a couple of attorneys. From my research, acting on behalf of myself and stating up front with the buyer that I an not an agent or a broker because I am not representing anyone but myself, is legal when negotiating a price for the property and getting it under contract. I wouldn’t even consider assigning a contract that did not have a profit built in for the buyer of the contract. I’m glad my main career goal is to buy properties for rentals and rehabs. Quality fair wholesaling was my initial means of getting started.

  23. Michael Williams

    Question: If 5 motivated sellers with great deals APROACH ME in a month about their property, I get them under contract and mention on BP- Investors on BP want to buy, is that the grey area? I did not advertise, they came to me and I did not mass market- I just started a BP conversation about it, and it produces a sell. Anyone please give me your thoughts.

  24. John Hamilton

    In my research (not experience) as a wholesaler, one of the groups of people I should have consulted with are cash buyers (investors who want buy and hold or fix and flip), well before I have anything under contract or start looking for properties. I get their requirements (location, size of house, price, condition, etc). This is true for bird dogs, too.
    Once I have those requirements, if I come across a deal, I negotiate with the seller to meet the price requirement (buyer’s price, minus my fee, minus rehab costs, minus holding/closing costs). If we come to an agreement, I put that house under contract with an option to purchase or assignment subject to financing. You have to be up front with the seller and explain in simple terms what this means.
    Then, once I have the house under contract, inform my list of buyers (that match the criteria) that an option is available and at this price (no need to tell them what you are buying it for or what is stated on the purchase agreement between you and the seller). It should be at least 70% of ARV (After Retail Value), to make it more appealing to your investors. (apparently marketing on public sites could lead to trouble).
    Then perform a double closing (you will need to have your funding all lined before closing day; HML, LOC, Transactional lender) You meet with the seller and close, then meet with the buyer and close. You either pay all closing or share that with the seller and buyer (you pay half each time) or put that all on the buyer (add the other closing costs to the 2nd closing – you have to know this well in advance in order to present you final price to the buyer so as to not to surprise them on closing day).
    If you have a private lender that will lend you all the money needed or you have your own money (401k, IRA that you can lend from) then you can purchase and sell on your time schedule without having to worry about a 3 day limit in some transactional cases.

    I hoped this helped

  25. David Maddox

    I’m with the skeptics about wholesaling requiring a license. If it does require a license, then how could it not require a broker? A salesperson has no authority to do brokerage except through a broker. But how can selling something that you own require a license? If you are selling rights under a contract or an option, you are selling something that you own. Since when do owners ever require a license to sell their own property? What you intent is when you put property under contract should be irrelevant to the legal question, though it might be grounds for a civil suit by the seller if a buyer enters into a contract without good faith. But the intent to flip isn’t bad faith, unless there is a representation to the contrary.

    • The issue is how you market the property/contract. You can’t market something you don’t own so if you post pictures of the house but are selling your rights to the contract it is a problem I have seen and talked to lawyers who brought suits against wholesalers and have won/settled cases in this regard. Also, if you just wholesale and have no history of buying homes it only hurts you more if a case is brought against you. Just things to think about.

      • When you post a home ‘for sale by owner’ on Zillow, there are two options Zillow allows you to select from. One is that you are the owner of the property listing it as for sale by owner, and the other is that you are a person working with the permission of the owner to list it for sale by owner. If it was illegal to market a “for sale by owner” home as a 3rd party with permission, you’d think a reputable company like Zillow would know this.

  26. John Webster

    I had somebody come after a friend for wholesaling. Saying he needed to be a agent/broker . I went to court to support him. I stood up and read a few lines mentioning that a agent/broker negotiates for a buyer/seller for compensation. Wholesaler’s aren’t negotiating for a buyer or seller for compensation. They are just plainly selling contractual rights, they are engaging in activity for themselves, not for another. The law never mentions anything about reassigning a contract. Judge looked and agreed, case was thrown out. Judge asked if I was a lawyer I said no, just helping a friend I said the law is clear. I used the realestate commission own words against them lol. Judge said I should be a lawyer and friend didn’t get In trouble. Nothing days aa person can’t market a contract just can’t market the property houses etc. It felt good I must admit. I got the stink face lol

Leave A Reply

Pair a profile with your post!

Create a Free Account


Log In Here