The 8 Most Common Lies Newbies Believe About Wholesaling

by |

In this world of real estate, there are some truths—but there are also many lies. I assume since you’re reading this that you’re interested in real estate wholesaling. Let’s dive into some of the most common real estate lies about wholesaling.

Lately, I’ve been doing 30-minute free strategy sessions with aspiring wholesalers. I take this time to introduce newbies to the world of real estate investing. During these sessions, they can ask me anything about real estate and wholesaling more specifically. What I’ve found is that there are a ton of misconceptions out there, and I want present the truth.

How to Purchase Real Estate With No (or Low) Money!

One of the biggest struggles that many new investors have is in coming up with the money to purchase their first real estate properties. Well, BiggerPockets can help with that too. The Book on Investing in Real Estate with No (and Low) Money Down can give you the tools you need to get started in real estate, even if you don’t have tons of cash lying around.

Click Here to Download

The 8 Most Common Lies Newbies Believe About Wholesaling

1. Wholesaling is illegal.

This is the biggest question I’m asked. My answer, despite what critics might say, is no, wholesaling, at least how I do it, is not illegal. I am here to clarify that brokering a real estate transaction without a license is illegal. There is a small gray area, and although I do not like to operate in the gray area because I consider myself to be somewhat conservative, I tell aspiring wholesalers to get their license to eliminate that gray area.

Do not broker deals without a license. As a wholesaler without a license, you need to ensure you clarify with your seller that you are purchasing the property and not finding an end buyer. I know this is small semantics, but it is key that you clarify this. Again, I am an advocate for getting your license to help minimize risk. Plus, having a license may also help open other doors.


Related: 5 Ways to Lose Your Wholesale Deal (After Signing the Contract)

2. Wholesaling is dead.

Yes, I actually heard this. Although in many markets it’s harder to find deals, this strategy is not dead. I have a deal closing next week in one if the toughest markets in the nation.

I agree that it is much more challenging than it was just two years ago. During this time of market saturation, you have to be more creative and liquid to find deals.

3. You absolutely have to have a license to wholesale.

As I explain above, this is an advantage but not a necessity. This is just my advice. You can draw your own conclusions, but you do not have to have a license. Is it more beneficial? Yes.

4. You can be successful without money.

Let’s be clear: You cannot get something for nothing. Keep this in mind. You definitely cannot sustain a business without money. Can you get started with limited money? Yes, but you will have limited success.

5. There’s no risk involved.

This is the most audacious remark I’ve heard. What investment strategy that you know of has no risk and no downside? None. Here is one of the risks: You can be sued. Yes, this is a possibility. I don’t want you to have a false sense of security thinking that you can do this and not face any challenges. I’ve seen and heard of wholesalers being sued by the seller, the buyer, and other wholesalers.

Beware and get educated.


6. Wholesaling is for beginners only.

I am here to inform you that many seasoned investors still wholesale. Is it their primary strategy? Well, of course not. However, there are times where you have a deal is too sweet to pass up, but the deal does not fit your model. You’re not going to let money run through your fingers. As an entrepreneur, you look at every possibility to leverage your resources.

Many non-beginner investors I know personally wholesale a lot of deals.

7. You can virtually wholesale deals by yourself.

Now, this is a bunch of crap. Virtual wholesaling is difficult, and you cannot do it alone. It’s actually more important to have a team when virtual wholesaling rather than  wholesaling in your local market.

I’ve heard of courses that inform aspiring wholesalers to simply virtually wholesale if the local market is too competitive or saturated. Is virtual wholesaling a possible? Absolutely. I’ve done many virtual deals, but you have to have a strong team in place. This team may consist of a wholesaler in that market, birddogs, attorneys, title agents, etc. This is not a task you want to try and implement independently.

Related: A 60-Day Action Guide to Wholesaling Your First Property

8. Real estate agents hate wholesalers.

I’ve heard this quite often, and although the real estate agent/wholesaler relationship sometimes may not be the greatest, this isn’t always the case.

There are real estate agents who work with investors and who love wholesalers. This is because wholesalers can provide agents’ clients with off-market deals. This helps agents show their clients that they are embedded in the local industry. Agents can make a lot of money from wholesalers. I get that many agents believe wholesalers are taking possible listings. However, if wholesalers hand off below-market deals to agents, that is a benefit for the agent and his/her client. We have many agents on our buyer’s list, and you should too.

Remember, when you hear a negative statement, you must evaluate the source. Some of these lies are from those who have ulterior motives. When working to be a wholesaler, you will encounter many things that can skew your perspective. By reading this article, you have the upper hand on your competition.

We’re republishing this article to help out our newer readers.

What wholesaling myths and lies have you encountered?

Comment below!

About Author

Marcus Maloney

Marcus Maloney is a value investor and portfolio holder of residential and commercial units. He has completed over $3.3 million in wholesale transactions. Currently, Marcus is a licensed agent who wholesales virtually in multiple states while building his investment portfolio. He has also converted some of his deals into cash-flowing rentals. Marcus holds seven rentals, two of which are commercial units. He’s even purchased a school, which was converted into a daycare center. His overall goal is to turn what is a marginal profit into a significant equity position. He leverages the equity by using the BRRRR (buy, rehab, rent, refinance, repeat) strategy to increase his portfolio without any money out-of-pocket. Marcus has been featured in numerous podcast such as the Louisville Gal Podcast, The Best Deal Ever Podcast, The Flipping Junkie, and many others. He contributes content regularly to his YouTube channel and blog.


  1. Andrew Syrios

    Number 4 is important. I see the same thing with people who want to get into BRRRR and sometimes flipping. Yes, there are low cost options, but you need some cash. Even with wholesaling, you need some money for marketing and for lean months.

      • Ty Haas

        I have the same question that you do about getting sued. I’m in hopes that my commenting here will stir up more discussion. I would like to know more about the situations that could get a person sued when wholesaling. I do know that it would be illegal, as a wholesaler, to tell a seller that you are representing them to help them find a buyer. That’s the only thing that I have heard about from my attorney or other people here on Biggerpockets. If there are more ways, that people have heard of, to get sued as a wholesaler, please share! Thank you!

  2. Scott Schultz

    the key is intent, if you find a seller and write an offer with no intention of closing if you dont find an end buyer, this is where potential problems arise, now if you cant sell the contract, and you still intend to close, you are well within the law in most jurisdictions. but if you offer with no intention to close, tie up a deal and then let it fall apart, now you open yourself up to all kinds of issues.

    • Marcus Maloney

      As a licensee you do have to disclosure you’re licensed. The seller is unrepresented and this has to be disclosed as well.

      From what Ive discussed with aspiring investors they are fearful of their profits being marginalized by the broker and the fees associated with having a license. I always encourage those desiring to wholesale to be licensed.

  3. Isaac Sanchez

    I do not wholesale but I know some people that do. One person I know has a real estate license. I wonder how they handle the transaction. Being that you are an agent your have a fiduciary duty to represent the clients best interest. DO agents that wholesale have a disclaimer stating they are not representing the seller and have no fiduciary duty?

    I also wonder why new wholesalers do not just become full time agents. Seems to me its an easier path to success than narrowing yourself to just distressed homes.
    Thank you for sharing your article


    Number 8 could not be any truer. But in this business (and most), everyone is full of ulterior motives. It all just comes down to if everyone is on the same page and have align interests. Good article Marcus.

  5. Evin Lederman

    I’m not a lawyer.

    If you have an equity interest, you can act as a middle man or woman. If you don’t have an equity stake in the deal then you are acting as a broker and need a real estate license.

    This is an incomplete answer, as it doesn’t define equity interest; perhaps a lawyer can do that. I think an option or a lease (a contract interest that conveys rights) qualifies.

    • Melanie Hartmann

      Posing this question to the masses: Would putting an earnest money deposit down to hold the contract suffice as having equity interest?

      Then potentially have a clause in the contract that if you are not able to close by the predetermined date, you as the wholesaler, will loose your deposit and the contract becomes void?

      (All of this being clearly explained and spelled out yo the seller of course)

Leave A Reply

Pair a profile with your post!

Create a Free Account


Log In Here