{"id":71563,"date":"2021-07-29T09:30:00","date_gmt":"2021-07-29T15:30:00","guid":{"rendered":"https:\/\/www.biggerpockets.com\/renewsblog\/?p=71563"},"modified":"2023-06-22T09:03:58","modified_gmt":"2023-06-22T15:03:58","slug":"is-wholesaling-legal","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/is-wholesaling-legal","title":{"rendered":"Is Wholesaling Legal? It&#8217;s Complicated"},"content":{"rendered":"\n\n      <iframe loading=\"lazy\" frameborder=\"0\" height=\"200\" scrolling=\"no\" src=\"https:\/\/playlist.megaphone.fm?e=BIGPOC6098020219&#038;light=false\" width=\"100%\"><\/iframe>  \n\n\n\n\n<p>One of the more hotly debated topics on BiggerPockets is the legality of wholesaling. Laws on this are state-specific, which can be scary stuff for any wholesaler. Is wholesaling real estate legal? No&#8230; but sometimes yes. <\/p>\n\n\n\n<p>It\u2019s possible to look at it generally, though, to see the ways wholesaling real estate can be legal or illegal.<\/p>\n\n\n\n<p>(As with any business transaction, you should consult an attorney before engaging in any real estate activity.)<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What is wholesaling?<\/h2>\n\n\n\n<p>Wholesaling involves a third party, or middleman, in real estate transactions. The wholesaler enters a contract with the seller for a price under market value. Then, the wholesaler finds a buyer for the property at a higher price, pocketing the difference as profit. The objective is to find a buyer before the contract closes with the seller.<\/p>\n\n\n\n<p>It\u2019s a short-term investment strategy. There is no need for a wholesaler to pay any fees or additional costs, making it quite appealing.<\/p>\n\n\n\n<p>Before you <a href=\"https:\/\/www.biggerpockets.com\/blog\/wholesaling-strategy\" target=\"_blank\" rel=\"noreferrer noopener\">jump into wholesaling in real estate<\/a> due to its appeal, there are a few things you should know related to whether or not wholesaling real estate is legal.<\/p>\n\n\n\n<p>First, let\u2019s discuss a technicality.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-css-opacity\"\/>\n\n\n\n  <div id=\"posts_lists-block_60e4b483711fb\" class=\"  my-10\">\n    <div class=\"\">\n      <!-- Column One -->\n      <div>\n                  <h2 class=\"mt-0 mb-1 js-toc-ignore\">\n            More on wholesaling from BiggerPockets          <\/h2>  \n                  \n                  <div class=\"mt-1 mb-0 text-sm mb-2 excerpt\">\n            <span data-sheets-value=\"{\" data-sheets-userformat=\"{\">Wholesaling is a popular tool for beginners and pros. Learn how to execute strategies here.<\/span>          <\/div>\n        \n                  <a href=\"https:\/\/www.biggerpockets.com\/blog\/category\/real-estate-investing-strategies\/real-estate-wholesaling\" class=\"no-underline text-themeBlue-medium hover:underline uppercase font-semibold text-sm\" target=\"_blank\">Wholesaling<\/a>\n        \n        <div class=\"grid grid-cols-1 gap-y-4 lg:gap-y-7 mt-5\">\n          \n<article \n\tid=\"post-171834\" \n\tclass=\"content-card mb-0 flex flex-col  post-171834 post type-post status-publish format-standard has-post-thumbnail hentry category-politics-policy category-biggerpockets-daily category-real-estate-wholesaling\">\n\n\t<header class=\"entry-header\">\t\t\t\n\t\t<!-- Image -->\n        \t\t\t<a class=\"post-thumbnail\" href=\"https:\/\/www.biggerpockets.com\/blog\/new-south-carolina-law-would-severely-crack-down-on-wholesaling\" target=\"_blank\" aria-hidden=\"true\" tabindex=\"-1\">\n\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"340\" height=\"225\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2024\/05\/south-carolina-statehouse_canva-340x225.jpg\" class=\"size-card w-full  m-0 aspect-[68\/45] object-scale-down wp-post-image\" alt=\"A New South Carolina Law Would Severely Crack Down on Wholesaling\" title=\"\">\t\t\t<\/a>\n\t\t        \n\n\t\t<!-- Content Wrapper -->\n\t\t<div class=\"py-4 \">\t\n                            <div class=\"flex gap-4 justify-between items-center\">\n                    <!-- Category  -->\n                                            <a href=\"https:\/\/www.biggerpockets.com\/blog\/category\/real-estate-news\/politics-policy\" class=\"transition-colors bg-themeBlue\/20 text-themeBlue-medium hover:bg-themeBlue hover:text-white px-2 py-1 mb-2 inline-block rounded-sm no-underline text-sm\" target=\"_blank\">Politics &amp; Policy<\/a>\n                    \n                                            <span class=\"text-sm text-gray-500 hidden lg:inline-block\">5 min read<\/span>\n                                    <\/div>\n            \n           <div class=\"flex gap-3 items-center my-2 flex-nowrap text-base\">\n                <!-- Avatar and Author Name -->\n                <img decoding=\"async\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2024\/02\/cropped-Jeff-V-Garcia-Photography-71788-scaled-1-150x150.jpg\" class=\"w-8 h-8 object-cover my-0 inline-block rounded-full\" alt=\"\" title=\"\"><span class='leading-snug text-slate-500 flex items-center'><span class='hidden whitespace-nowrap sm:inline-block md:hidden lg:inline-block pr-1'><span class='posted-on'><time class=\"entry-date published\" datetime=\"2024-05-17T07:00:00-06:00\">May 17, 2024<\/time><time class=\"updated\" datetime=\"2024-06-02T03:52:46-06:00\">Jun 02, 2024<\/time><\/span><\/span>&nbsp;<a href=\"https:\/\/www.biggerpockets.com\/blog\/contributors\/jeffvasishta\" class=\"no-underline line-clamp-1\" target=\"_blank\">Jeff Vasishta<\/a><\/span>            <\/div>\n\n            <!-- Post title -->\n\t\t\t<h2 class=\"entry-title js-toc-ignore mt-4 mb-0 text-xl leading-snug text-left\">\n\t\t\t\t<a href=\"https:\/\/www.biggerpockets.com\/blog\/new-south-carolina-law-would-severely-crack-down-on-wholesaling\" rel=\"bookmark\" class=\"whitespace-normal no-underline font-bold  text-slate visited:text-slate hover:text-themeBlue\" target=\"_blank\">\n\t\t\t\t\tA New South Carolina Law Would Severely Crack Down on Wholesaling\t\t\t\t<\/a>\n\t\t\t<\/h2>\n\t\t\t\n                        <p class=\"text-lg font-normal mt-3 text-slate-500 mb-1 line-clamp-3\">The bill could be a precursor of what&#8217;s to come across the country.<\/p>\n\t\t<\/div>\n\t<\/header>\n     <footer class=\"flex justify-between mt-auto\">\n        <!-- Comment Count -->\n        \t\t<span class='flex items-center space-x-2 text-sm' x-cloak x-data='commentCount()' :class=\"parseFloat(commentCount) < 1 || commentCount == '' ? 'hidden' : 'flex'\">\n\t\t\n            <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"h-5 w-5 text-slate text-opacity-50\" fill=\"none\" viewBox=\"0 0 24 24\" stroke=\"currentColor\">\n                <path stroke-linecap=\"round\" stroke-linejoin=\"round\" stroke-width=\"2\" d=\"M17 8h2a2 2 0 012 2v6a2 2 0 01-2 2h-2v4l-4-4H9a1.994 1.994 0 01-1.414-.586m0 0L11 14h4a2 2 0 002-2V6a2 2 0 00-2-2H5a2 2 0 00-2 2v6a2 2 0 002 2h2v4l.586-.586z\" \/>\n            <\/svg>\n\n            <span x-ref=\"comment_count\" class=\"disqus-comment-count text-slate text-opacity-80\" data-disqus-identifier=\"171834\">\n\t\t\t\t\t\t\t<\/span>\n        <\/span>\n\t    <\/footer>\n<\/article><!-- #post-171834 -->\n<article \n\tid=\"post-157031\" \n\tclass=\"content-card mb-0 flex flex-col  post-157031 post type-post status-publish format-standard has-post-thumbnail hentry category-real-estate-wholesaling\">\n\n\t<header class=\"entry-header\">\t\t\t\n\t\t<!-- Image -->\n        \t\t\t<a class=\"post-thumbnail\" href=\"https:\/\/www.biggerpockets.com\/blog\/bird-dog-real-estate\" target=\"_blank\" aria-hidden=\"true\" tabindex=\"-1\">\n\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"340\" height=\"225\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/08\/birddog_austin-distel-VvAcrVa56fc-unsplash-340x225.jpg\" class=\"size-card w-full  m-0 aspect-[68\/45] object-scale-down wp-post-image\" alt=\"Bird Dog in Real Estate: What It Is &#038; How to Make Money\" title=\"\">\t\t\t<\/a>\n\t\t        \n\n\t\t<!-- Content Wrapper -->\n\t\t<div class=\"py-4 \">\t\n                            <div class=\"flex gap-4 justify-between items-center\">\n                    <!-- Category  -->\n                                            <a href=\"https:\/\/www.biggerpockets.com\/blog\/category\/real-estate-investing-strategies\/real-estate-wholesaling\" class=\"transition-colors bg-themeBlue\/20 text-themeBlue-medium hover:bg-themeBlue hover:text-white px-2 py-1 mb-2 inline-block rounded-sm no-underline text-sm\" target=\"_blank\">Wholesaling<\/a>\n                    \n                                            <span class=\"text-sm text-gray-500 hidden lg:inline-block\">8 min read<\/span>\n                                    <\/div>\n            \n           <div class=\"flex gap-3 items-center my-2 flex-nowrap text-base\">\n                <!-- Avatar and Author Name -->\n                <img decoding=\"async\" src=\"https:\/\/secure.gravatar.com\/avatar\/9aabd644b4873fad6fb444b68352070b20998c463fb97473da70a61bdc38d4fd?s=150&#038;d=mp&#038;r=g\" class=\"w-8 h-8 object-cover my-0 inline-block rounded-full\" alt=\"\" title=\"\"><span class='leading-snug text-slate-500 flex items-center'><span class='hidden whitespace-nowrap sm:inline-block md:hidden lg:inline-block pr-1'><span class='posted-on'><time class=\"entry-date published\" datetime=\"2023-08-20T07:00:00-06:00\">Aug 20, 2023<\/time><time class=\"updated\" datetime=\"2023-11-06T13:47:49-07:00\">Nov 06, 2023<\/time><\/span><\/span>&nbsp;<a href=\"https:\/\/www.biggerpockets.com\/blog\/contributors\/cyrus-vanover\" class=\"no-underline line-clamp-1\" target=\"_blank\">Cyrus Vanover<\/a><\/span>            <\/div>\n\n            <!-- Post title -->\n\t\t\t<h2 class=\"entry-title js-toc-ignore mt-4 mb-0 text-xl leading-snug text-left\">\n\t\t\t\t<a href=\"https:\/\/www.biggerpockets.com\/blog\/bird-dog-real-estate\" rel=\"bookmark\" class=\"whitespace-normal no-underline font-bold  text-slate visited:text-slate hover:text-themeBlue\" target=\"_blank\">\n\t\t\t\t\tBird Dog in Real Estate: What It Is &#038; How to Make Money\t\t\t\t<\/a>\n\t\t\t<\/h2>\n\t\t\t\n                        <p class=\"text-lg font-normal mt-3 text-slate-500 mb-1 line-clamp-3\">Becoming a bird dog is a great option for someone who wants to get involved in real estate investing but doesn&#8217;t have the necessary capital for a down payment.<\/p>\n\t\t<\/div>\n\t<\/header>\n     <footer class=\"flex justify-between mt-auto\">\n        <!-- Comment Count -->\n        \t\t<span class='flex items-center space-x-2 text-sm' x-cloak x-data='commentCount()' :class=\"parseFloat(commentCount) < 1 || commentCount == '' ? 'hidden' : 'flex'\">\n\t\t\n            <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"h-5 w-5 text-slate text-opacity-50\" fill=\"none\" viewBox=\"0 0 24 24\" stroke=\"currentColor\">\n                <path stroke-linecap=\"round\" stroke-linejoin=\"round\" stroke-width=\"2\" d=\"M17 8h2a2 2 0 012 2v6a2 2 0 01-2 2h-2v4l-4-4H9a1.994 1.994 0 01-1.414-.586m0 0L11 14h4a2 2 0 002-2V6a2 2 0 00-2-2H5a2 2 0 00-2 2v6a2 2 0 002 2h2v4l.586-.586z\" \/>\n            <\/svg>\n\n            <span x-ref=\"comment_count\" class=\"disqus-comment-count text-slate text-opacity-80\" data-disqus-identifier=\"157031\">\n\t\t\t\t\t\t\t<\/span>\n        <\/span>\n\t    <\/footer>\n<\/article><!-- #post-157031 -->\n<article \n\tid=\"post-145171\" \n\tclass=\"content-card mb-0 flex flex-col  post-145171 post type-post status-publish format-standard has-post-thumbnail hentry category-real-estate-wholesaling category-biggerpockets-daily\">\n\n\t<header class=\"entry-header\">\t\t\t\n\t\t<!-- Image -->\n        \t\t\t<a class=\"post-thumbnail\" href=\"https:\/\/www.biggerpockets.com\/blog\/buy-deals-from-wholesalers\" target=\"_blank\" aria-hidden=\"true\" tabindex=\"-1\">\n\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"340\" height=\"225\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/10\/wholesale-real-estate-340x225.jpg\" class=\"size-card w-full  m-0 aspect-[68\/45] object-scale-down wp-post-image\" alt=\"How to Buy Great Deals From Wholesalers as the End-Buyer\" title=\"\">\t\t\t<\/a>\n\t\t        \n\n\t\t<!-- Content Wrapper -->\n\t\t<div class=\"py-4 \">\t\n                            <div class=\"flex gap-4 justify-between items-center\">\n                    <!-- Category  -->\n                                            <a href=\"https:\/\/www.biggerpockets.com\/blog\/category\/real-estate-investing-strategies\/real-estate-wholesaling\" class=\"transition-colors bg-themeBlue\/20 text-themeBlue-medium hover:bg-themeBlue hover:text-white px-2 py-1 mb-2 inline-block rounded-sm no-underline text-sm\" target=\"_blank\">Wholesaling<\/a>\n                    \n                                            <span class=\"text-sm text-gray-500 hidden lg:inline-block\">6 min read<\/span>\n                                    <\/div>\n            \n           <div class=\"flex gap-3 items-center my-2 flex-nowrap text-base\">\n                <!-- Avatar and Author Name -->\n                <img decoding=\"async\" src=\"https:\/\/bp-wp-migration.s3.amazonaws.com\/author_avatars\/1689.jpg\" class=\"w-8 h-8 object-cover my-0 inline-block rounded-full\" alt=\"\" title=\"\"><span class='leading-snug text-slate-500 flex items-center'><span class='hidden whitespace-nowrap sm:inline-block md:hidden lg:inline-block pr-1'><span class='posted-on'><time class=\"entry-date published\" datetime=\"2022-10-14T12:57:00-06:00\">Oct 14, 2022<\/time><time class=\"updated\" datetime=\"2023-08-08T15:46:53-06:00\">Aug 08, 2023<\/time><\/span><\/span>&nbsp;<a href=\"https:\/\/www.biggerpockets.com\/blog\/contributors\/andrewsyrios\" class=\"no-underline line-clamp-1\" target=\"_blank\">Andrew Syrios<svg class=\"h-5 inline ml-2\" viewBox=\"0 0 21 21\" fill=\"none\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\"><g clip-path=\"url(#a)\"><path d=\"M19.253 5.25a1.75 1.75 0 0 0-1.663 2.29l-1.42.902a2.188 2.188 0 0 1-2.868-.46L11.91 6.28a1.73 1.73 0 0 0 .342-1.03 1.75 1.75 0 1 0-3.5 0c0 .37.12.732.34 1.03L7.701 7.982a2.188 2.188 0 0 1-2.868.46l-1.42-.903a1.75 1.75 0 1 0-1.816 1.203l1.035 6.205a.438.438 0 0 0 .43.366H17.94a.437.437 0 0 0 .431-.366l1.035-6.204a1.75 1.75 0 0 0-.153-3.494Z\" fill=\"#FFC107\"\/><path d=\"M10.502 17.064c4.108 0 7.438-.98 7.438-2.188 0-1.208-3.33-2.188-7.438-2.188-4.109 0-7.439.98-7.439 2.188 0 1.208 3.33 2.188 7.439 2.188Z\" fill=\"#FFA000\"\/><path d=\"M10.502 17.501c-3.915 0-7.877-.901-7.877-2.625s3.962-2.625 7.877-2.625c3.914 0 7.876.9 7.876 2.625 0 1.724-3.962 2.625-7.876 2.625Zm0-4.375c-4.597 0-7.001 1.137-7.001 1.75s2.404 1.75 7 1.75c4.597 0 7.002-1.138 7.002-1.75 0-.613-2.405-1.75-7.001-1.75Z\" fill=\"#FFD54F\"\/><\/g><defs><clipPath id=\"a\"><path fill=\"#fff\" d=\"M0 0h21v21H0z\"\/><\/clipPath><\/defs><\/svg><\/a><\/span>            <\/div>\n\n            <!-- Post title -->\n\t\t\t<h2 class=\"entry-title js-toc-ignore mt-4 mb-0 text-xl leading-snug text-left\">\n\t\t\t\t<a href=\"https:\/\/www.biggerpockets.com\/blog\/buy-deals-from-wholesalers\" rel=\"bookmark\" class=\"whitespace-normal no-underline font-bold  text-slate visited:text-slate hover:text-themeBlue\" target=\"_blank\">\n\t\t\t\t\tHow to Buy Great Deals From Wholesalers as the End-Buyer\t\t\t\t<\/a>\n\t\t\t<\/h2>\n\t\t\t\n                        <p class=\"text-lg font-normal mt-3 text-slate-500 mb-1 line-clamp-3\">Wholesale real estate has&nbsp;a controversial reputation&nbsp;and has even faced legislative restrictions in various places such as&nbsp;Oklahoma&nbsp;and&nbsp;Philadelphia. Regardless of the legal and ethical considerations, however, wholesaling can be done in an&hellip;<\/p>\n\t\t<\/div>\n\t<\/header>\n     <footer class=\"flex justify-between mt-auto\">\n        <!-- Comment Count -->\n        \t\t<span class='flex items-center space-x-2 text-sm' x-cloak x-data='commentCount()' :class=\"parseFloat(commentCount) < 1 || commentCount == '' ? 'hidden' : 'flex'\">\n\t\t\n            <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"h-5 w-5 text-slate text-opacity-50\" fill=\"none\" viewBox=\"0 0 24 24\" stroke=\"currentColor\">\n                <path stroke-linecap=\"round\" stroke-linejoin=\"round\" stroke-width=\"2\" d=\"M17 8h2a2 2 0 012 2v6a2 2 0 01-2 2h-2v4l-4-4H9a1.994 1.994 0 01-1.414-.586m0 0L11 14h4a2 2 0 002-2V6a2 2 0 00-2-2H5a2 2 0 00-2 2v6a2 2 0 002 2h2v4l.586-.586z\" \/>\n            <\/svg>\n\n            <span x-ref=\"comment_count\" class=\"disqus-comment-count text-slate text-opacity-80\" data-disqus-identifier=\"145171\">\n\t\t\t\t\t\t\t<\/span>\n        <\/span>\n\t    <\/footer>\n<\/article><!-- #post-145171 -->\n<article \n\tid=\"post-143234\" \n\tclass=\"content-card mb-0 flex flex-col  post-143234 post type-post status-publish format-standard has-post-thumbnail hentry category-real-estate-wholesaling category-biggerpockets-daily tag-wholesaling\">\n\n\t<header class=\"entry-header\">\t\t\t\n\t\t<!-- Image -->\n        \t\t\t<a class=\"post-thumbnail\" href=\"https:\/\/www.biggerpockets.com\/blog\/want-to-start-investing-start-wholesaling\" target=\"_blank\" aria-hidden=\"true\" tabindex=\"-1\">\n\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"340\" height=\"225\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/05\/Wholesaling-uncertainty-340x225.jpg\" class=\"size-card w-full  m-0 aspect-[68\/45] object-scale-down wp-post-image\" alt=\"Want to Start Investing But Unsure About the Economy? Start Wholesaling\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/05\/Wholesaling-uncertainty-340x225.jpg 340w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/05\/Wholesaling-uncertainty-300x199.jpg 300w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/05\/Wholesaling-uncertainty-1024x680.jpg 1024w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/05\/Wholesaling-uncertainty-768x510.jpg 768w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/05\/Wholesaling-uncertainty-1536x1020.jpg 1536w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/05\/Wholesaling-uncertainty-2048x1360.jpg 2048w\" sizes=\"auto, (max-width: 340px) 100vw, 340px\" title=\"\">\t\t\t<\/a>\n\t\t        \n\n\t\t<!-- Content Wrapper -->\n\t\t<div class=\"py-4 \">\t\n                            <div class=\"flex gap-4 justify-between items-center\">\n                    <!-- Category  -->\n                                            <a href=\"https:\/\/www.biggerpockets.com\/blog\/category\/real-estate-investing-strategies\/real-estate-wholesaling\" class=\"transition-colors bg-themeBlue\/20 text-themeBlue-medium hover:bg-themeBlue hover:text-white px-2 py-1 mb-2 inline-block rounded-sm no-underline text-sm\" target=\"_blank\">Wholesaling<\/a>\n                    \n                                            <span class=\"text-sm text-gray-500 hidden lg:inline-block\">3 min read<\/span>\n                                    <\/div>\n            \n           <div class=\"flex gap-3 items-center my-2 flex-nowrap text-base\">\n                <!-- Avatar and Author Name -->\n                <img decoding=\"async\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/04\/JamilDamji_headshot1-scaled-150x150.jpeg\" class=\"w-8 h-8 object-cover my-0 inline-block rounded-full\" alt=\"\" title=\"\"><span class='leading-snug text-slate-500 flex items-center'><span class='hidden whitespace-nowrap sm:inline-block md:hidden lg:inline-block pr-1'><span class='posted-on'><time class=\"entry-date published\" datetime=\"2022-05-26T12:50:51-06:00\">May 26, 2022<\/time><time class=\"updated\" datetime=\"2023-08-07T15:19:31-06:00\">Aug 07, 2023<\/time><\/span><\/span>&nbsp;<a href=\"https:\/\/www.biggerpockets.com\/blog\/contributors\/jamildamji\" class=\"no-underline line-clamp-1\" target=\"_blank\">Jamil Damji<\/a><\/span>            <\/div>\n\n            <!-- Post title -->\n\t\t\t<h2 class=\"entry-title js-toc-ignore mt-4 mb-0 text-xl leading-snug text-left\">\n\t\t\t\t<a href=\"https:\/\/www.biggerpockets.com\/blog\/want-to-start-investing-start-wholesaling\" rel=\"bookmark\" class=\"whitespace-normal no-underline font-bold  text-slate visited:text-slate hover:text-themeBlue\" target=\"_blank\">\n\t\t\t\t\tWant to Start Investing But Unsure About the Economy? Start Wholesaling\t\t\t\t<\/a>\n\t\t\t<\/h2>\n\t\t\t\n                        <p class=\"text-lg font-normal mt-3 text-slate-500 mb-1 line-clamp-3\">Back in 2002, I made my first deal as a real estate wholesaler. I was literally walking the streets looking for a deal when I came across a tired landlord&hellip;<\/p>\n\t\t<\/div>\n\t<\/header>\n     <footer class=\"flex justify-between mt-auto\">\n        <!-- Comment Count -->\n        \t\t<span class='flex items-center space-x-2 text-sm' x-cloak x-data='commentCount()' :class=\"parseFloat(commentCount) < 1 || commentCount == '' ? 'hidden' : 'flex'\">\n\t\t\n            <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"h-5 w-5 text-slate text-opacity-50\" fill=\"none\" viewBox=\"0 0 24 24\" stroke=\"currentColor\">\n                <path stroke-linecap=\"round\" stroke-linejoin=\"round\" stroke-width=\"2\" d=\"M17 8h2a2 2 0 012 2v6a2 2 0 01-2 2h-2v4l-4-4H9a1.994 1.994 0 01-1.414-.586m0 0L11 14h4a2 2 0 002-2V6a2 2 0 00-2-2H5a2 2 0 00-2 2v6a2 2 0 002 2h2v4l.586-.586z\" \/>\n            <\/svg>\n\n            <span x-ref=\"comment_count\" class=\"disqus-comment-count text-slate text-opacity-80\" data-disqus-identifier=\"143234\">\n\t\t\t\t\t\t\t<\/span>\n        <\/span>\n\t    <\/footer>\n<\/article><!-- #post-143234 -->        <\/div>\n      <\/div>\n    <\/div>\n  <\/div>\n\n  \n\n\n<hr class=\"wp-block-separator has-css-opacity\"\/>\n\n\n\n<h2 class=\"wp-block-heading\">Do you need a license to wholesale?<\/h2>\n\n\n\n<p>A license is not required to wholesale\u2014generally.<\/p>\n\n\n\n<p>That being said, there\u2019s a lot of nuance with the legality of wholesaling. If you are going to do it without a license, it\u2019s a good idea for you to have considerable knowledge about real estate.<\/p>\n\n\n\n<p>It\u2019s probably best practice to get your license if you are planning to wholesale properties. But reviewing the aspects of wholesaling could help you\u2014with or without a license.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What\u2019s illegal about wholesaling?<\/h2>\n\n\n\n<p>The debate on whether wholesaling is illegal revolves around the term <em>brokering<\/em>.<\/p>\n\n\n\n<p>Although each state has its own definition, a broker is someone who helps put a deal together.<\/p>\n\n\n\n<p>For example, the <a href=\"http:\/\/www.leg.state.fl.us\/Statutes\/index.cfm?App_mode=Display_Statute&amp;URL=0400-0499\/0475\/Sections\/0475.01.html\" target=\"_blank\" rel=\"noopener noreferrer\">state of Florida<\/a> defines it as:<\/p>\n\n\n\n<p>\u201cBroker\u2019 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 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.\u201d<\/p>\n\n\n\n<p>In <a href=\"https:\/\/apps.leg.wa.gov\/rcw\/default.aspx?cite=18.85&amp;full=true\" target=\"_blank\" rel=\"noopener noreferrer\">Washington State<\/a>, brokering is defined as:<\/p>\n\n\n\n<p>\u201cListing, selling, purchasing, exchanging, optioning, leasing, renting of real estate, or any real property interest therein\u2026\u201d and \u201cNegotiating or offering to negotiate, either directly or indirectly, the purchase, sale, exchange, lease, or rental of real estate, or any real property interest therein.\u201d<\/p>\n\n\n\n<p>Those who argue that real estate wholesaling is illegal claim so because the wholesaler acts as a broker in the deal without being licensed.<\/p>\n\n\n\n<p>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. Therefore the law doesn\u2019t apply to this situation. They are not selling a property, only the ownership of a real estate contract.<\/p>\n\n\n\n<p>To further complicate the situation, there is the issue of \u201cmarketing\u201d a property that you do not currently own. Most states include \u201cmarketing a property\u201d as brokering. For example, let\u2019s say Jim, the wholesaler, buys a property from Deborah, and Jim then sells the property for cash to Tom. If Jim didn&#8217;t know Tom but put the ad for the house on, say, Craigslist, is he marketing the property? Most definitely, yes.<\/p>\n\n\n\n<p>Putting a deal under contract, marketing that deal and then assigning that deal is a fast way to get fined by your state government and get a misdemeanor on your record.<\/p>\n\n\n\n<p>But what if Jim wasn\u2019t marketing the property? What if Jim knew Tom and told him about the deal. Is that marketing?<\/p>\n\n\n\n<hr class=\"wp-block-separator has-css-opacity\"\/>\n\n\n\n\n\n<hr class=\"wp-block-separator has-css-opacity\"\/>\n\n\n\n<h2 class=\"wp-block-heading\">What is the right way to wholesale real estate?<\/h2>\n\n\n\n<p>When starting out and learning <a href=\"https:\/\/www.biggerpockets.com\/blog\/find-real-estate-wholesale-deals\" target=\"_blank\" rel=\"noreferrer noopener\">how to find wholesale properties<\/a>, its important to protect yourself from breaking any laws. Here are a few tips to help guide you, but you should also talk to an attorney for additional guidance.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">1. Get a license<\/h3>\n\n\n\n<p>This one is a simple fix. No one can accuse you of brokering without a license if you have your license. A real estate license makes you appear more legitimate to potential buyers and expands your list.<\/p>\n\n\n\n<p>However, you will now be held to the same ethics as other licensed real estate agents. Making a wrong move during a wholesale could impact your license (and reputation).<\/p>\n\n\n\n<p>A license would hold you to a higher standard and cost you a couple grand, but it\u2019s better than getting a penalty from the state for breaking the law.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">2. Assign contracts<\/h3>\n\n\n\n<p>Assigning contracts is the most common way to wholesale real estate. In essence, you begin a contract with the seller and then sell \u201crights\u201d of the contract to a buyer, often for a fee.<\/p>\n\n\n\n<p>There&#8217;s no minimum capital needed, which can be a perk for most investors.<\/p>\n\n\n\n<p>Since you do not own the property, you must be careful how you advertise it to stay within the law (as we touch on in No. 5).<\/p>\n\n\n\n<p>Plus, you are promising the seller that you are buying their property when you are giving it to another buyer.<\/p>\n\n\n\n<p>This is the most common wholesaling method, but it&#8217;s also the most precarious.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">3. Double closing<\/h3>\n\n\n\n<p>Rather than assigning the contract, you buy the property, own it (even if only for five minutes), and then resell it to a buyer.<\/p>\n\n\n\n<p>However, this is risky because there are now two closings out of your control. Either the buyer or the seller could choose last-minute not to go through with the transaction. It also requires upfront costs, which can be paid back by the buyer in the second close.<\/p>\n\n\n\n<p>There are a few moving parts with a double closing. The buyers need to understand that the first transaction must go through before you can resell the property. This might require legal advice on your part to ensure you are following every rule.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">4. Buying and selling<\/h3>\n\n\n\n<p>Buying and selling is the safest way to wholesale real estate. Once you buy and own the property, you can do what you want with it\u2014including finding an interested buyer and advertising the property however you would like.<\/p>\n\n\n\n<p>There are more upfront costs with this method, which is something to consider. Down payments and closing costs are required with each property with no guarantee. If you cannot find the next buyer, then you absorb the capital you invested.<\/p>\n\n\n\n<p>Once you find the next buyer, especially if you have rehabbed the property, you&#8217;ll likely earn a significant profit, even in just a few months.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">5. Advertising<\/h3>\n\n\n\n<p>To go back to an earlier point, there is the issue of \u201cmarketing\u201d a property that you do not currently own. Your advertising must be legal, but how can you ensure it is?<\/p>\n\n\n\n<p>The best way is to build relationships with potential buyers, so you can use your connections when a property comes up. You can then avoid Craigslist posts or promoting on Facebook Marketplace or other marketing tactics that look shady.<\/p>\n\n\n\n<p>Illegal advertising for wholesale properties involves ambiguous language and intentional dishonesty or omission. It can include advertising that you are selling the property rather than the purchase agreement.<\/p>\n\n\n\n<p>The buyer is purchasing the <em>transfer<\/em> of a contract, not the real estate property, from you. That needs to be clear in your marketing.<\/p>\n\n\n\n<p>Examples of legal marketing include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Posting a Craigslist ad that you are a wholesaler looking for potential buyers.<\/li>\n\n\n\n<li>Building your connections with people who want to sell and who want to buy real estate.<\/li>\n\n\n\n<li>Networking with buyers at real estate auctions.<\/li>\n\n\n\n<li>Advertising the selling of a contract to prospective buyers.<\/li>\n<\/ul>\n\n\n\n<p>Also, know whether or not you need to have a real estate license in your state to advertise the property. And remember that in most states, you are not allowed to show photos or give specific information about a wholesale property.<\/p>\n\n\n\n<p>Check with your local and state guidelines before designing your marketing strategy.<\/p>\n\n\n\n<p>The truth about wholesaling is this: it definitely flirts with the line between legal and illegal.<\/p>\n\n\n\n<p>If you want to see how close to that line you can get, that is your choice.<\/p>\n\n\n\n<p>However, if you want to be sure that you are operating your wholesaling business as legally as possible, either get your license or close on the property, take the title, and sell the property itself.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>One of the more hotly debated topics on BiggerPockets is concerning the legality of wholesaling. Laws on this are state-specific, which can be scary stuff for any wholesaler. Here&#8217;s what to know.<\/p>\n","protected":false},"author":710,"featured_media":139211,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[5526,7119],"tags":[],"class_list":["post-71563","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-real-estate-wholesaling","category-biggerpockets-daily"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/71563","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/710"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=71563"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/71563\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/139211"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=71563"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=71563"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=71563"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}