What are the pitfalls of wholesaling in a lawful manner?

29 Replies

@Michael Woodruff

The only way you will have a real equitable interest is if you have the intent and the means to actually close on a property. Assigning your contract is normally fine is its a one-off thing, but if you plan on doing lots of them, you're in the business and need a license. Closing on the property and being on the deed helps get around a lot of the problems associated with unlicensed wholesaling.

Originally posted by @Storm S. :

@Michael Woodruff Also i forgot to mention equitable interest has nothing to do with a mortgage loan.

and equitable interest is very discretionary some will say just having a contract is equitable interest were others will say nope.. 

and in our state this still does not entitle you to break the licensure laws.. equitable interest relates more to enforcing a seller not selling and or other issues.. Not a get out of real estate license free card. OF course the guru's hammer on it. and many on BP just regurgitate it.

Originally posted by @Jay Hinrichs :
Originally posted by @Storm S.:

@Michael Woodruff Also i forgot to mention equitable interest has nothing to do with a mortgage loan.

and equitable interest is very discretionary some will say just having a contract is equitable interest were others will say nope.. 

and in our state this still does not entitle you to break the licensure laws..  equitable interest relates more to enforcing a seller not selling and or other issues.. Not a get out of real estate license free card.  OF course the guru's hammer on it. and many on BP just regurgitate it.

 I completely agree with you. Personally, I am in the nope camp. If you don't have the intent or the ability to close you don't have an equitable interest Most wholesalers are just acting as unlicensed agents, and for the ones who claim they're just selling and marketing the contract, then there acting as unlicensed broker-dealers selling unregistered securities. To be a legitimate wholesaler you should be licensed, have the ability to close, not back out of a contract with weasel clauses if you can't find a buyer, and take on inventory and market risk.