Wholesale or investors required to have license to sell real estate

13 Replies

Has any investor have any information that you will be required to have a license if you sale over a certain amount of real estate? Did you hear of any legislation going to your state for a change in the law? Someone mention it to me, just curious.

Jay

I don't know about other states but an owner certainly can sell all of his RE in Florida without a license!  Now, if you look at California...or some other states with very heavy and sometimes usless regs things might be different.

the only state I have heard of that you need a license to sell your own RE is Wisconsin.

the issue comes with those that flip or double escrow or make bird dog fee's or assign contracts.. Ohio has started to crack down on this activity and there was a thread here were a person in FLA got turned into the DRE and they are pursuing the case as an unlicensed activity

what do you mean by the term "wholesale"? Do you mean to buy properties at a discount then resell them? Or do you mean attempting to broker RE transactions between a buyer and a seller but calling it assigning contracts?

The 1st activity to my knowledge is something that doesn't require a license in 49 states. I believe Wisconsin requires a license if you do it more than 5 times a year.

The 2nd activity already requires a license. Those that hold this license are commonly known as Real Estate Brokers.

Wholesale, as in putting the property under contract and finding a buyer. Selling a property without a license. I understand the real estate aspect, have a California license. Just wanted to know what was going on in other states. Thanks James for the information.

Jay

Here in Illinois depends on how many a year you do and if they are recorded or not .

Originally posted by @John Thedford:

I don't know about other states but an owner certainly can sell all of his RE in Florida without a license!  Now, if you look at California...or some other states with very heavy and sometimes usless regs things might be different.

I think the question of "owning" is where the problem comes in play, especially in Fla and a few other states. Do you "own" a property, or the right to sell it, by having a $10 deposit on a purchase option? 

Assigning a contract will protect you more if you have a true stake in the property, not $10. If you have a $1000 deposit it might, depending on the purchase price. A 10% non-refundable deposit for a limited time and I suspect any law student could fight contract law and common law in your favor. To meet the criteria I think non-refundable and significant interest apply. 

Not a legal opinion, just my understanding.

Thanks Brandon for the information.

Jay

An investor's license has been kicked around here. The issue is a bit with property rights as someone has the right to lease a property. The state I believe has pointed this out to municipalities and if you're leasing as a side line business having more than one for example, then a business license kicks in, as well as personal property taxes on property used in that business like refrigerators, free standing stoves. If you get nailed for some violation then your business license can be pulled/denied which will lead to conducting business without a license, if you do and have subsequent violations that can just lead to jail. So, they can put someone out of business. Haven't heard of it applied to that extent here.

An investor's license has been discussed concerning RE operators too, much like the agent's license route but there is no organization recognized to oversee activities, conduct or ethics like the Board of Realtors for agents and brokers.  I think there should be such an organization but not run like the Board necessarily. We had a thread on that I think a couple few years ago. Not much interest, most want the wild west to come back. As if people have the right to be stupid, get ripped or rip off others outsmarting the other guy.

Mo. is not what I'd call overly consumer friendly, there is a political view of big business requiring the advantages over competition and to seek business from the public to include the ignorant or disadvantaged, free enterprise and the only hooks being set by violations or laws or in ethical areas, through complaints.

Municipalities have the ability to require service industry providers or professions to demonstrate education or knowledge. A contractor here takes a test before getting a city license, a private investigator takes a test here and KC and I believe St. Louis. Professionals who hold state licenses are simply required to hold that license, no testing required.

I know people resist change and don't want oversight in what they do, but I know that having a license would get fewer doors slammed in your face trying to conduct business, evidence of that is with a licensed contractor compared to storm chasers, there has been enough public education about homeowners dealing with those who hold a city license. I also think there is a lot less scamming since a licensed contractor wants to keep their license, not saying some don't try to pull little rip off gigs with granny, but not as bad as the wild west.  

So far, the city hasn't gotten into regulatory creep like the state(s) does (do). Realtors with continuing education for Realtors, that means mandatory classes, for that you have to have certified instructors, course materials, schools and support which just leads to another industry niche and fees and charges to feed the beast.

An example I give for a better approach is more like the FCC and their system of testing for HAM Radio Operators, they take a test proctored by certified volunteers under a club setting, different tests for beginner to advanced holders and there is never continuing education requirements and the license is good for 10 years as I recall. But, then there is little risk to the public that a HAM is going to scam money out of them on a radio too. :)       

Thanks for the information Bill G.

Jay

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