Wholesaling - Is It About to Change?

Real Estate Agent · Geneva, IL · Member since 2015 · 403 posts · 172 votes

The Real Estate License Act (RELA) of 2000 is about to sunset. Check out the changes they are making to the RELA regarding wholesaling. How do you think this will affect things?

Excerpt is taken from the article posted by Illinois Realtors

Title: SB 1872 or Real Estate License Act of 2000 - Explained (full link at bottom of post)

As you may already be aware, the Illinois Real Estate License Act of 2000 (RELA or the Act) was due to “sunset” at the end of 2019.

This is a regular “thing” for licensing laws, and knowing this was on the horizon Illinois REALTORS®set to work organizing a task force to study, consider and recommend changes for a rewrite of RELA.

Accordingly, the Illinois REALTORS® task forces were focused on consumer protection from the start. In addition, IDFPR has a mission of consumer protection together with establishing the standards for professional real estate licensees in Illinois.

With regard to business practices, in Section 1-10, the definition of “broker” has been amended to include the practice of “wholesaling” if done as a business model. Generally, “wholesaling” involves the practice of entering contracts to purchase property, then quickly assigning that contract to another buyer for a profit. When done as a business practice, “wholesaling” will now come under RELA’s enforcement provisions and the wholesaler will need a real estate broker’s license, as well as be subject to consumer protection provisions such as disclosure of self-interest and prohibition against dual agency.

Full Link: https://www.illinoisrealtors.org/blog/sb-1872-or-real-estate-license-act-of-2000-explained/?fbclid=IwAR34h8ys5z-ea3ks6ufLTwSPNNos-XAR1unslWPbcLlGQQ7tSnpCmxSw24M#consumer

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Mark Fries

Contractor · Jacksonville, FL · Member since 2017 · 1k+ posts · 2k+ votes

@Patrice Boenzi

Because wholesalers are hustlers by nature. And by virtue of this they always find a way to make it happen. Maybe they come up with another name for what they are doing or find a different angle but I'm sure it will continue. Wholesaling is a billion dollar industry across America. The economy needs it, whether or not anybody likes it is a different story.

** Please note I am not a wholesaler but I am a realist and this is how society works.

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Patrice Boenzi
OP
Real Estate Agent · Geneva, IL · Member since 2015 · 403 posts · 172 votes
7y
Originally posted by @Chris Martin:
Originally posted by @Jay Hinrichs:
on another thread a Chicago resident said that this proposed changes have been signed into law..
so will see if they enforce it.. will be pretty easy.. all they have to do is troll CL and anyone who does not have a realtor designation will be a target.

Signed into law last Friday, per the TrackBil site. I would expect there will be a lot of cease and desist letters first, but with Illinois it's hard to tell. But yes, Jay, there are ways for regulators to find FSBO sellers/buyers and certainly advertisers for broker services on social media and online sources like CL. The bill added "electronic advertisements" under the existing "Blind Advertisement" section. Not much ambiguity in the text. I'm just grateful my operation is in NC and not IL.
It's going to be interesting to see the Disciplinary Actions pages in the upcoming months....

I just got notified today, the bill has been signed into law
0 Reply
John Thedford
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
7y
Originally posted by @Chris DeSisto:
@John Thedford
Everyone is a victim... Not saying anyone should take advantage of people. But nobody is holding a gun to anybody's head and telling them to sign. It should be common sense to get a second opinion, if a wholesaler is trying to contract the property for X amount you can bet there is 10 other wholesalers competing for that house too. Which will probably raise the value.
There is a balance of taking responsibility for yourself and someone trying to screw some old lady out of her equity. A license isn't really going to make an unethical person an ethical person.
Licensees have oversight. Unlicensed brokers have nobody to answer to. The state of CO just went after a LICENSEE for ripping a lot of money from an unsuspecting seller. The State of FL regulators have stated most of the VICTIMS of these unlicensed brokers have a poor grasp of the english language and are often elderly. I have met several victims of unlicensed brokers and found the majority to be lacking in ethics and integrity. Many use BS escape clauses to walk on contracts that they cannot assign.

0 Reply
Elbert D.
Real Estate Entrepreneur / Investor · Chicago, IL · Member since 2016 · 688 posts · 367 votes
7y
@Chris DeSisto we have similar views on this matter. And yes it was reported the bill got signed.
As I look on realtor.com now I see a bunch of overprice inventory and some overprice rubbish with the descriptions of ”nvestors special or handyman special” along with one picture or three pictures of the outside. These pictures and the listing must have been put up by such a hard working person..... I really don’t see how this is suppose to help the Illinois real estate market.....so now you mean to tell me not only does Illinois have high taxes and high insurance rates. But now your regulating and cutting off the number of fix and flippers and wholesalers? Wow......that was smart.
I wonder why the news didn’t also report property taxes jumping about 10% next year. Not to mention the slow job market that’s here in this state.
Ohhhhh wait. I see what their doing. They want to turn Illinois into a state ran similar like NY and Cali. What a awesome idea. Make everyone renters and regulate everything and tax everything until you can’t anymore. Such a great plan.....
Yet. No one seems to answer my question about what about the influx of people that’s going be licensed.....I can guarantee there will be more complaining once realtors who were making a little money see their checks cut by a lot now that everyone is licensed to do deals and now retail side of things. Does IL really need more estate brokers??? That’s not to more wholesalers and or flippers are needed but now that there will be such a huge pool of people licensed(supply) with only a handful actually making money(just like lawyers) with little supply of inventory. what will this accomplish actually??? The only thing happened is now IL cut out people/business owners who took that avenue serious and left them out of business. If they are only operating in IL. Wow way to go IL ^___^
2 Reply
Chris DeSisto
Specialist · SC · Member since 2016 · 79 posts · 19 votes
7y
So your saying even people with a license do bad things, just as an unlicensed person? Adults have to be responsible for their own decisions. Again, nobody is holding a gun to their head to sign. The passing of blame gets old.
Again, I wouldn't try to rip anyone off but who is to say what is a rip-off and what isn't? The vulnerability of the person? They are old, short, fat, pretty, ugly, tall, can't speak English? Who gets to "regulate" and be the almighty ethical person? If you screw someone you will get what's coming to you. Most people inherently know what is right and wrong, unless they are a sociopath. You know if an old person is dealing with dementia, you have to be pretty low to take advantage of someone like that.
I just don't buy into the victim stuff. I'm sure there are cases, but a lot less than what is perceived.
2 Reply
Christopher Lyons
Real Estate Agent · Central Florida · Member since 2019 · 14 posts · 2 votes
7y
Where would I go to find a reliable resource as to the laws regarding wholesaling in FL?
1 Reply
Bob Floss II
Attorney · Northbrook, IL · Member since 2017 · 719 posts · 549 votes
7y
I feel like debbie downer today bursting everyone's bubble.
I clerked at IDFPR in law school and helped with real estate complaints. They don't need a task force and they're not going to send people out scouring the internet or looking for mailers. They will do nothing. They will sit and wait. Almost all complaints are generated by a member of the public or another professional. This is business and your competitors want you out of the way. This is capitalism at it finest. Licensed Realtors that don't like wholesalers and even licensed wholesalers that want to level the playing field and eliminate competition are going to flood them with complaints. Your buddy that you see at networking events and seems like a great guy already filed a complaint against you.
8 Reply
Account Closed
Attorney · Sacramento, CA · Member since 2014 · 300 posts · 172 votes
7y
I wouldn't be surprised if California did something similar.
1 Reply
John Thedford
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
7y
Originally posted by @Chris DeSisto:
So your saying even people with a license do bad things, just as an unlicensed person? Adults have to be responsible for their own decisions. Again, nobody is holding a gun to their head to sign. The passing of blame gets old.
Again, I wouldn't try to rip anyone off but who is to say what is a rip-off and what isn't? The vulnerability of the person? They are old, short, fat, pretty, ugly, tall, can't speak English? Who gets to "regulate" and be the almighty ethical person? If you screw someone you will get what's coming to you. Most people inherently know what is right and wrong, unless they are a sociopath. You know if an old person is dealing with dementia, you have to be pretty low to take advantage of someone like that.
I just don't buy into the victim stuff. I'm sure there are cases, but a lot less than what is perceived.

I purchased this house a couple of years back. The owner knew the house was worth 200K. They had it listed. Then the listing was withdrawn and they contacted me about buying it. I paid $145K. Was that a ripoff? No, because THEY set the price knowing it was worth 200K but they were in a big bind. I offered to originally list it for them for 200K as well. Their options were to file BK or get quick cash. I wrote the contract, made it assignable, and put it into my S corp. No weasel clauses, etc...but it was assignable for a reason. I always make them assignable so i have the options of putting into my name, my LLC, or my S corp. Assignment clauses were never meant to be a workaround and broker without a license but we have lots of people playing that exact game. In FL, you CANNOT advertise the property even if under contract.
2 Reply
Irina Belkofer
Real Estate Broker · Cleveland, OH · Member since 2017 · 719 posts · 658 votes
7y
@Chris DeSisto not in Ohio: once you’re licensed professional, you must disclose it to all involved parties.
Your broker is responsible for you actions in real estate even when you buy your own houses.
When I tried to get E&O insurance, one company refused to because I'm buying and selling my own properties as well. The one who I found by referrral of my title company, made my own transactions not insurable because of it - so the insurance covers only my clients.
That’s why I don’t want any agents work for me - it’s too much responsibility. I work with investors so would be my agents....they will buy their own properties to flip or to rent....that’s how I can loose my license - I can’t control what I don’t know about.
0 Reply
Chris DeSisto
Specialist · SC · Member since 2016 · 79 posts · 19 votes
7y
@Irina Belkofer
That is what I am saying though. You don't want to let agents buy their own properties.. I don't see how making someone get a license makes sense then. Insurance won't cover, well how can they possibly force people to get a license knowing most brokers can't or won't let someone do it? They are making it impossible basically. If I want to wholesale, I can't with or without a license? There is no logic to it. It is like saying a person can't FSBO just because I don't want them too....

1 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
7y
Originally posted by @Chris Martin:
Lots of people are missing the point.
The law doesn't say everyone must get a license. The IL law defines, or maybe a better way to put it is the law now more clearly refines, the definition of what "broker" means.
Many state RECs frown upon "self dealing" because it has proven to be problematic. And (brokers can correct me if not) some E&O policies have clauses relating to self dealing coverage. The reality is that investor transactions make up a small part of real estate brokerage transactions, yet account for a big part of brokerage violations. In a similar way that's partly why, for instance, OO loan have better terms. NOO default rates are higher.
This is America, but I need a license to fly an airplane, a license to drive a car, a different license to drive a tractor trailer, etc. I don't need to get a CDL to receive or send a package, I just use a service where the drivers have a CDL.
Chris to me this has some similarities with sub prime whip lash.. Not sure if you know of or recall NACA they are still in operation. Their make narrative was that subprime was aimed at certain segment of the borrowing public. They went on to have rallies and demonstrations at this big companies offices and even picketed the CEO's houses.. it made national news.
I think the whip lash here is along the same lines that as it relates to wholesaling in IL or Chicago specific its dominated in certain areas. Like subprime was.. and the person way up in the thread from CO that sited the seller selling a home that was wholesaled twice for 150k more than she got.. / or they got.. These issues come to light politicians get into it and boom you have dodd frank all over again..
And as one of the attorneys that is from Chicago stated and its that way in Oregon they chase down complaints .. And I think as he stated what your going to see is the bigger wholesale players have far to much invested in their business's to simply not get a license.. they can buy their own company they can run without E and O if they wish.. I did for years.. And then Brokers / agents educating their buyers and sellers and that's were you probably get the complaints coming from.. As one who has worked in Chicago though from my personal experience you get into their system and its pretty rough stuff.

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1 Reply
Irina Belkofer
Real Estate Broker · Cleveland, OH · Member since 2017 · 719 posts · 658 votes
7y
@Elbert D. you get all the things together but it’s specific only to wholesalers.
Flippers are buying houses, improve them and sell - under their name (LLC etc)
Wholesalers are marketologostsjust like RE agents: they are looking for listing to sell and of their main point is “cut off unnecessary comissions and sell for cash”.
Do sellers realize what kind of comissions the wholesaler will makeoff them? Besides, 90% of my investors are cash buyers. So, when I find the property to sell, I offer to the seller 3 options:
1. I can list your house for $100K
2. I can sell it off market for cash and no inspection for $75K
3. I can buy it on terms for $110K (no money down)
They know what's the market value is because just like any agent, I do CMA for them but including distressed sales if their house in such condition. I can offer them even to flip their house which adds time, money but will be sold, let's say $180K.
When people make an informed decision, it’s not a crime. When you tell them your house worth $200K when you know it’s $300K - you’re preying on their vulnerability.
Your “they are adults and should know better” won’t stand a trial in a court or at RE Board, Division or whatever the authority is in your state. If you’re a licensed professional. That’s why it’s easier to get people out of their money and hide behind that mantra
0 Reply
Will Fraser
Real Estate Broker · Salt Lake City & Oklahoma City · Member since 2018 · 3k+ posts · 2k+ votes
7y
I'm jumping in late here, so I bet somewhere in the 176 replies so far something like this has been said, but I'd love to add some clarity to the core issue with wholesaling according to agents - the issue isn't the money made off of the difference. We love that; would gladly take that and, in fact, that is what we shoot for ourselves in deals.
HOWEVER, the problem is in how this is presented to the seller. I would have no problem whatsoever if each wholesaler was having a document explained to the seller and signed by them stating that they are fully aware that the wholesaler is not paying them the market value of the home. If the seller KNOWS that and accepts that in exchange for some other value (quiet sale, quick sale, sure sale, etc) then kuddos! Wholesaler wins; seller gets what they are wanting to accomplish in the deal KNOWING that it isn't the full value of the home.
What tends to happen, though, is that the seller accepts the value offered to them BECAUSE of one of the valuable aspects of a wholesale deal, but also believes that the value given to them is the market value. Then they feel "duped" when they see their very same property on . . . the MLS, a mailing list, facebook, etc for a significant markup. In real estate this is tantamount to a Net Listing (in which the seller and agent agree to the seller "needs X out of the deal, so you keep anything over X as your commission" (more or less). Net Listings have been illegal for a while now, and wholesalers side step this and all other restrictions about insinuating the value of a home, etc by simply not having a license.

Well, the time is coming when wholesaling will be placed under the brokerage laws (which . . . doesn't that make sense in light of wholesaling property being an act of brokering a deal?) and I hope that this leads to more awareness on all sides of a transaction and that wholesalers, sellers, buyers, and agents alike will thrive by doing good, honest business that serves each other.
The journey is tough, and good.
Will
0 Reply
Jimmy O'Connor
Real Estate Agent · Philadelphia, PA · Member since 2018 · 428 posts · 484 votes
7y
Originally posted by @Zoran Stanoev:
I think it will certainly change things. I don't see how it can't. and I don't think doing a double close would avoid running afoul of the law. Wholetailing would, but not a double close. While I don't doubt the hustle of some wholesalers, I also don't doubt the broker's lobby and that some brokers may push for this to be enforced. I'm not sure how title companies will feel about this, but I think Illinois being very pro-tenant is going to also be very pro-consumer (or anti-wholesaler).
I also think it'll affect some of the educational courses out there, which usually lead with wholesaling to entice people because it requires "no money" to start (although I think it actually may require the most). Illinois will have to be carved out as an exception.

@Zoran Stanoev- Why is pro-consumer and pro-wholesaler mutually exclusive? The entire demand for wholesalers stems from investors needing prices that are actually profitable- often times too difficult to find on the MLS (not an absolute rule, I have bought and sold home runs through conventional means.) Can you elaborate further?
0 Reply
Elbert D.
Real Estate Entrepreneur / Investor · Chicago, IL · Member since 2016 · 688 posts · 367 votes
7y
Originally posted by @Irina Belkofer:
@Elbert D. you get all the things together but it’s specific only to wholesalers.
Flippers are buying houses, improve them and sell - under their name (LLC etc)
Wholesalers are marketologostsjust like RE agents: they are looking for listing to sell and of their main point is “cut off unnecessary comissions and sell for cash”.
Do sellers realize what kind of comissions the wholesaler will makeoff them? Besides, 90% of my investors are cash buyers. So, when I find the property to sell, I offer to the seller 3 options:
1. I can list your house for $100K
2. I can sell it off market for cash and no inspection for $75K
3. I can buy it on terms for $110K (no money down)
They know what's the market value is because just like any agent, I do CMA for them but including distressed sales if their house in such condition. I can offer them even to flip their house which adds time, money but will be sold, let's say $180K.
When people make an informed decision, it’s not a crime. When you tell them your house worth $200K when you know it’s $300K - you’re preying on their vulnerability.
Your “they are adults and should know better” won’t stand a trial in a court or at RE Board, Division or whatever the authority is in your state. If you’re a licensed professional. That’s why it’s easier to get people out of their money and hide behind that mantra

I see what your saying. But that’s not how I go about wholesaling if I’m wholesaling. Also my business model isn’t like the usual wholesaler that leaves and dumps the house. If they are able to sell it. In real estate there is usually more than one way to do things and add unique value.
0 Reply
Patrice Boenzi
OP
Real Estate Agent · Geneva, IL · Member since 2015 · 403 posts · 172 votes
7y
Originally posted by @Chris DeSisto:
@Irina Belkofer
That is what I am saying though. You don't want to let agents buy their own properties.. I don't see how making someone get a license makes sense then. Insurance won't cover, well how can they possibly force people to get a license knowing most brokers can't or won't let someone do it? They are making it impossible basically. If I want to wholesale, I can't with or without a license? There is no logic to it. It is like saying a person can't FSBO just because I don't want them too....

That isn’t everybody. My company allows me to buy and sell my own property; as well as, property manage them.

1 Reply
Chris DeSisto
Specialist · SC · Member since 2016 · 79 posts · 19 votes
7y
Market value on a beat up property is not an exact science... Most are using a range of what something is worth. How can that really and honestly be valued? Finding comps on a torn up home gets a decent ballpark figure. If you are adding another layer to the sale (wholesaler) then it's another cost. Just like any other industry. Amazon sells cheaper cause they ship it right to you. Go to Best buy you'll pay more.
Samething here, if you don't want to pay that fee, go directly to someone who will fix and flip. Skip the wholesaler. There really is no difference. That's why people try to FSBO, they are trying not to pay realtor fees. Same exact thing.
0 Reply
Chris Martin
Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
7y
Originally posted by @Jay Hinrichs:
Originally posted by @Chris Martin:
Lots of people are missing the point.
The law doesn't say everyone must get a license. The IL law defines, or maybe a better way to put it is the law now more clearly refines, the definition of what "broker" means.
Many state RECs frown upon "self dealing" because it has proven to be problematic. And (brokers can correct me if not) some E&O policies have clauses relating to self dealing coverage. The reality is that investor transactions make up a small part of real estate brokerage transactions, yet account for a big part of brokerage violations. In a similar way that's partly why, for instance, OO loan have better terms. NOO default rates are higher.
This is America, but I need a license to fly an airplane, a license to drive a car, a different license to drive a tractor trailer, etc. I don't need to get a CDL to receive or send a package, I just use a service where the drivers have a CDL.
Chris to me this has some similarities with sub prime whip lash.. Not sure if you know of or recall NACA they are still in operation. Their make narrative was that subprime was aimed at certain segment of the borrowing public. They went on to have rallies and demonstrations at this big companies offices and even picketed the CEO's houses.. it made national news.
I think the whip lash here is along the same lines that as it relates to wholesaling in IL or Chicago specific its dominated in certain areas. Like subprime was.. and the person way up in the thread from CO that sited the seller selling a home that was wholesaled twice for 150k more than she got.. / or they got.. These issues come to light politicians get into it and boom you have dodd frank all over again..
And as one of the attorneys that is from Chicago stated and its that way in Oregon they chase down complaints .. And I think as he stated what your going to see is the bigger wholesale players have far to much invested in their business's to simply not get a license.. they can buy their own company they can run without E and O if they wish.. I did for years.. And then Brokers / agents educating their buyers and sellers and that's were you probably get the complaints coming from.. As one who has worked in Chicago though from my personal experience you get into their system and its pretty rough stuff.

I've sold 3 or 4 properties to people who obtained NACA loans. One was to a buyer, represented by a broker, and unsolicited. That was about 8-9 years ago. The buyer paid the broker's commission and I sold at the (then) current appraised value.
I think you can always go to extremes. Deregulate by industry and end up with Enron and Lehman Brothers type catastrophic events. Regulate too far and you interfere with commerce. The bill, as written, will result (as IDed by Bob formerly at IDFPR) in selective enforcement of some aspects of law and/or REC policy. To me that's bad public policy. That's why I posted what I did.
If the goal is to avoid "ripping people off" then the state could require that transactions executed by unlicensed parties obtain fair market value of a property by using some method of appraisal or CMA-type value. Many other states do that. The NC Home Foreclosure Rescue Scam legislation requires a buyer (rescue agent) present an appraisal and an offer of at least 50% of FMV.
But I think the bill's goal was established or heavily influenced by NAR, and that's why this legislation appears the way it is. If you are NAR, then the regulatory structure is the answer with no exceptions. It's mot the answer I endorse... but I'm not in IL, a state where all three counties I checked charge the public for public access to public documents.
1 Reply
Eric Williams
Member since 2019 · 7 posts · 1 vote
7y
Funny wholesaling is considered “unethical” now that more low to middle income citizens are aware and taking advantage of an opportunity to become financially independent
0 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
7y
Originally posted by @Chris Martin:
Originally posted by @Jay Hinrichs:
Originally posted by @Chris Martin:
Lots of people are missing the point.
The law doesn't say everyone must get a license. The IL law defines, or maybe a better way to put it is the law now more clearly refines, the definition of what "broker" means.
Many state RECs frown upon "self dealing" because it has proven to be problematic. And (brokers can correct me if not) some E&O policies have clauses relating to self dealing coverage. The reality is that investor transactions make up a small part of real estate brokerage transactions, yet account for a big part of brokerage violations. In a similar way that's partly why, for instance, OO loan have better terms. NOO default rates are higher.
This is America, but I need a license to fly an airplane, a license to drive a car, a different license to drive a tractor trailer, etc. I don't need to get a CDL to receive or send a package, I just use a service where the drivers have a CDL.
Chris to me this has some similarities with sub prime whip lash.. Not sure if you know of or recall NACA they are still in operation. Their make narrative was that subprime was aimed at certain segment of the borrowing public. They went on to have rallies and demonstrations at this big companies offices and even picketed the CEO's houses.. it made national news.
I think the whip lash here is along the same lines that as it relates to wholesaling in IL or Chicago specific its dominated in certain areas. Like subprime was.. and the person way up in the thread from CO that sited the seller selling a home that was wholesaled twice for 150k more than she got.. / or they got.. These issues come to light politicians get into it and boom you have dodd frank all over again..
And as one of the attorneys that is from Chicago stated and its that way in Oregon they chase down complaints .. And I think as he stated what your going to see is the bigger wholesale players have far to much invested in their business's to simply not get a license.. they can buy their own company they can run without E and O if they wish.. I did for years.. And then Brokers / agents educating their buyers and sellers and that's were you probably get the complaints coming from.. As one who has worked in Chicago though from my personal experience you get into their system and its pretty rough stuff.

I've sold 3 or 4 properties to people who obtained NACA loans. One was to a buyer, represented by a broker, and unsolicited. That was about 8-9 years ago. The buyer paid the broker's commission and I sold at the (then) current appraised value.
I think you can always go to extremes. Deregulate by industry and end up with Enron and Lehman Brothers type catastrophic events. Regulate too far and you interfere with commerce. The bill, as written, will result (as IDed by Bob formerly at IDFPR) in selective enforcement of some aspects of law and/or REC policy. To me that's bad public policy. That's why I posted what I did.
If the goal is to avoid "ripping people off" then the state could require that transactions executed by unlicensed parties obtain fair market value of a property by using some method of appraisal or CMA-type value. Many other states do that. The NC Home Foreclosure Rescue Scam legislation requires a buyer (rescue agent) present an appraisal and an offer of at least 50% of FMV.
But I think the bill's goal was established or heavily influenced by NAR, and that's why this legislation appears the way it is. If you are NAR, then the regulatory structure is the answer with no exceptions. It's mot the answer I endorse... but I'm not in IL, a state where all three counties I checked charge the public for public access to public documents.
OR WA and CA passed the same foreclosure rescue laws.. that was the bulk of my business pre 07 when the law took affect it came in even before the big ole crash.. so we stopped.. the penalties are criminal. part of that was from the guys in Florida charging 1k and we solve the problem and they never did a thing and people lost their homes thinking this company was fixing it.. I bought many at court house steps from folks when I showed up that were shocked.. those guys were bad actors all the way.. I sold some through NACA as well interesting people there at NACA.. I think another part of this is that assingments etc while always with us.. its become a full blown business model with the guru's and as such it has gotten much more attention.

Podcast Guest on Show #222
JLH Capital Partners51 Review
Website View Page
1 Reply
Gary L Wallman
Rental Property Investor · Beavercreek OH · Member since 2018 · 422 posts · 970 votes
7y
I've met some unbelievably lazy realtors. I think it kind of funny that they think it's perfectly okay to make a 20k commission for listing a property on the MLS and barely answering their phone. If a wholesaler makes the same 20k after sending out thousands of direct mail pieces and making hundreds of phone calls and knocking on dozens of doors he's a thief. Give me a break. No, I'm not a wholesaler. I just hate big government and the idea that they need to protect us.
6 Reply
Elbert D.
Real Estate Entrepreneur / Investor · Chicago, IL · Member since 2016 · 688 posts · 367 votes
7y
Originally posted by @Jay Hinrichs:
Originally posted by @Chris Martin:
Originally posted by @Jay Hinrichs:
Originally posted by @Chris Martin:
Lots of people are missing the point.
The law doesn't say everyone must get a license. The IL law defines, or maybe a better way to put it is the law now more clearly refines, the definition of what "broker" means.
Many state RECs frown upon "self dealing" because it has proven to be problematic. And (brokers can correct me if not) some E&O policies have clauses relating to self dealing coverage. The reality is that investor transactions make up a small part of real estate brokerage transactions, yet account for a big part of brokerage violations. In a similar way that's partly why, for instance, OO loan have better terms. NOO default rates are higher.
This is America, but I need a license to fly an airplane, a license to drive a car, a different license to drive a tractor trailer, etc. I don't need to get a CDL to receive or send a package, I just use a service where the drivers have a CDL.
Chris to me this has some similarities with sub prime whip lash.. Not sure if you know of or recall NACA they are still in operation. Their make narrative was that subprime was aimed at certain segment of the borrowing public. They went on to have rallies and demonstrations at this big companies offices and even picketed the CEO's houses.. it made national news.
I think the whip lash here is along the same lines that as it relates to wholesaling in IL or Chicago specific its dominated in certain areas. Like subprime was.. and the person way up in the thread from CO that sited the seller selling a home that was wholesaled twice for 150k more than she got.. / or they got.. These issues come to light politicians get into it and boom you have dodd frank all over again..
And as one of the attorneys that is from Chicago stated and its that way in Oregon they chase down complaints .. And I think as he stated what your going to see is the bigger wholesale players have far to much invested in their business's to simply not get a license.. they can buy their own company they can run without E and O if they wish.. I did for years.. And then Brokers / agents educating their buyers and sellers and that's were you probably get the complaints coming from.. As one who has worked in Chicago though from my personal experience you get into their system and its pretty rough stuff.

I've sold 3 or 4 properties to people who obtained NACA loans. One was to a buyer, represented by a broker, and unsolicited. That was about 8-9 years ago. The buyer paid the broker's commission and I sold at the (then) current appraised value.
I think you can always go to extremes. Deregulate by industry and end up with Enron and Lehman Brothers type catastrophic events. Regulate too far and you interfere with commerce. The bill, as written, will result (as IDed by Bob formerly at IDFPR) in selective enforcement of some aspects of law and/or REC policy. To me that's bad public policy. That's why I posted what I did.
If the goal is to avoid "ripping people off" then the state could require that transactions executed by unlicensed parties obtain fair market value of a property by using some method of appraisal or CMA-type value. Many other states do that. The NC Home Foreclosure Rescue Scam legislation requires a buyer (rescue agent) present an appraisal and an offer of at least 50% of FMV.
But I think the bill's goal was established or heavily influenced by NAR, and that's why this legislation appears the way it is. If you are NAR, then the regulatory structure is the answer with no exceptions. It's mot the answer I endorse... but I'm not in IL, a state where all three counties I checked charge the public for public access to public documents.
OR WA and CA passed the same foreclosure rescue laws.. that was the bulk of my business pre 07 when the law took affect it came in even before the big ole crash.. so we stopped.. the penalties are criminal. part of that was from the guys in Florida charging 1k and we solve the problem and they never did a thing and people lost their homes thinking this company was fixing it.. I bought many at court house steps from folks when I showed up that were shocked.. those guys were bad actors all the way.. I sold some through NACA as well interesting people there at NACA.. I think another part of this is that assingments etc while always with us.. its become a full blown business model with the guru's and as such it has gotten much more attention.

Exactly. Those 3 States OR, Cali and WA are all 3 liberal badly ran states. But that's one of my biggest issues is these gurus 97% of them are liars. more and more of them keep popping up. "This guy has built a 100 million dollar business flipping and or wholesaling houses" I laugh and immediately walk out if I'm at a REIA meeting or a event that says that. I went to one of the....Actually probably the biggest guru here in Chicago when I didn't know anything and there were hundreds of people there at that event. Then it occurred to me. How are all these people going be doing the same exact thing. Going after the same houses. In the same areas. Marketing the same way..... Then he mentioned that inventory is never a problem and deals are plentiful. No matter what. Even though I was brand new. I still have common sense and basic knowledge of economics. Sure enough. Years laters I see now how these gurus mix in lies with the truth and get people hooked. Lol quite funny once I think about it. Especially now knowing what I know about the industry itself and how people are. Everyone screws everyone along the lines within this industry. Don't Trust anyone all the way and always verify. It's like you have to cover all of your own bases.

Anyway. The truly greats in anything will always find ways to continue to be successful. This is just a bump in the road for me. Will adjust and continue being successful within the industry.

1 Reply
Chris Martin
Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
7y
Originally posted by @Elbert D.:
Originally posted by @Jay Hinrichs:
Originally posted by @Chris Martin:
Originally posted by @Jay Hinrichs:
Originally posted by @Chris Martin:
Lots of people are missing the point.
The law doesn't say everyone must get a license. The IL law defines, or maybe a better way to put it is the law now more clearly refines, the definition of what "broker" means.
Many state RECs frown upon "self dealing" because it has proven to be problematic. And (brokers can correct me if not) some E&O policies have clauses relating to self dealing coverage. The reality is that investor transactions make up a small part of real estate brokerage transactions, yet account for a big part of brokerage violations. In a similar way that's partly why, for instance, OO loan have better terms. NOO default rates are higher.
This is America, but I need a license to fly an airplane, a license to drive a car, a different license to drive a tractor trailer, etc. I don't need to get a CDL to receive or send a package, I just use a service where the drivers have a CDL.
Chris to me this has some similarities with sub prime whip lash.. Not sure if you know of or recall NACA they are still in operation. Their make narrative was that subprime was aimed at certain segment of the borrowing public. They went on to have rallies and demonstrations at this big companies offices and even picketed the CEO's houses.. it made national news.
I think the whip lash here is along the same lines that as it relates to wholesaling in IL or Chicago specific its dominated in certain areas. Like subprime was.. and the person way up in the thread from CO that sited the seller selling a home that was wholesaled twice for 150k more than she got.. / or they got.. These issues come to light politicians get into it and boom you have dodd frank all over again..
And as one of the attorneys that is from Chicago stated and its that way in Oregon they chase down complaints .. And I think as he stated what your going to see is the bigger wholesale players have far to much invested in their business's to simply not get a license.. they can buy their own company they can run without E and O if they wish.. I did for years.. And then Brokers / agents educating their buyers and sellers and that's were you probably get the complaints coming from.. As one who has worked in Chicago though from my personal experience you get into their system and its pretty rough stuff.

I've sold 3 or 4 properties to people who obtained NACA loans. One was to a buyer, represented by a broker, and unsolicited. That was about 8-9 years ago. The buyer paid the broker's commission and I sold at the (then) current appraised value.
I think you can always go to extremes. Deregulate by industry and end up with Enron and Lehman Brothers type catastrophic events. Regulate too far and you interfere with commerce. The bill, as written, will result (as IDed by Bob formerly at IDFPR) in selective enforcement of some aspects of law and/or REC policy. To me that's bad public policy. That's why I posted what I did.
If the goal is to avoid "ripping people off" then the state could require that transactions executed by unlicensed parties obtain fair market value of a property by using some method of appraisal or CMA-type value. Many other states do that. The NC Home Foreclosure Rescue Scam legislation requires a buyer (rescue agent) present an appraisal and an offer of at least 50% of FMV.
But I think the bill's goal was established or heavily influenced by NAR, and that's why this legislation appears the way it is. If you are NAR, then the regulatory structure is the answer with no exceptions. It's mot the answer I endorse... but I'm not in IL, a state where all three counties I checked charge the public for public access to public documents.
OR WA and CA passed the same foreclosure rescue laws.. that was the bulk of my business pre 07 when the law took affect it came in even before the big ole crash.. so we stopped.. the penalties are criminal. part of that was from the guys in Florida charging 1k and we solve the problem and they never did a thing and people lost their homes thinking this company was fixing it.. I bought many at court house steps from folks when I showed up that were shocked.. those guys were bad actors all the way.. I sold some through NACA as well interesting people there at NACA.. I think another part of this is that assingments etc while always with us.. its become a full blown business model with the guru's and as such it has gotten much more attention.

Exactly. Those 3 States OR, Cali and WA are all 3 liberal badly ran states. But that's one of my biggest issues is these gurus 97% of them are liars. more and more of them keep popping up. "This guy has built a 100 million dollar business flipping and or wholesaling houses" I laugh and immediately walk out if I'm at a REIA meeting or a event that says that. I went to one of the....Actually probably the biggest guru here in Chicago when I didn't know anything and there were hundreds of people there at that event. Then it occurred to me. How are all these people going be doing the same exact thing. Going after the same houses. In the same areas. Marketing the same way..... Then he mentioned that inventory is never a problem and deals are plentiful. No matter what. Even though I was brand new. I still have common sense and basic knowledge of economics. Sure enough. Years laters I see now how these gurus mix in lies with the truth and get people hooked. Lol quite funny once I think about it. Especially now knowing what I know about the industry itself and how people are. Everyone screws everyone along the lines within this industry. Don't Trust anyone all the way and always verify. It's like you have to cover all of your own bases.

Anyway. The truly greats in anything will always find ways to continue to be successful. This is just a bump in the road for me. Will adjust and continue being successful within the industry.

Reality check. CA, WA, OR - all top 10 in per capita GDP. CA is largest GDP by state of any... by far.

0 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
7y
Originally posted by @Elbert D.:
Originally posted by @Jay Hinrichs:
Originally posted by @Chris Martin:
Originally posted by @Jay Hinrichs:
Originally posted by @Chris Martin:
Lots of people are missing the point.
The law doesn't say everyone must get a license. The IL law defines, or maybe a better way to put it is the law now more clearly refines, the definition of what "broker" means.
Many state RECs frown upon "self dealing" because it has proven to be problematic. And (brokers can correct me if not) some E&O policies have clauses relating to self dealing coverage. The reality is that investor transactions make up a small part of real estate brokerage transactions, yet account for a big part of brokerage violations. In a similar way that's partly why, for instance, OO loan have better terms. NOO default rates are higher.
This is America, but I need a license to fly an airplane, a license to drive a car, a different license to drive a tractor trailer, etc. I don't need to get a CDL to receive or send a package, I just use a service where the drivers have a CDL.
Chris to me this has some similarities with sub prime whip lash.. Not sure if you know of or recall NACA they are still in operation. Their make narrative was that subprime was aimed at certain segment of the borrowing public. They went on to have rallies and demonstrations at this big companies offices and even picketed the CEO's houses.. it made national news.
I think the whip lash here is along the same lines that as it relates to wholesaling in IL or Chicago specific its dominated in certain areas. Like subprime was.. and the person way up in the thread from CO that sited the seller selling a home that was wholesaled twice for 150k more than she got.. / or they got.. These issues come to light politicians get into it and boom you have dodd frank all over again..
And as one of the attorneys that is from Chicago stated and its that way in Oregon they chase down complaints .. And I think as he stated what your going to see is the bigger wholesale players have far to much invested in their business's to simply not get a license.. they can buy their own company they can run without E and O if they wish.. I did for years.. And then Brokers / agents educating their buyers and sellers and that's were you probably get the complaints coming from.. As one who has worked in Chicago though from my personal experience you get into their system and its pretty rough stuff.

I've sold 3 or 4 properties to people who obtained NACA loans. One was to a buyer, represented by a broker, and unsolicited. That was about 8-9 years ago. The buyer paid the broker's commission and I sold at the (then) current appraised value.
I think you can always go to extremes. Deregulate by industry and end up with Enron and Lehman Brothers type catastrophic events. Regulate too far and you interfere with commerce. The bill, as written, will result (as IDed by Bob formerly at IDFPR) in selective enforcement of some aspects of law and/or REC policy. To me that's bad public policy. That's why I posted what I did.
If the goal is to avoid "ripping people off" then the state could require that transactions executed by unlicensed parties obtain fair market value of a property by using some method of appraisal or CMA-type value. Many other states do that. The NC Home Foreclosure Rescue Scam legislation requires a buyer (rescue agent) present an appraisal and an offer of at least 50% of FMV.
But I think the bill's goal was established or heavily influenced by NAR, and that's why this legislation appears the way it is. If you are NAR, then the regulatory structure is the answer with no exceptions. It's mot the answer I endorse... but I'm not in IL, a state where all three counties I checked charge the public for public access to public documents.
OR WA and CA passed the same foreclosure rescue laws.. that was the bulk of my business pre 07 when the law took affect it came in even before the big ole crash.. so we stopped.. the penalties are criminal. part of that was from the guys in Florida charging 1k and we solve the problem and they never did a thing and people lost their homes thinking this company was fixing it.. I bought many at court house steps from folks when I showed up that were shocked.. those guys were bad actors all the way.. I sold some through NACA as well interesting people there at NACA.. I think another part of this is that assingments etc while always with us.. its become a full blown business model with the guru's and as such it has gotten much more attention.

Exactly. Those 3 States OR, Cali and WA are all 3 liberal badly ran states. But that's one of my biggest issues is these gurus 97% of them are liars. more and more of them keep popping up. "This guy has built a 100 million dollar business flipping and or wholesaling houses" I laugh and immediately walk out if I'm at a REIA meeting or a event that says that. I went to one of the....Actually probably the biggest guru here in Chicago when I didn't know anything and there were hundreds of people there at that event. Then it occurred to me. How are all these people going be doing the same exact thing. Going after the same houses. In the same areas. Marketing the same way..... Then he mentioned that inventory is never a problem and deals are plentiful. No matter what. Even though I was brand new. I still have common sense and basic knowledge of economics. Sure enough. Years laters I see now how these gurus mix in lies with the truth and get people hooked. Lol quite funny once I think about it. Especially now knowing what I know about the industry itself and how people are. Everyone screws everyone along the lines within this industry. Don't Trust anyone all the way and always verify. It's like you have to cover all of your own bases.

Anyway. The truly greats in anything will always find ways to continue to be successful. This is just a bump in the road for me. Will adjust and continue being successful within the industry.

Yup exactly if every student of BP Gurus the world wide and others jumped into real estate there would be very little opportunity its totally market specific.. I mean you take Portland.. this city basically has NO hood homes in the so called hood sell for 300 a foot not 30.. and lots are worth 150 to 300k each no matter were they are in the city. you take other cities and lots are worthless many times and areas are in bad state of decline and values of existing properties are measured in the teens per foot .. I mean it just is what it is.

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1 Reply
Elbert D.
Real Estate Entrepreneur / Investor · Chicago, IL · Member since 2016 · 688 posts · 367 votes
7y
@Chris Martin I guess that’s why people in those states are thriving right? A simple google search will explain and show how Cali is not in a good stance economically. Also there are many many West coast investors who have bought properties in the Midwest due to the high cost of living in those states. So that’s the actual reality check.
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