Wholesaling- Illegal or Legal in Jersey

Buying & Selling Real Estate
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Wholesaling- Illegal or Legal in Jersey

Dan Bottiglieri
Central Jersey · Member since 2020 · 18 posts · 2 votes

Is wholesaling real estate illegal in New Jersey? I understand that Jersey is a bit more strict than other states when it comes to real estate laws and I'd love some insight on the topic!

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  • Steve Morris
    Real Estate Broker · Portland, OR · Member since 2019 · 4k+ posts · 2k+ votes
    5y

    0.26 sec on Google:

    REGULATIONS FOR THE NEW JERSEY REAL ESTATE COMMISSION Page 84

    11:5-6.2



    (f) No licensed individual, partnership, firm or corporation shall enter into a “net listing” contract for the sale of real property, or any interest therein. A “net listing” is defined as an agency agreement in which a prospective seller lists real estate for sale with an authorization to a broker to sell at a specified net dollar return to the seller, and which provides that the broker may retain as commission the difference between the specified dollar return to the seller and the actual sales price.

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  • Jonathan GreeneBusiness Member
    Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
    5y

    You can do it if you are unlicensed. It's not illegal in NJ. Plenty of agents to do modified versions of it, but most would be in violation for the rule @Steve Morris cited.

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  • Natalie Schanne
    Real Estate Agent · Princeton, NJ · Member since 2016 · 1k+ posts · 1k+ votes
    5y

    @Dan Bottiglieri - I’m not a lawyer. SJREIA has an excellent central Jersey based wholesaling networking group led by @Steve Chatto so look into joining it if you haven’t already. There are also several excellent free Facebook groups - Brandon Israel leads one.

    If you want to wholesale without wholesaling, you can always Double Close with transaction funding in which case you are selling a property you just purchased, even if it is 5 minutes ago. This is common for wholesaling foreclosures / reos in New Jersey. Additionally, you could go under contract to buy a property as an LLC and sell the LLC and all its interests to someone else before closing. Making an LLC costs about $125 in New Jersey.

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  • Steve Morris
    Real Estate Broker · Portland, OR · Member since 2019 · 4k+ posts · 2k+ votes
    5y
    Originally posted by @Natalie Schanne:

    If you want to wholesale without wholesaling, you can always Double Close with transaction funding in which case you are selling a property you just purchased, even if it is 5 minutes ago. 

    Slight quibble, they NEVER purchased the property, as in taking title and transferring their own funds.  The double close is a ruse to make sure the seller doesn't know what the true buyer is paying.  

    They could do the same in a single escrow, but that would be "uncomfortable" to explain to the seller.

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  • Steve Morris
    Real Estate Broker · Portland, OR · Member since 2019 · 4k+ posts · 2k+ votes
    5y
    Originally posted by @Jonathan Greene:

    You can do it if you are unlicensed. 

    Pretty sure arranging the sale of real estate without licensing in expectation of a fee/skim is not legal anywhere unless you're a principal (actual owner and true buyer), atty or bank.  

    That happens the moment he doesn't take title and then takes money from a buyer for a property and doesn't give 100% to a seller without a listing agreement.

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