Tax, Legal Issues, Contracts, Self-Directed IRA

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Corey Reyment
  • Wholesaler
  • Green Bay, WI
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Can I sell someone else's house for them legally w/o a license?

Corey Reyment
  • Wholesaler
  • Green Bay, WI
Posted Jul 21 2017, 12:57

We do some flips and wholesale's and so far have had a lot of success just posting on Facebook and in Facebook groups. We were recently approached by another investor friend who is not big on his following with Facebook and asked if we would try to sell his property for him. 

He would pay us a commission if we could bring him a buyer. We are posting it and taking people through it right now but we will not be involved in any of the purchase agreements or negotiations. We have another seller who contacted us looking to see if we could do the same thing. Before we start talking about this option for potential sellers, is this even legal if someone doesnt have their real estate license? 

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Carolyn Ward
  • Albuquerque, NM
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Carolyn Ward
  • Albuquerque, NM
Replied Jul 22 2017, 16:13

Oops, I misspoke.  It's a 4th degree felony and the fine is $500 and prison is 6 months.  But, the commission can also impose a civil penalty of up to $1,000 and/or the amount of the commission the person received up to $5,000, and put it in the Real estate recovery fund.  This is true for sales, and for management of rental properties for a fee as well.

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John Thedford
  • Real Estate Broker
  • Naples, FL
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John Thedford
  • Real Estate Broker
  • Naples, FL
Replied Jul 22 2017, 16:31
Originally posted by @Rob Haines:

In the case you described you are only being paid to advertise, send leads to the seller, and when one of your leads results in a sale you get paid; you are not being paid to draw up contracts and act act a commissioned salesperson with prospective buyers. If you position the agreement as purchasing ad labor, likely yes you can advertise it legally as a sole proprietor. Essentially you are simply a freelance marketer.

That is brokering and illegal unless licensed. 

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Jennie O.
  • Greer, SC
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Jennie O.
  • Greer, SC
Replied Jul 22 2017, 17:59

Thank you Ned for getting back to me. I am in the State of SC, No I am not quite ready, however, I have been researching for approximately a year now and I am interested in learning more about wholesaling before putting myself in that position. I just found out that it is legal. 

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William Carr
  • Baytown, TX
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William Carr
  • Baytown, TX
Replied Jul 22 2017, 21:43

Ned Carey So could he not get the property under contract find a buyer and than use the assignment fee as his form of compensation?

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Ned Carey
  • Investor
  • Baltimore, MD
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Ned Carey
  • Investor
  • Baltimore, MD
ModeratorReplied Jul 22 2017, 22:16

@William Carr potentially yes he could. However in FL and perhaps a couple of other states that could be construed as illegal. If he were to settle on the property and then resell it, that I believe to be legal in all 50 states. 

@Jennie O. if you haven't found it yet you might want to read the free wholesaling guide under the education tab above

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Rob Haines
  • Rental Property Investor
  • Windermere, FL
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Rob Haines
  • Rental Property Investor
  • Windermere, FL
Replied Jul 23 2017, 10:07

If it were illegal to sell marketed leads, every SEM, billboard and Yellow Pages firm in the country would be breaking the law.

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Sam Shueh
  • Real Estate Agent
  • Cupertino, CA
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Sam Shueh
  • Real Estate Agent
  • Cupertino, CA
Replied Jul 23 2017, 11:15

If CA one can receive a "gift" but never can receive a referral fee. IRS wants to know, your local tax agency want to see 1099 on referrals you can not initiate unless you are a RE broker not just an agent.

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