West Chester, PA · Member since 2013 · 15 posts · 1 vote
Hello friends,
Being in the mortgage business for the past 4 as well as being a property manager i have established a pretty good relationship with a good amount of realtors. I have been calling around and telling them that i am looking to get into wholesaling homes and for the most part all of them have been telling me that they think that i need a license to do this. Could someone please explain to me why i do not need a license to do this? because i kind of feel like i should need one also...
I have been wanting to get my realtors licens anyway so i am sure that i will get it at some point but in the mean time I am not real turned on by testing my luck... am i good to go?....
Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
13y
Andrew: what's your definition of wholesaling? What is it you want to do exactly? Of course you don't need a license to buy a property and re-sell it. Assignments of contract are legal and are done every day. Double closings, while legal if you are a principal and if they are done with the right paperwork, can cause confusion. Agents get confused (as do the realtor boards, depts. of RE and DAs and AGs) when you bring buyers and sellers together for profit without a license.
I haven't done an assignment or double close in many years. Why? Because I don't have to. I'd rather use lender funds (even hard money funds) and/or my own funds and close on the deal. Closing is everything. I get to control the re-sale in a way that isn't possible when you are trying to get the stars to align with a double closing. I don't have to disclose anything to the buyer or the seller about the price or the assignment or the double close. I only have to worry about one party at a time. So while I have no doubt that assignments and double closes are legal, they just aren't worth it to me.
You can read about wholesaling endlessly here at BP. Lots of opinions, lots of spewing (unfortunately) but not a lot of case law. Read and think. Consult with an attorney. And then proceed!
Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
13y
Andrew: what's your definition of wholesaling? What is it you want to do exactly? Of course you don't need a license to buy a property and re-sell it. Assignments of contract are legal and are done every day. Double closings, while legal if you are a principal and if they are done with the right paperwork, can cause confusion. Agents get confused (as do the realtor boards, depts. of RE and DAs and AGs) when you bring buyers and sellers together for profit without a license.
I haven't done an assignment or double close in many years. Why? Because I don't have to. I'd rather use lender funds (even hard money funds) and/or my own funds and close on the deal. Closing is everything. I get to control the re-sale in a way that isn't possible when you are trying to get the stars to align with a double closing. I don't have to disclose anything to the buyer or the seller about the price or the assignment or the double close. I only have to worry about one party at a time. So while I have no doubt that assignments and double closes are legal, they just aren't worth it to me.
You can read about wholesaling endlessly here at BP. Lots of opinions, lots of spewing (unfortunately) but not a lot of case law. Read and think. Consult with an attorney. And then proceed!
West Chester, PA · Member since 2013 · 15 posts · 1 vote
13y
Thank you both very much, if anything i would have thought a double closing would be easier to do legaly... as I would be golding the title for all of about 5 min or so which also would be equitable interest also i suppose if i put an earnest money deposit down... so i guess i kind of answered my own question so thanks for the assistance!!
Real Estate Investor · Aurora, CO · Member since 2009 · 155 posts · 60 votes
13y
I've done 8 double closings this year so far. Not hard to do.
Find the deal, find the buyer, have a good line if communication with your Title Company or Attorney. It's really very simple. Think of them as two separate transactions, which they are and coordinate them properly. No problema.
Rental Property Investor · Palm Bay, FL · Member since 2009 · 511 posts · 290 votes
13y
Find a closing company that is investor friendly and understands wholesaling and you can double close all day long with no problems. They are out there you just need to search.
I too was told many times I needed a license...I was confused, even fearful for the longest time, until one day it just clicked and I understood...I am actually BUYING the house, and then just reselling it the same day....so why would I need a license to BUY a house..?
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
13y
Originally posted by Kyle Weimer:
If you have equitable interest in a property (signed contracf and earnest money) you can legally market the property without being licensed.
I guess this site is just a place for you to get your giggles off. .....
You can not advertise RE as an owner just because you have a contract, that is wrong. You must disclose your offer is subject to a pending sale or specifiy that you are not offering good title in some manner as you fail to have the BUNDLE OF RIGHTS, the power to sell with good title......
Investor · Southeast, MI · Member since 2012 · 2k+ posts · 1k+ votes
13y
Check the laws of your state. In my state, you need a license if you sell more than five houses in a year or if you spend more than 15 hours per week working in real estate.
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
13y
Sorry, got side tracked by a jokester.
If you are a mortgage lender, the best way to kill your business is to get a license and compete with those who drag thier buyer in to you!
You end up with more info than the Realtors get, that would be like Realtors opening up thier past sales files to let another Realtor to forge through looking for future sale opportunities....that's dumb!
Choose one area or the other. You can do deals, just don't solicit the deals through your Realtor customers! :)
If you *intend* to tie something up and sell the contract you're really just doing a listing and this requires a license.
If you *intend* to shop something you're capable of buying and performing on yourself then this is a different matter altogether.
There is a comment in the thread above about this being a religious war. This comment is very apt and I am sure that there is a better than 50% chance that this thread will mushroom into name calling, strongly held beliefs, and all manner of red herrings.
The truth is that substance rules over form. If you INTEND to tie something up and sell it you are functioning as a broker and not a principal. Whether or not you'll ever have much to risk using the techniques espoused by wholesalers depends on many factors:
1. How much you're worth
2. How you operate; specifically how you operate with your seller
3. Your state and the politics in your state
4. What you put in writing and how you use your contracts
5. Probably 10+ other things
So....what is it that you're INTENDING (there's that word again) to do?
West Chester, PA · Member since 2013 · 15 posts · 1 vote
13y
Bill, the reasoning behind me getting my RE License would mostly be to have access to all of the newest listings but more so than that would be for me to have access to the MLS to find comps. This would also be extremely useful for me working as a MLO for a broker. we are not aloud to choose our appraisers unless you are a Banker and have a warehouse line to fund from, they are selected out of a Pool and sometimes they are not even from the area and have no idea about the local RE market...it would help both the buyer, seller and me as the LO.
Just a very useful tool to have for someone in the RE industry
West Chester, PA · Member since 2013 · 15 posts · 1 vote
13y
Interesting Bryan.- I suppose what i am "intending" is to assign the contract to somone else more capable of purchasing the property (hopefully that will change in the near future and i will be in the buyers seat). so i have no intentions of taking ownership of that property with my own money at least. so what you are saying is that i WOULD in fact need to get a RE license...Correct?
At the same time however, when the agreement of sale is written, from the start, I am incorporating "Andrew Mazzenga, Or Assigned" into the contract. so doesn't that imply (from a legal standpoint that i "intended" to never hold the property in my own name or with my own money from the start?
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
13y
Originally posted by Andrew Mazzenga:
Bill, the reasoning behind me getting my RE License would mostly be to have access to all of the newest listings but more so than that would be for me to have access to the MLS to find comps. This would also be extremely useful for me working as a MLO for a broker. we are not aloud to choose our appraisers unless you are a Banker and have a warehouse line to fund from, they are selected out of a Pool and sometimes they are not even from the area and have no idea about the local RE market...it would help both the buyer, seller and me as the LO.
Just a very useful tool to have for someone in the RE industry
Think about the obvious. If you call the MLS office, you can become an affiliate member, just as appraisers are and get MLS access as you want the information to for collateral reviews of loans you made in the past. That was my excuse. Good luck... :)
Bryan, good post!
Kyle, didn't say you cant sell, said you can't offer title unless you disclose that your offer is subject to you obtaining good title in some manner, there is a difference.
In RE, it's the little things that can get you in trouble. Attention to detail! :)
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
12y
Affiliate members to a Board of Realtors are professionals in related areas in RE, appraisers, banks/lenders, title companies, surveyors, engineers or those as deemed appropriate by that board. "Investors" won't cut it, they are the general public.....buyers and sellers. :)
House Flipper · East Stroudsburg, PA · Member since 2013 · 1k+ posts · 205 votes
12y
I would shop for a Title Company that has experience in double closings and search for a Realtor, who is not in competition with you. Have the Realtor keep you posted on listings that meet your criteria and now you have Team Players. If you wish to become a Realtor, that's a different matter with rules, restrictions and disclosure requirements. You have options and it is good that you are exploring them. Just another opinion.
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
12y
I think a team approach is fine, select reputable and ethical players.
Asking for and suggesting "Investor Friendly" team players is code for unethical or for those who may operate outside of the regulatory structure or such....someone who may be willing to look the other way.
If that's the way an investor deals, good luck, they won't be in it for the long haul.
If something is acceptable and lawful, then any professional in any aspect will work with you, it's not them that have a problem, it's your guru strategy and attitude in business.
This is not directed at any one poster but a general statement from the various posts giving the flavor to the topic. :)
Investor · Arlington, TX · Member since 2013 · 27 posts · 1 vote
12y
@bill gulley. Sometimes wanting an investor friendly person on your team has NOTHING to do with trying to bend the laws or regulations. I want an investor friendly realtor, why? because they know what kind of properties I'm looking for that have a good ARV verses an end buyer who might fret about a bad kitchen or some dirty floors. Investor friendly title agents are the ones who understand that as an investor your closings might sometimes be a little more complicated than an end buyer. I cant over emphasize the neccesity of an investor friendly bank or loan officer. They could make or break your business. Investor friendly contractors price out your repairs and suggest ways to save money cause they know youre in the business and they might get another job from you down the road verses the "jones" who just need a faucet changed every now and then
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
12y
Fred, all of your points are well covered by saying you want "professionals" involved in your deals and there won't be any confusion using "investor friendly". :)
Dallas, TX · Member since 2013 · 4k+ posts · 744 votes
12y
Check your state laws and do not rely on a realtor because they are like bankers pass and present they only have tunnel vision and cannot think outside the box because they were train that way.
Involved In Real Estate · Eden Prairie, MN · Member since 2012 · 8 posts · 2 votes
12y
This is a fantastic thread! Thanks to all of you for your input and words of wisdom. I would like to defend a select few in my profession (realtors) and say that there are some of us that can think outside the box. I have a fairly large group of investors to whom I sell. In our market, it is almost impossible to find viable options for fix-and-flip investors on the MLS. I'm putting an advertising campaign together that will allow me to act as a "facilitator" and collect a commission on what basically amounts to a wholesale transaction. I will not be able to mark it up, but everything then flows through my broker, which keeps him happy, and my team leader, so she is happy as well. This pays the bills in the short run. In the long run, I get the listings from my investors, which will enable me to be an active investor. On some of the deals, I will be able to secure owner financing and rent for cash flow. I think this would qualify as thinking outside the box.
The nuances of specific wording in contracts and "intentions" and legality are intimidating. Would it be nice to be able to pad those wholesale deals and collect a huge check? Yes. However, if I continue to pass the savings along to my investor clients, they'll continue to buy from me before anyone else. Wouldn't you agree? And this way, I stay in good standing with my firm, my Dept of Commerce, the BBB, the state, etc. Maybe most realtors can't think outside the box, but let's not put them all IN a box. Some of us legitimately want to serve our clients - big and small, and want to grow ethical, honorable, profitable businesses.
God Bless,
Ted