Interacting with agents
Reading through the forums I came across a post by a new wholesaler in Maryland. She had sent out yellow letters and gotten a response from a realtor who was representing the homeowner and she wanted advice on how to proceed. One of the people responding pointed out that she should be sure she knew wholesale laws for her state before speaking with a realtor. He stated that If her intent was to make an "offer to buy your house for cash" and the truth was that she planned to wholesale it off to someone else, the realtor might catch this, and if illegal, might be inclined to turn her in to the local agency that controls. Is this something that I should be concerned about in California? Where would be a good start to become educated on the laws regarding wholesaling in California?
In some states the Real Estate Licensure laws have been changed to address the issue of wholesaling because in a lot of cases wholesalers do not know what they are doing. The Real estate commissions in a number of states have tried to address this issue because wholesalers will try to sell they property and get a commission. This is obviously illegal because selling real estate for some on else and receiving a commission is not legal unless are are appropriately licensed broker or agent with a real estate company. Having said that there is nothing that prevents you from wholesaling a property if you are not miss-representing what you are doing and making false promises to the seller. A lot of time people who are wholesaling deals have not idea what they are doing and get themselves in a pickle. Most I believe have the right intention yet because of lack of knowledge and expertise mess up the deal and make promises to the seller and cannot follow through. Then it becomes a non performance issue because they may have gotten themselves in a contract and the seller feels misled. You can reach out and ask to speak to the legal council at the Real Estate Commission In California. My suggestion is that you do not say you are wholesaling. I would ask the legal council at the real estate commission - if you get a property under contract do you have the right to sell your interest in the contract and receive compensation for your interest.
If you just say can I wholesale a lot of real estate professionals do not understand what you are really saying and will shut your question down by saying NO as a first reaction with out thinking. Aleix McGee happens to be a seasoned real estate investor in Sacramento, CA. I would suggest you reach out her and she should be able to help you since she is in your state.
Best of luck.
@Calvin Rankin Welcome! This site is a great resource for researching "Wholesaling in California" and nationwide wholesaling for that matter. Being honest and upfront is the only way to go. Nothing should be a gimmick or misleading. This is non negotiable or you could have some problems. You should also research "Double Close" or "Double Closing" to help understand wholesaling and protecting yourself. Good luck and keep us posted.
Much like the others, just be upfront and prepared to explain to the agent what it is exactly you're doing. They may need a little hand holding if they've never done it. Be ready to educate, you may find a new resource in that rookie agent.
@Dylan Vargas @John King I'm sorry for the long delay in replying. Some urgent matters came up that I had to take care of but I'm back in the saddle again. :-) Thank you all for the advice. I'm getting comfortable with the idea that being up front with everyone about what I'm doing is that best and easiest policy. That fits my personality type as well since I'm not one to shy away from things. Thanks!
With wholesaling, if you market incorrectly and fail to disclose certain things, you could run afoul of the Business and Professions code that requires you to have a license to market properties to buyers. If you are interested in getting into wholesaling, you should discuss your plan with a wholesale-savvy attorney and get informed on how to do so in such a way as to mitigate risks of violating the B&P code as much as possible.
Also, legalities aside, soliciting to anyone that already has an agent listing their house for sale is basically asking their agent to file a complaint against you for practicing without a license. So..... Yeah, don't ever do that.