I was talking to a realtor who has cash buyer clients and he was telling me how wholesaling isn't an officially recognized real estate practice in the "real estate" industry.
It could be considered an illegal practice because it's doing real estate without a license.
Can someone help me understand this?
I have read a lot of stupid and uninformed anwers here but that is to be expected. First of all no one is saying everything is illegal as far as a seasoned licensed agent is concerned. Now the big but, laws for licensing were passed to protect the public and many times investors cross the line into licensed activity and as far as I'm concerned if you get nailed good.
I was an investor for ten years before I got a license so my first love is investing and being a broker was intended to aid my investing. But lines get crossed by investors. For example if you find a buyer first and tell them you will find them a property
you are acting as a agent, you are not a principle in any deal at this point, you are no different then a agent trying to locate a property for a buyer. Plus it can go even further if the buyer thinks you are acting in a agency capacity for them. It doesn't matter what you think, it only matters what the buyer thinks and it is called implied agency. The only reason you don't hear more about this is because the average person has no clue, but when that person seeks a lawyer for some reason you won't like the consequences. There are other lines we cross but I will stop here.
@Richard C. Where does she live and is she motivated? Give her my number.
I have much respect for folks who are experts in their profession. Expert Real Estate agents are a wholesaler's best kept secret and vice versa. Be sure to provide value to everyone you do business with. A good real estate agent can get you comps and in return you can give them listings that are easy sales on the MLS.
This business is networking. Give and take, not take and take.
The real estate agents who think wholesaling is illegal are not lawyers, are not educated, and are not experts.
Hey Rob,
You're gonna find that a lot of real estate agents are idiots. Plain and simple. And this is coming from someone who has been an agent and just recently became a broker. For some reason, its just a job that attracts the dodos.
Wholesaling is not illegal. An attorney may correct me on this, but the reason its not illegal is because you're making yourself a party to the contract and then assigning your contract. Or closing your contract and then immediately selling the property to someone else, as in a double closing.
Unlicensed practice of real estate has more to do with finding a buyer for a seller for a fee. You're not actually a party to the transaction in that case.
Unethical? It can be, depending on how you go about it. I believe that as long as you disclose and don't try to hide things from the seller its completely ethical. They have a problem and you're solving it for them.
I was listening to the BiggerPockets Podcast today and one of the guests was talking about how he tells the sellers that either himself or one of his partners will be purchasing the property. That's an easy way of communicating to the seller what you're doing without having them get upset over an assignment of the contract.
Good luck man!
Speaking as a "comically offended" Broker/Investor, I wouldn't say a "lot of agents are idiots." That's actually pretty demeaning, not to mention disempowering. The same could be said of wholesalers.
The real truth, if you want to know it, is it is a lack of clear communication.
Agents tell you that "wholesaling is illegal" because 9 times out of 10 the way the "newbie" investor will describe wholesaling is in fact "illegal, unlicensed activity".
Instead of saying you "flip houses" by "putting homes under contract and then finding a buyer prior to close" which is typically taught by most gurus out there... INSTEAD...
Say that you are "assigning your interest" in the contract if your intent is to assign. Most Realtors® were taught about assignments shortly after lunchtime so its a bit fuzzy. You may have to remind us specifically as to what that is (to counter the idiot in us all).
If your intent is to truly "flip" via double close, transactional funding, etc. then cool. Just be open about it.
I think however, it's not a matter of Realtors® being "idiots" or wholesalers being "lowballers". To get your deal through, think smart. Communicate.
Have a POWERFUL sales day!
Your Investing Realtor®