Are wholesalers unlicensed brokers?
Houston, TX · Member since 2014 · 100 posts · 20 votes
Are wholesalers unlicensed brokers?
Most Popular Reply
Investor · Dallas, TX · Member since 2014 · 2k+ posts · 1k+ votes
11yWith apologies to both Jay & James, both of whom I respect tremendously, I disagree in theory.
The unscrupulous wholesalers who are trying to wholesale MLS listed properties...yes, they are essentially acting as an unlicensed broker. They are NOT true wholesalers.
A real wholesaler is finding properties not listed on any MLS. They are negotiating sales prices. They are placing a sales contract on the property to lock in the negotiated price and then - in most cases - selling their right/option to buy the property at that price to someone else. They are not receiving a commission for the sale of the property. That would make them a broker. They are selling their contact. It's the same thing you do when you exchange stock options without purchasing the stock.
None of the things I described above constitutes what a broker or realtor does.
Wholesalers get a really bad wrap, because there are a lot of them who don't know what they are doing and/or don't do what they are doing ethically. I will say again, you can't wholesale an MLS listed property. By definition, that property is already listed for retail sale. If a wholesaler offers me a property that turns up with an active MLS listing, when I type the address in, it will be the last deal from them I ever bother looking at.
56 Replies
- 11yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
One is licensed by the state they work in and works under a code of ethics etc.
the other is a cowboy ! LOL
- Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes11y
Originally posted by @David Ward:
Seems like wholesalers are pretty much unlicensed brokers. Whats the difference? A broker is the middleman, is that not what a wholesaler is?
There really is not one. That is why so many on here give wholesalers so much flak. They are trying to operate as unlicensed brokers whether they realize it or not.
- Houston, TX · Member since 2014 · 100 posts · 20 votes11y
@Jay Hinrichs Makes total sense! lol
@James Wise Thanks for the reply.
- Fayetteville, NC · Member since 2014 · 43 posts · 8 votes11y
Would a wholesaler learn a lot from going ahead and getting the brokers license?
- Investor · Dallas, TX · Member since 2014 · 2k+ posts · 1k+ votes11y
With apologies to both Jay & James, both of whom I respect tremendously, I disagree in theory.
The unscrupulous wholesalers who are trying to wholesale MLS listed properties...yes, they are essentially acting as an unlicensed broker. They are NOT true wholesalers.
A real wholesaler is finding properties not listed on any MLS. They are negotiating sales prices. They are placing a sales contract on the property to lock in the negotiated price and then - in most cases - selling their right/option to buy the property at that price to someone else. They are not receiving a commission for the sale of the property. That would make them a broker. They are selling their contact. It's the same thing you do when you exchange stock options without purchasing the stock.
None of the things I described above constitutes what a broker or realtor does.
Wholesalers get a really bad wrap, because there are a lot of them who don't know what they are doing and/or don't do what they are doing ethically. I will say again, you can't wholesale an MLS listed property. By definition, that property is already listed for retail sale. If a wholesaler offers me a property that turns up with an active MLS listing, when I type the address in, it will be the last deal from them I ever bother looking at.
- Investor · Century, FL · Member since 2015 · 950 posts · 603 votes11y
Originally posted by @Hattie Dizmond:
A real wholesaler is finding properties not listed on any MLS. They are negotiating sales prices. They are placing a sales contract on the property to lock in the negotiated price and then - in most cases - selling their right/option to buy the property at that price to someone else. They are not receiving a commission for the sale of the property.
There you are - the word "negotiating".
Once you negotiate anything (or at least in the many states mentioned in previous threads), you are brokering a deal.
All the state statutues I'm reading, although they are defining "commission" they are also defining any sort of reward in the function of a sale of a property as being covered under brokering.
- 11yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
I would tend to agree with you if the wholesalers are getting paid regardless if the deal closes or not and not getting paid on the HUD.
IE here is this contract I want 3k for it.. cut me a check and I hand it to you and its up to you to close.
But again its all semantics what you describe if taken to task a RE commission would probably not agree with you.. if this is what you do for a living IE you never actually own any thing.
Its pretty clear in the laws that its the intent.. If your in business with the intention of making a profit commission proceeds from selling a contract etc. on a real property you do not own your brokering without a license..
Until someone has filed a complaint against you and the RE commission says your golden then its still up to how the state may view it... We are not going to settle anything on the 50 thousand watt BP big show!!! LOL
- 11yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Maybe we should just look at one of your deals and run it by the state and see what they say... that's what I would do if I was in your line of work.. and if it is OK with the state and you get a letter from them to that effect ( you know you can request a ruling on these things in writing from the state) then fine. but if its not I would want to figure out how to take title then resell as we all know as long as you own it you can resell it and you can market it.
I have always played by the I own it and have closed on it then I sell it.. not before .. but maybe that's why I never made any money flipping contracts as I never thought if I got taken to the mat with the state I would win...
- Investor · Dallas, TX · Member since 2014 · 2k+ posts · 1k+ votes11y
Which is a really odd interpretation, since a Broker doesn't negotiate a listing price. The seller sets the listing price. In fact, the Broker/Realtor doesn't really negotiate the final sales price, they simply facilitate negotiations. I would argue that's a mediation role.
In the end, my view is probably largely shaped by Texas laws, which tend to interpret narrowly, rather than broadly. In Texas, the role of the Wholesaler is NOT defined as a function in the sale of the property. Again, they are simply selling their legal right to purchase the property at an agreed upon price. If you really want to avoid any of this discussion, simply handle it as a double escrow. Then you legal take possession of the property, which you sell as your asset for an amount above your purchase price...i.e the wholesale fee. Again, in Texas, there is an action TREC form to facilitate the sell - assignment - of a contract to another buyer, which includes the listed assignment fee.
It astounds me why this would be interpreted any differently than me holding stock options on 100 shares at $100. The stock price is now at $150. I can exchange my legal right to buy 100 shares at $100 for the difference between the option price and the $150 market price, without ever executing the options. I could also straight out sell my options at a negotiated price to someone who anticipates the stock continuing to rise in value.
I guess this is one of the reasons I love living in Texas.
- Houston, TX · Member since 2014 · 100 posts · 20 votes11y
@James DeRoest So does that mean that the title companies that close these deals and attorneys that draw up the contracts are also knowingly participating in illegal activity?
@Freddy Pettiford It's not that easy. I think in Texas you have to be a real estate agent for a minimum of three years before you can even apply to be a broker.
- 11yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
I guess that answered my question if there is a RE approved form for assigning contracts that TREC has approved then there ya go. That does not exist in many states. you will not have half of BP flooding to Texas because they are getting kicked out of Ohio CA and FLA who frowns on the practice and I can flat guarantee you its not permissible in Oregon to in any way advertise a property for sale you do not own.
- Investor · Century, FL · Member since 2015 · 950 posts · 603 votes11y
Originally posted by @Hattie Dizmond:
Which is a really odd interpretation, since a Broker doesn't negotiate a listing price. The seller sets the listing price. In fact, the Broker/Realtor doesn't really negotiate the final sales price, they simply facilitate negotiations. I would argue that's a mediation role.
It doesn't matter what the negotiation is about, negotiating about the outcome of the sale of the property is taking place, and that's what the commissions will be looking at.
And I wouldn't get too happy about any position Texas is taking right now, because when Florida acts (which it will), Texas will follow (and vice versa). Florida and Texas tend to run together on many things.
- Investor · Century, FL · Member since 2015 · 950 posts · 603 votes11y
Originally posted by :
So does that mean that the title companies that close these deals and attorneys that draw up the contracts are also participating in illegal activity? knowingly?
Title companies write titles.
Lawyers write contracts.
What you do with them is your business.
Gun shop owners don't get arrested for selling the gun that was used in an armed robbery.
- Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes11y
Yes, they would learn so much that wholesaling would not be their focus at all in the real estate business, then they would know better.
There is a legal theory in law that says; One can not serve two masters, this is a basic primes of agency law. Agency can be established by specific or implied consent, when one acts in a manner that serves another party, the one serving in an act or deed can become an agent by an implied consent when the party served allows or even encourages that party to act in a way that benefits them. Specific consent is given through a contract, implied consent is established by performance of the act or deed and such performance is accepted.
A real estate broker/agent uses an agency agreement to list an owner's property, called the "listing agreement" which appoints the agent as the owner's agent in selling a property, this is a specific agency appointment.
A wholesaler uses a different kind of contract, it is not a specific agency appointment. The wholesaler uses a contract to bind the owner into selling a property. The wholesaler has no intention of buying the property but to effect a sale to a third party. The benefit to the owner is the same, be it with an agent under a specific agency appointment or using a wholesaler who employs a different contract, the owner gets their property sold. The wholesaler may be seen as an agent of the owner by the act or deed performed.
Laws are established to protect the public good, real estate is an aspect of our economy that carries a great deal of constitutional rights and traditions of individual rights for a property owner and laws are established to protect those rights.
That is why states regulate who can represent the public in real estate transactions or selling, buying or leasing the rights of an owner. States require those engaged in such transactions to hold a license.
A wholesaler doesn't have a license, it doesn't matter what contract they might use to facilitate a sale or a lease. From the stand point of acting to facilitate a transaction that ultimately benefits a property owner, it doesn't mater what interest they may have, if any at all, in a property. A wholesaler may have an interest in a contract, but they have no title interest in a property and the acts performed to facilitate an owner's interest in title.
While the wholesale gurus point out equitable interests (which are usually very limited if the exist at all) in a contract to give a wholesaler ownership of an asset to sell, the implied agency still exists by the act performed of facilitating a sale that benefits, however slightly, the property owner. The wholesaler is an unlicensed agent facilitating the sale of a property they do not own. State laws do not allow real estate transactions to be facilitated through implied agency arrangements, they must be specific and conducted by a licensee.
Hope that makes it clearer to see the relationship promoted by wholesalers and agents. :)
- 11yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
WHAT BILL SAID
- Houston, TX · Member since 2014 · 100 posts · 20 votes11y
Originally posted by @James DeRoest:
Originally posted by :
So does that mean that the title companies that close these deals and attorneys that draw up the contracts are also participating in illegal activity? knowingly?
Title companies write titles.
Lawyers write contracts.
What you do with them is your business.
Gun shop owners don't get arrested for selling the gun that was used in an armed robbery.
Touche
- Fayetteville, NC · Member since 2014 · 43 posts · 8 votes11y
@Hattie Dizmond Great explanation! Thanks for clearing that up.
- Investor · Corpus Christi, TX · Member since 2012 · 2k+ posts · 1k+ votes11y
I presume you've read ad nauseum about this very subject in other posts. I also hope by now you realize their is a difference between wholesaling a property and assigning a contract. I've never quite understood why investors believe the two are synonymous.
In Texas, it is absolutely legal to assign a contract and there are ample court cases dating back to the 1940's to support this.
Can an assignee screw up and cause a legal problem? Yes. Do licensee's do this all the time? Absolutely.
The real issues begin when someone with virtually no knowledge of real estate believes they can read a book, attend a seminar or listen to a podcast and become competent to start drafting contracts and assignment agreements....not unlike someone who always thought of being a pilot, then jumps into the cockpit of a small plane and believes they can fly because they read a book about it.
- Investor · Darien, IL · Member since 2015 · 10 posts · 16 votes11y
IS WHOLESALING ILLEGAL IN ILLINOIS?
The Real Estate License Act of 2000, 225 ILCS 454/1-1, et seq., and its accompanying
regulations, 68 Ill.Admin. Code pt. 1450, govern the business of real estate brokerage in Illinois.
The Act, as amended, defines a real estate “broker” as
an individual, partnership, limited liability company, corporation, or registered
limited liability partnership other than a real estate salesperson or leasing agent
who, whether in person or through any media or technology, for another and for
compensation, or with intention or expectation of receiving compensation, either
directly or indirectly:
(1) Sells, exchanges, purchases, rents, or leases real estate.
(2) Offers to sell, exchange, purchase, rent, or lease real estate.
(3) Negotiates, offers, attempts, or agrees to negotiate the sale, exchange,
purchase, rental, or leasing of real estate.
(4) Lists, offers, attempts, or agrees to list real estate for sale, lease, or exchange.
(5) Buys, sells, offers to buy or sell, or otherwise deals in options on real estate or
improvements thereon.
(6) Supervises the collection, offer, attempt, or agreement to collect rent for the
use of real estate.
(7) Advertises or represents himself or herself as being engaged in the business
of buying, selling, exchanging, renting, or leasing real estate.
(8) Assists or directs in procuring or referring of leads or prospects, intended to
result in the sale, exchange, lease, or rental of real estate.
(9) Assists or directs in the negotiation of any transaction intended to result in
the sale, exchange, lease, or rental of real estate.
(10) Opens real estate to the public for marketing purposes.
(11) Sells, leases, or offers for sale or lease real estate at auction. [Emphasis
added.] 225 ILCS 454/1-10.
This statutory definition of real estate “broker” is broad, All involve the actual transfer of real estate as the object of the action. Wholesaling is the sale of the contract buying real estate.
Real estate brokers must comply with the provisions of the Real Estate License Act of 2000 and its
accompanying regulations or be subject to discipline. Section 5-15(a) of the Act provides:
It is unlawful for any person, corporation, limited liability company, registered
limited liability partnership, or partnership to act as a managing broker, real estate
broker . . . or to advertise or assume to act as such broker . . . without a properly
issued sponsor card or a license issued under this Act by the Department, either
directly or through its authorized designee. 225 ILCS 454/5-15(a).
A license issued by the IDFPR certifies that the real estate broker has fulfilled all of the
requirements of licensure under the Act. 225 ILCS 454/1-10.
As of December 31, 2009, the Illinois Real Estate License Act of 2000 provides for a private
right of action when private citizens can seek to stop the unlicensed practice of real estate
brokerage. 225 ILCS 454/20-21(c).
Other than as provided in Section 5-20 of this Act, if any person practices as a real
estate broker, real estate salesperson or leasing agent or holds himself or herself out
as a licensed sponsoring broker, managing broker, real estate broker, real estate
salesperson or leasing agent under this Act without being issued a valid existing
license by the Department, then any licensed sponsoring broker, managing broker,
real estate broker, real estate salesperson, leasing agent, any interested party, or any
person injured thereby may, in addition to the Secretary, petition for relief as
provided in subsection (a) of this Section. Id.
Subsection (a) allows the Secretary of the Illinois Department of Financial and Professional
Regulation to petition for an order enjoining the violation or for an order enforcing compliance
with the Act. 225 ILCS 454/20-21(a).
The Illinois Department of Financial and Professional Regulation has regulatory oversight
over the practice of real estate brokerage. To that end, the IDFPR has authority to initiate
disciplinary proceedings against licensees for violations of the Illinois Real Estate Act of 2000.
The IDFPR may “refuse to issue or renew a license, may place on probation, suspend, or revoke
any license, reprimand, or take any other disciplinary or non-disciplinary action as the
Department may deem proper or impose a fine not to exceed $25,000 upon any licensee under
this Act . . . for any one or combination of” the grounds for discipline set forth in §20-20 of the
Act, 225 ILCS 454/20-20.
Additionally, a licensee may be subject to both civil penalties and criminal liability for the
unlicensed practice of real estate brokerage:
Any person who practices, offers to practice, attempts to practice, or holds oneself
out to practice as a real estate broker, real estate salesperson, or leasing agent
without being licensed under this Act shall, in addition to any other penalty
provided by law, pay a civil penalty to the Department in an amount not to exceed
$25,000 for each offense as determined by the Department. 225 ILCS 454/20-10(a).
Any person who is found working or acting as a managing broker, real estate
broker, real estate salesperson, or leasing agent or holding himself or herself out as
a licensed sponsoring broker, managing broker, real estate broker, real estate
salesperson, or leasing agent without being issued a valid existing license is guilty of
a Class A misdemeanor and on conviction of a second or subsequent offense the
violator shall be guilty of a Class 4 felony. 225 ILCS 454/20-22.
It is a fundamental principle under Illinois law that parties can agree to any terms, and can contract in any situation, as long as there is no legal prohibition or public policy that dictates otherwise.
Contracts for the sale of lands, tenements, or hereditaments or any interest in or concerning them for a term longer than one year must be in writing to satisfy the Frauds Act. The contract must be signed by the party obligated by it or by some other person whom that party has lawfully authorized in writing. Further, the writing must contain a description of the property and the terms of sale, including the price and manner of payment. Although the Frauds Act requires that any contract for the sale of land be in writing, it contains no such requirement with regard to real estate brokers’ contracts of employment or the commissions derived from them. A brokerage contract may be oral, and the law applicable to ordinary contracts governs. A lease for a term of more than one year must be in writing and, at a minimum, contain the names of the parties, a description of the leased property, the amount of the rent, and the term of the lease.
Illinois courts have adopted the definition of “assignment” which is:
An assignment of a right is a manifestation of the assignor’s intention to transfer it by virtue of which the assignor’s right to performance by the obligor is extinguished in whole or in part and the assignee acquires a right to such performance.
If a valid assignment is effected, the assignee acquires all of the interest of the assignor in the property that is transferred. The assignee, it has been often said, is placed ‘in the shoes’ of the assignor.
Illinois law recognizes the distinction between the assignment of a right and the delegation of a duty and recognizes that an assignment can involve merely the transfer of a right. In this respect, Illinois authorities, recognize the general rule that rights under a contract are freely assignable.
As a general matter assignments are governed by contract law, and an assignment is subject to the same requisites for validity as are other contracts, such as intent, mutuality of assent, capacity to contract, legal subject matter, and consideration.
It is my opinion that wholesaling is not real estate brokerage as the real estate sale has already been consummated and only the sales contract is being sold and that valuable right is a salable commodity under Illinois law.
Attached is a list of prohibited contracts and wholesaling is not among them.
Void Contracts or Clauses Under Illinois Statutes
Contracts with the Government or Clauses in Government Contracts
A. Conflict of Interest Statutes
B. Bidder Requirements
1. Disclosure
2. Discretion of Procurement Officer
C. Collusion Among Bidders
D. Not Budgeted and Appropriated
E. Contracts Must Conform to Statutes, Ordinances, Rules, and Regulations
F. Miscellaneous Provisions
G. Acts Exempting Certain Government Actions from the Voiding Provisions
Real Estate Contracts or Leases
A. Condominium Property Act
B. Agreement for Deed or Installment Land Sales
There are two statutes that make an entire land contract voidable.
The first, the Dwelling Unit Installment Contract Act, 765 ILCS 75/0.01, et seq., requires that a contract for the sale of a “dwelling unit” state that the seller warrants that there is no notice that has been received of a dwelling code violation or, if one has been received, that a list of the notices and statements is available to the contract purchaser. 765 ILCS 75/1, 75/2. If this clause is not in the contract for sale, the buyer has the option to void the entire contract. 765 ILCS 75/2.
The second, the Sale of Residential Property Subject to Land Trust Act, 765 ILCS 430/0.01, et seq., requires that if the seller in an installment sale contract is a trust, in addition to the trust signing the contract, the names of the beneficiaries having the power of direction must be disclosed, the trustee must be named, and all must sign the contract. 765 ILCS 430/2. The buyer has the option to void the contract if this is not done. Id.
C. Clause Prohibiting or Penalizing Recording Real Estate Contract
D. Timeshare Sale Not Complying
E. Acts That Void Leases
F. Property Taxes of Alien Landlords Act
G. Undisclosed Principal and the Chicago Board of Education
H. Mortgage Rescue Fraud Act
Effective January 1, 2007, the Mortgage Rescue Fraud Act, 765 ILCS 940/1, et seq., is aimed at the persons or organizations that prey on homeowners in difficulty. It makes any agreement with a “distressed property consultant” or a “distressed property purchaser” subject to its provisions. Any waiver of the provisions of the Act is declared void. 765 ILCS 940/20.
The distressed property consultant is required to provide a written notice containing statutory provisions with a form notice of cancellation. One of the prohibitions is that the consultant cannot “[t]ake any money from you or ask you for money” until the consultant has fully performed. 765 ILCS 940/10. Similarly, a contract to convey a distressed property must be in writing (765 ILCS 940/25) and contain certain provisions (765 ILCS 940/30) and a notice about the right to cancel it (765 ILCS 940/30, 940/35, 940/40). Any waiver of §§35 and 40 is void. 765 ILCS 940/45.
Statutes Directed at Specific Businesses
A. Particular Business Rules
1. Hearing Instrument Consumer Protection Act
2. Physical Fitness Services Act
3. Dating Referral Services Act
4. Dance Studio Act
5. Illinois Fair Invention Development Standards Act
6. Illinois Loan Brokers Act of 1995
7. Illinois Securities Law of 1953
8. Credit Services Organizations Act
9. Illinois Pre-Need Cemetery Sales Act
10 Illinois Business Brokers Act of 1995
B. Miscellaneous Statutes Targeting Particular Business Transactions
1. Motor Vehicle Leasing Act
2. Illinois Equipment Fair Dealership Law
3. Consignment of Art Act
4. Construction Contract Indemnification for Negligence Act
5. Health Care Arbitration Act
6. Legal Business Solicitation Act
7. Illinois Commercial Transportation Law
8. Debt Management Service Act
9. Building and Construction Contract Act
Under the Building and Construction Contract Act, 815 ILCS 665/1, et seq., any provision in connection with a building or construction contract to be performed in Illinois that makes the contract subject to the laws of another state or requires litigation or dispute resolution in another state is void and unenforceable. 815 ILCS 665/10.
Insurance
A. Insurance Contracts
1. Workers’ Occupational Diseases Act
2. Illinois Vehicle Code; Proof of Financial Responsibility for the Future
3. Managed Care Reform and Patient Rights Act
B. Miscellaneous Provisions Pursuant to the Illinois Insurance Code
1. Public Insurance Adjusters
2. Fraternal Benefit Societies
3. Insurance Holding Company Systems
4. Urban Property Insurance
215 ILCS 5/525.4 is aimed at redlining. This particular statute provides that the insurance issued by the urban property insurance administrator may be voided if the property is held in a land trust and all the beneficial interests are not disclosed and updates are not given as changes are made. 215 ILCS 5/525.4(2).
. Employment
A. Sales Representative Act
B. Wages of Women and Minors Act
C. Minimum Wage Law
D. Illinois Educational Labor Relations Act
E. Workers’ Compensation Act
F. Burial Rights Act
G. Employment Contract Act
H. State Prohibition of Goods from Child Labor Act
. Miscellaneous
A. Barber, Cosmetology, Esthetics, Hair Braiding, and Nail Technology Act of 1985
B. Guardians for Disabled Adults
C. Uniform Commercial Code
1. Leases
2. Creditors
3. Remedies
D. Illinois Marriage and Dissolution of Marriage Act
E. Criminal Code of 1961; Gambling
F. Liquor Control Act of 1934
G. Illinois Savings and Loan Act of 1985
H. Public Utilities Act
I. Drycleaner Environmental Response Trust Fund Act
J. Medical Practice Act of 1987
- Investor · Hereford, TX · Member since 2013 · 70 posts · 5 votes11yOk so I've seen the posts about wholesaling where it's illegal and people asking if it be better to just get a lisence. I'm sure a lot of newbies are getting scared especially the ones who wanted to start wholesaling. Seems like there's hate towards wholesalers all the time..
- 11yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
its usually a short flight for the non trained pilot...
there was the case of the barefoot bandit... 17 year old kid who kept stealing planes up in Washington.. He did this multiple times and some how got it off the ground and even more remarkable landed it without crashing.. although last trip he ran out of fuel and dumped it in a swamp.
goofing around in real estate and tie up properties with no clue on how to do it is much easier and potentially not as lethal but the results are usually the same.. deal dies or crash lands.. Many times with collateral damage
- Real Estate Broker · Indianapolis, IN · Member since 2009 · 575 posts · 496 votes11y
@Bill Gulley I really have never understood why a wholesaler wouldn't just take the 2 weeks or whatever to go get there license.
There are so many benefits and so little negatives. Just having access to the MLS is worth getting a license. Plus how many deals could you dig up that weren't good for wholesaling but would be a great listing for MLS... it would allow you to do like 3 times the business a wholesaler with out a license can do.
I have had a lot of people on BP act like getting a license would be such a hassle.. and so expensive.. It really made me wonder if Indiana was particularly easy to get a license or are people just that lazy and broke?
- 11yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
too funny Lazy and Broke would answer some of it... But somewhere folks are telling them that its a risk the main reason is these wholesalers want to be able to buy as low and they can and not be worried about unconscionable profits like RE agents. So think having a RE license is bad.
the ones who think its to expensive should not be in the business at all if you can't afford 2k or so a year for your business that you own and control you should not be in the business... Nor should you be a wholesaler with no money and no means.. Its the I wanna get rich but I have no money syndrome for whatever reason ,, be it guru be it right here on BP this industry draws folks with no capital or money into it who think somehow they can get a career by starting as a wholesaler.. Maybe a bird dogger would be a more apt way to start for some.. But really this is a proud industry.. And many half to save money so they have money in the bank before they start.. just like saving for college.. Or taking out student loans.. That is were the gurus get people to put those courses on credit cards ..
but it just aint that easy ... We all need to apprentice I did not wakeup one day and think hey in 3 months I am going to be making the salary of a doctor because I am going to wholesale real estate which takes no license and nothing other than following a couple simple mind numbing low end rules. LOL
- Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes11y
Marvin, "list" means published, it is not limited to an MLS publication, a sticky note on the Wal-Mart bulletin board that you have a house for sale is a listing, publishing is placing an ad anywhere. A sign in the yard is a listing, if it advertises RE for sale or rent.
Gary Van Horn's post appears to have someone's personal opinion interjected into the statutes quoted. In the RE Brokerage definition (7), (8), (9) and (10) appear to be very specific and difficult to overcome doing a wholesale transaction as a business. I don't really agree with the opinion that wholesaling is not facilitating a sales transaction by assigning a contract.
I do agree that assigning a contract is legal (I assigned one last year), I did it personally, not under a business entity. The difference is, I was not engaged in the business of doing a wholesale deal, it was a transaction that I could have gone through with it but simply decided not to buy it myself. There is a difference in "being in the business" of something and doing something that is a one time occurrence accomplished for personal reasons. I don't run around seeking to accomplish such transactions to be in the business of earning my livelihood in that manner.
Which is another point: "Investing" is using your money, time and talents to gain a profit, being involved in some activity that provides your main source of income is not investing, it is a business activity, ask the IRS! A wholesaler who does transactions to earn their living are not investors, they are in the business of dealing in real estate according to the IRS.
If you cut hair for compensation and that activity requires a license, being in the business of cutting hair would then be a violation of law if you don't hold the appropriate license. Not rocket science!
Assigning contracts goes far back in history, merchants assigned contracts to take delivery of goods shipped without holding title to the goods. The concept is not new!
The issue is not about the assignment of contracts, that can be perfectly legal, it is more to operating a business venture that requires a license.
Anyone who conducts business in any regulated industry needs to understand what is meant by "in the public good" (while some laws are economically generated) laws are established as rules of the road to protect the public interest, not those of an individual dealer.
The state wants all those who cut hair for the public to understand what must be done if they cut hair for someone with head lice and not just say "next". The health concerns are to the public good, not to limit the hair dresser's rights to earn a living.
Many here on BP are completely caught up in a skewed (political) ideology of personal rights, those rights will always be trumped in a democracy by the public good, what is in the public's best interests. The first responsibility that any public servant has is to protect the public, not some individual or interest. Any regulator looks first to the public's interest in applying regulations and laws.
If you do anything that is not in the public's best interest, finding the law or regulation to apply to that activity will not be hard to do. Those that read statutes literally can be missing the boat as to the intent of the law, its purpose and reasoning behind it, which is why we have regulators, attorneys and judges.
In law in all states, the rights of a property owner are seen as being greater than the rights of a buyer, this goes to the public good. Property rights are paramount to consumer laws, selling a contract to buy beans is a consumer matter, facilitating a real estate transaction falls to a property rights matter.
Instead of debating the legality of wholesaling with non-qualified legal scholars on the internet, call your state real estate regulator. Explain what you want to do, tell them it is a business venture, not just a one time thing. Most of you won't make that call because you fear the answer won't be what you want to hear, that should tell you something. :)
- Investor · Cleveland, OH · Member since 2015 · 6k+ posts · 2k+ votes11y
@Bill GulleyHave you just thrown the cat among the pigeons?
Or, when you said "I do agree that assigning a contract is legal (I assigned one last year), I did it personally, not under a business entity. The difference is, I was not engaged in the business of doing a wholesale deal, it was a transaction that I could have gone through with it but simply decided not to buy it myself. There is a difference in 'being in the business' of something and doing something that is a one time occurrence accomplished for personal reasons. I don't run around seeking to accomplish such transactions to be in the business of earning my livelihood in that manner" - did you only mean it was legal for you because you are LICENSED? Or, legal because your State has no issues with assigned Contracts anyway?
You seem to only be relying on your "intent", because assigning is not part of your business model. But, doesn't it cut across every other warning that has been given on this thread and those other two big threads recently (because once you have to PROVE "intent" - wouldn't your business find it very murky to prove)? To me, it looks instead like you "snuck one in"! [No legal advice given]...
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