Is wholesaling legal in AZ?

Question

I keep seeing articles all over the web that offers both yes and no answers to the question "Is wholesaling legal without an RE license?". Does anyone actually know definitively?

Bill Gulley · Answer

Do we really need to go through all 50 states? Call your state RE Commission  and tell them what you want to do and see if they will allow it!!!!!!!

I've posted on this topic in 2 days on the basic concepts of the legal ramifications. Please give us a break, the way wholesaling is promoted on the internet, it probably is not in the public's best interest.

Learn real estate and you won't try to be wholesaling, you're are other alternatives to take advantage of all kinds of deals! A little knowledge goes a long way. By the time you listen to, you could have been well on your way with a real RE education. Best of luck :)

Anita Walter · Answer

@Krystian Sosinski I have been trying hard to get my first wholesale deal here in phoenix and im just so lost with all the information I have been receiving about this topic. So basically I would have to obtain the property fully (by closing as sold to me) first before I can then resale it to the buyer ? A double closing is what I need to do ?

Krystian Sosinski · Answer

Please note that the Commissioner's Rules have the force and effect of law only to real estate licensees, if you are referencing @Brian Gibbons post.

Conducting real estate activity for pay in Arizona requires an active real estate license. Arizona law provides some exemptions from real estate licensing law, where people may in certain situations may legally conduct real estate activities without a license.

The exemptions are:* Persons buying and selling their own property, no matter how many properties owned. aka. For Sale By Owner* An attorney in their line of work as an attorney (however, if they are doing real estate as a broker would, then they must have a real estate license)* A trustee selling under a deed of trust* A government employee carrying out their official duties* A guardian, executor, administrator, receiver or any person carrying out a court order* An attorney-in-fact, as long as the power of attorney is for an isolated transaction* A property manager, if managing or leasing only one property at a time

Anibal Mijangos · Answer

Wholesaling in AZ is legal as long as the wholesaler doesn't receive commissions and if they promote their equitable interest in the property. Not the property itself. Basically, the wholesaler can't act as the real estate agent/salesperson. They can only "sell" the contract and can't do marketing as if they're selling the home.

Gerry Rae · Answer

I want to thank you all for your contributions here. As I newbie, I don't know what I don't know so I have tried to research and learn. Since it is not structured learning it is not always easy to link all the components together in a seasoned fashion. That's why experienced minds, like yours, are invaluable to us newbies - no matter whether we like the answer or not. Thank you again. You provided that little push that I needed to convince me what I really already knew - get educated!

Krystian Sosinski · Answer

I got a response from the AZDRE for those who want an answer from the source:

Is real estate wholesaling legal in Arizona without a real estate license?

Thank you for contacting the Arizona Department of Real Estate.The answer to your question is contained within A.R.S. 32-2121Please review, A(1) and A(17)32-2121. Applicability of article; exemption

A. The provisions of this article do not apply to:

1. A natural person, a corporation through its officers, a partnership through its partners or a limited liability company through its members or managers that deals in selling, exchanging, purchasing, renting, leasing, managing or pledging the person's or entity's own property, including cemetery property and membership camping contracts, and that does not receive special compensation for a sales transaction or does not receive special compensation or other consideration including property management fees or consulting fees for any property management services performed, if the majority of an officer's, partner's, member's or manager's activities do not involve the acts of a real estate broker,

17. Notwithstanding paragraph 1 of this subsection, a corporation through its officers and employees that purchases, sells, exchanges, rents, leases, manages or pledges its property if both of the following apply:

(a) The activity is only incidental to the business of the corporation.

(b) The officers and employees engaged in the activity do not receive special compensation or other consideration for the activity.

Brian Gibbons · Answer

@Gerry Rae

There is a thread here

http://www.biggerpockets.com/forums/93/topics/1847...

Arizona Regs

Disclosures in a Transaction:

In accordance with the Commissioner’s Rule, R4-28-1101 (B), a licensee participating in a real estate  	    transaction must disclose in writing any information the licensee possesses that materially or adversely affects  	    the consideration to be paid by any party to the transaction, including:

• Any information that the seller or lessor is or may be unable to perform.
• Any information that the buyer or lessee is or may be unable to perform.
• Any material defect existing in the property being transferred.
• The existence of a lien or encumbrance on the property being transferred.

In accordance with the Commissioner’s Rule, R4-28-1101 (E), a licensee shall not act directly or indirectly  	    in a transaction without informing the other parties in the transaction, in writing and before the parties enter  	    any binding agreement, of a present or prospective interest or conflict in the transaction, including that the:

• Licensee has a license and is acting as a principal.
• Buyer or Seller is a member of the licensee’s immediate family.
• Buyer or Seller is the licensee’s employing broker, or owns or is employed by the licensee’s employing  	            broker.
• Licensee or a member of the licensee’s immediate family has a financial interest in the transaction  	            other than the licensee’s receipt of compensation for the real estate services.

In accordance with the Commissioner’s Rule, R4-28-1101 (F), a licensee shall not accept compensation from or  	    represent more than one party to a transaction without the prior written consent of all parties.

NOTE:  The above listed disclosure issues reflect only those requirements in the Commissioner’s Rules.   	    Refer to other Federal, State, County and/or City statutes or regulations, which may contain additional required  	    disclosures relating to a real estate transaction.

http://www.re.state.az.us/Inv/InvFaqs.aspx#FAQ7

I would talk to the re.state.az and a senior re broker over anyone on a public board.

Stanley Bronstein · Answer

@Gerry Rae

Here's my take on the subject.

1) There are people doing wholesaling in Arizona

2) I choose to not take any of them on as clients.

It is not that hard to get a real estate license in Arizona. All it takes is a little bit of time and a little bit of money to take the classes and to take the test. When you have a license, you are removed from the gray area and you can then do as many deals as you (and your sponsoring broker) wish.

Leonie Jones · Answer

I'm also trying to understand the legal process and I think I MIGHT understand.

From what I understand, without having a license, as long as I am paying for the services of someone (RE attorney) to help close the deal it is legal. Is that right?

Eduardo Chacon · Answer

I am having an agent help me with the paperwork on my first 2 deals that I'm working on here in the East Valley. I've flat out asked him for help with drawing up the contracts for the deals and he said " why don't we help each other? " So I don't think it's illegal. Now he is helping with leads comps projected evals. He gets 4% of and deals I make off his leads. I am still very new so I feel it's fair 😊

Is wholesaling legal in AZ?

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