In california: what about nhd, tds?

Question

so what does the wholesaler do with a seller tds? Or nhd? Or megans law or security disclosures? Supplemental tax bill? Have the new buyer review & sign all those too??  Its not just the purchase agmt & an assignment of contract right? I guess i could have in the assignment that the buyer has received, reviewed and agreed to those as well?

Terri Ardrey · Answer

I am jumping into this convo because I am on the fence as to whether to get my RE license.  I too am in California and I keep hearing conflicting responses as to whether I should do so.  I do not plan on using it to make money on sales for others but would just like the knowledge I may gain from obtaining it.  I don't know if I should just study AS IF I was going to take the test and call it good, or go through with sitting for the exam.  Any input from you all would be GREATLY appreciated, especially since you are from Cali.

Terri (I too am just starting out)

Victoria Winters · Answer

@Pat McGrath

Hi Pat,

Wholesalers who are unlicensed want to work directly with a seller as a "FSBO".  Their objective is to find a seller who needs cash quickly and is willing to sell their property for an under market price.  This is more commonly referred to as a "motivated seller".

Once a price is agreed upon and a contract is signed, the whole seller proceeds to sell the contract to a buyer. Not he buyer could definitely benefit from a TDS, but there probably is not one available. The buyer must perform their own inspection and due diligence before purchasing the contract from the wholesaler.

A good wholesaler will do their best to disclose to the potential buyer of the contract as much information about the property as they have been able to gather based on their due diligence. Estimating the amount and types of repairs that may be necessary for the property to command a full retail price is part of the wholesalers work.  As long as the wholesaler works without violating real estate license law, this type of sales transaction is perfectly legal.

The problems that arise from wholesale transactions have more to do with the diligence performed by the wholesaler and the quality of the contracts.

Pat McGrath · Answer

well im studying for my license & it occured to me how do wholesalers deal with that. I would imagine a tds is still good to get from a seller.

Victoria Winters · Answer

@Pat McGrath

Hi Pat,

You asked some very important questions in your post. Do you have a real estate license?

The documents you refer to are disclosures used by real estate agents and are important for full disclosure to the buyer. If you are conducting a sale transaction as a non-licensed person with a seller who is non-licensed, you both can discuss disclosures of all of the items you mentioned. Full disclosure is always the best course of action to take.

Consider hiring a licensed agent to help with your transactions. It is well worth the money to gain an understanding and protection for your sales and purchases.

What type of real estate investing is of interest to you?  California is a state that pays particular attention to disclosure laws.  Also, if you are non-licensed, you must gain an understanding of how to conduct transactions that do not violate license law. Ignorance of the law is not an excuse in courts of law.

Please elaborate more on your business and let the BP community help guide you.  There is a lot of good information here and people willing to give you truthful and accurate information.