is wholesaling illegal?

166 Replies

That was really my biggest challange when getting started investing in real estate. i didn't read a lot of the post in the wholesale catagory, but i have not seen one taht address this. When i got started it seemed like everyone told me that "wholesaling" is illegal.  doesn't anyone know that it IS LEGAL to market a property as your own as soon as you have it under a purchase agreement or an option to purchase.  It will be interesting to read everyones responses.  

To bad toooo many "wholesalers" sign Joint venture or co-wholesale agreements. then they end up brokering without a license and that is illegal.

Whether wholesaling is illegal or not is going to vary from state to state...and could even vary within local municipalities.  

In Maryland I am going to say it is a bit of a gray area.  Can you assign a contract? The answer seems to be yes.  Can you show the property to the person you are assigning that contract to....that seems like a no according to the Maryland Real Estate Commission. Does this happen? Of course.  Would you be in a legal or civil situation if an agent reported you? Possibly, but who knows?

Originally posted by @Felix Goldstein :

doesn't anyone know that it IS LEGAL to market a property as your own as soon as you have it under a purchase agreement or an option to purchase.

Felix,

I think your issue here is the word 'own' and I do not agree with your statement. You don't 'own' a property by having it under contract. You own it when the deed is conveyed to you by the seller. This is why wholesalers are getting into trouble. You can advertise that you have a contract for sale, but you can not advertise that you have a property for sale, as you do not. Can you show someone the property? Probably not, because you don't have equitable interest, therefore, this could be construed as marketing someone else's property. Its a convoluted situation and one I would personally avoid.

-Christopher

Originally posted by @Felix Goldstein :

That was really my biggest challange when getting started investing in real estate. i didn't read a lot of the post in the wholesale catagory, but i have not seen one taht address this. 

   

 Oh there definitely is one that does!  Check out this post, with 17 epic pages of comments, from March.  People are still posting replies as of today:  

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

Also this blog post by one of the site contributors and podcast guy, Brandon Turner, which was inspired by all of the activity from the above thread:  

http://www.biggerpockets.com/renewsblog/2015/03/27...

I am a total newbie and just created an account on this site minutes ago to respond to your post.  I was told about wholesaling and thought I'd check it out.  The above discussions have swayed my opinion significantly away from trying it.

so you say i odn't own the property just by having it under contract.  how come if i have a property under contract, i can go to the housing dept and get a permit to fix a property as the owner.  or if i'm subleasing the property i would need a rental permit to lease as teh owner. wholesalers are getting into trouble becuase they use joint venture agreements and "consulting agreements" and all sorts of other non-sense contracts.  you say i can not advertise that i have a property for sale.  what if i'm doing a double close then i'm not assigning the contract to someone. i would sign a purchase agreement with whoever i sold the property to.  when i'm offering a property to someone, it is still undertermined what paperwork will be signed.  that is determined later when they make offer, etc.  also you say i can't advertise the property becuase all i have is a contract.  well if they are taking over my place as teh buyer in a contract they would be getting the property.  i show properties becuase in my contract it says BUYER has access to property to show potential assignees and/or their agents." consult with attorney on this i'm not an attorney. i just invest in real estate. i would say its not convoluted if someone knows what they are tlaking about. a half way decent attorney should be able to explain it. or you can call the state deptartment that licenses real estate brokers and ask them.  hopefully they won't be on some complete BS like the goobers at teh ohio dept of real estate. i called them. they had to get their attorney on the phone for me LOL. their lawyer didn't have much to say to my arguement. the investigator manager said there is a statute that says i can not wholesale.  i said oh really send me the statute. he sent me the statute that says to sell other peoples property, i need to be licensed.  that was not our argument, i was saying as soon as i have contract to purchase or option to purchase i can market it as my own. so he never showed me the statuted he said existed.  he also said well if this is so good why doesn't everyone do this.  i didn't even bother calling him back.  i'm looking to operate a legitimate investment company. iam not looking to get in trouble.


Eric Beale, those people in the other posts that you said soudned like they were not wholesaling, but acting as brokers. since they weren't licensed, they got busted. the one woman was charging a commission to sell other peoples property. that is not what wholesaling is all about. wholesaling is getting someone to sign over a property to you and then assiging that contract to someone else in exchange for the person that you are selling the property to paying you an assignment fee. or doing a double close. yes if someone wants to be a broker (in any of the 50 states as far as im aware of), they need to be lcensed. consult with an attorney or call the real estate commission and as the source that is what i did. that is why i'm not worried about getting busted.  i never tell people i'm a broker.

the other posts that were mentioned above also state:

"If you're in Ohio or California or Florida get license if you're doing wholesaling

whether it's option contracts or sale and purchase agreements that are assigned, get licensed and act as a principal" get licensed and act as principal???? huh. if i'm licensed, i'm acting as agent. if i'm wholesaling i'm acting as principal. i don't represent anyone except my company since i operate through my investment company.

the other posts also say:

"If you option a hundred thousand dollar house or get a sale and purchase agreement with "and/or assigns" at the top of the agreement, you don't own anything, and the courts look at that as operating "agent for" anyone seen any court case that supports that claim?? i have yet to see one.

@Felix Goldstein

Well, since nobody else has responded to this nonsense, I suppose I will reiterate my previous points, for I fear that newer members to the website might read your dribble and think it has some merit. 

1) You do not own a property by putting it under contract. A contract is an agreement between a seller to sell the property and a buyer to buy it at a certain price in a certain time frame. No more, no less. Until you execute the contract (ie: Close & Convey Title) you have a piece of paper and a promise. It doesn't matter if you single close, double close, or triple close. Your entire theory is flawed because under no circumstance do you "own" the property until the contract is executed - this is why people are getting into trouble. 

2) You can not advertise a property that you do not own without being considered a broker. That's the definition of brokering without a license. Clearly, you are breaking the law. I don't care, but don't want you to lead others down that path. You even called the Ohio Board and they told you the same thing, you are in denial.

3) It is clear that you are not an attorney. I firmly agree on this point. You need to consult one as soon as possible so they can explain the finer points of wholesaling to you, especially in Ohio.

4) In no situation above have you acted as a principal, you need to own the property to be a principal. See point #1.

In closing, this website is devoted to helping people become better investors. It is so the new people can learn from the experiences that those of us who came before them have learned. You are welcome to ask any questions you want here and we will do our best to answer them with the best information we have, but please don't ask a question then tell us we're wrong when you don't get the answer you want. It is insulting and detrimental to the people who are here to learn.

-Christopher

   

Felix,

    Again, I am a complete newbie at this, and have just began my studying, but I sure did read all 17 pages of comments on that post.  It took me at least an hour, if not more, but it was worth every minute of my time.  I do understand everything you are saying, especially regarding the contract, and that is the primary argument for wholesaling as being legal (which I agree it should be).  But the problem is states are starting to go after this, even if its wrong, and do you want to have to pay a lawyer thousands of dollars to try and save you, assuming he even can, and maybe face thousands of dollars of fines?  The law, unfortunately, doesn't always come down on the right side of things and whether it would be worth it or not, I suppose, would depend on your cashflow.

    You are right about the brokering, and some say its about semantics and how you word things.  You certainly don't want to say you are earning a "commission."  You also aren't supposed to market the property, in any way, shape, or form whatsoever, unless you are a licensed RE agent.  Also, and this is all based on what I read in that forum post, you can supposedly act as a licensed agent and wholesale as long as you are completely up front about the fact that you are NOT representing the seller but, rather, yourself as a business that is seeking to earn a profit.  But then you would think this would be a conflict of interest. 

    The double closed was often mentioned but then you have the double fees.  I guess it all just depends on the quality of the deal.  Anyways, and not to sound like a broken record, none of what I've written here is from personal experience but all from reading all those comments.  If you haven't read them all I highly recommend that you do.  I'm pretty sure every last opinion and angle on this topic is completely covered in those pages.  It really shouldn't be so complicated but there's a grey area that some states are exploiting to go after some people.  I guess the bottom line is it all boils down to what risks one wants to take.  I think that's awesome that you called the Ohio DRE and did your due diligence even if they were full of it!  

    As I said, in my first post, I'm leaning away from the idea of wholesaling but still haven"t completely made my decision.  I'm also studying whether or not to secure my RE license.  I listened to a great BP podcast on flipping and it was highly recommended for the access to information and networking it can provide (podcast #130, guest Will Barnard, if you have any interest in flipping).

    Good luck.  I'd love to hear how it works out for you.  Regards, Eric

I"m not a lawyer so consult a lawyer. i will not be responsible if you get in trouble.

well there you have it Chris i consulted an attorney. youtube wholesaling is illegal great video on youtube. and he specificlly mentions ohio. i had to listen to it multiple times to fully get what the lawyer was saying. thanks eric for posting links to the other posts.  they were "cavalier in the language" when the dept of real estate said that it is brokering when someone has a property under contract and assign the contract.  also he says they are "ignorant about the law" for thinking that you can not sell the property simply by having it under contract. NICE! I would say they are not ignorant. they know exaclty what the law says and what one can and can not do. they are just a bunch of goobers.   Eric, not sure why you would be concerned about getting in trouble after listening to that. or maybe you skipped the video. that is an attorney talking!

Eric, you say "You also aren't supposed to market the property, in any way, shape, or form whatsoever, unless you are a licensed RE agent." according to the attorney one needs to be a broker to market property for another => ohio revised code about brokering . so i can market the property just not on behalf of anyone else(namely the person that sold me the property). well i don't do that. i decide to send an email out with a flyer, show the property, etc. the deed holder didn't ask me to do that. i'm not representing them.  

Eric, next you mention "you can supposedly act as a licensed agent and wholesale as long as you are completely up front about the fact that you are NOT representing the seller but, rather, yourself as a business that is seeking to earn a profit." um that doesn't make anysense.  either you are a broker and representing someone. in which case they decide waht to do. or you are representing yourself.  in which case the person that sold you the house can not tell you how to market it, etc. if you are not representing the seller then you are not an agent. this is something that any attorney should explain to you. you say it would be a conflict of interest. how so? for who? you lost me on that one. please explain. you mention double closing. its not just about the paperwork that is signed by everyone. it is also teh actions of the flipper/wholesaler that count.  i do not let people that sold me property to tell me what to do.  I tell people upfront, i'm not a broker. i never say i am. i don't talk like a broekr, i don't act like a broker.  the woman on the video had a good point.  when she talked about not matching buyers to properties and vise versa.  i'm selling this hosue here in cleveland. the guy that sold me the house, called me a few times asking me how is it going. i told him i don't and really can not tell him its a privacy issue. i told him that i got no offers so far but had a few people walking through the property. this one has no doors so i just tell people go on in and see the inside.  there is nothing left to steal. everything was already stolen.

oh and i forgot to mention one thing when i was telling poeple what happened when i talked to the dept of real estate. one of the first things the manager asked me about is what contracts i sign. i told him i sign purchase agreements. they say that i'm agreeing to purchase the property and someone is willing to sell me the property, then i assign my rights as teh buyer to someone else for a fee.  he asked me to see the contract. so emailed him my contract. i might of said fee i might of said assignment fee. this was a few years ago that i talked to them.  i read a few pages of the posts that you linked to. not the whole thing. it just kind of depressed/annoyed me listening to too many people saying stuff that is not true and contridictory sometimes.  Some of those people know what they are saying, some do not.  i would rather be on teh phone looking for great deals.

I would disagree with you that there is a grey area. either someone is brokering or they are not. if someone sounds like a broker, acts like a broker and smells like a broker, then they are brokering. in my opinion.  if someone doesn't act like a broker then they are not brokering. you also said that "states are starting to go after this, even if its wrong,"  They are not stupid. they know what the law says and what you can and can't do.  I have yet to see a case where someone was geting a property under a purchase agreement and then making a nice pretty flyer marketing the property, then sending teh flyer to everyone they know, then assigning the contract to whoever wants to buy the property. if someone knows of a case, i would definatly want to research that. i don't want to get in trouble.  also if people from other states want to join this discussion feel free. I buy commercial properties anywhere in the country so i would want to know about other states laws. my guess is its the same in all 50 states.  i buy residential properties in cuyahoga county(cleveland area).  any price ($0-many millions is good with me). i can go find millions of dollars if the price is right. it really all comes down to price.  any type (office, retail, apts, industrial, a few acres of land on the corner, etc), any condition even if there are no windows.  

since you are in california, maybe you can call the people that license realtors and ask them. i would love to hear what they say.  i actually talked to a guy from california. he is a licensed agent in Cali.  he also wants to invest. he wanted me to sign a co wholesale contract or something. i said no. but it was funny he couldn't decide if he wanted to be an investor buying/selling for himself or a broker buying/selling for other people.  i'll listen to the podcast about flipping.  i'm always intersted to learn more.  as far as getting your RE license my opinion is that there are toooooo many regulations to follow if you are brokering.  as far as staying in touch. i'm not sure how much i will post on here. i'm a private person to begin with. my facebook is set to private and i don't constantly post stuff on there. plus i'm busy. WOW this is a long post!

Chris, ok maybe i'm going to far when i say i own a property by having it under contract. just maybe. a purcahse agreement is a legally binding very important paper. in essense someone is signing over the property by signing that.  you say its just a promise. what if there are no contingencies? well then thats it as soon as its executed (signed by both parties) the property is sold. since you are in nevada, why don't you call the folks taht give licenses to brokers and ask them the same question i asked the folks in ohio. i would love to know what they say since i buy anywhere in the country. this is great we have people from maryland, cali, nevada, and ohio here. so that is 4 states, 46 to go.  i'm not trying to insult you or other people here. i'm wanting to know the truth just like everyone else. i really didn't ask a question that was retorical, i know what the answer is becuase i did my due diligence already. now if i'm wrong well then prove to me that i'm wrong. show me statutes, case, etc. you just telling me your opinion is not enough for me. back up what you are saying. im not trying to be rude.  i'm looking to have a civilized discussion.

@Felix Goldstein

You're not using the correct terminology and/or understanding its meaning. It doesn't matter how many contingencies you do or do not have, you do not own the house until the contract is executed. What you have when the contract is signed is an executory contract. This means it is capable of being executed. Once you fork over the money and the seller signs over the deed, it becomes an executed contract. Once this occurs (closing), you own the property and can do whatever you want with it. Based on your logic, you don't need to pay the sellers at all. Since you already own the house by signing a contract, why bother closing? Just keep writing contracts and you'll own all of Ohio in a week. 

I don't need to call the NRED - NRS 645.030 is very clear about what qualifies you as a broker and basically states the same thing as Ohio. To summarize, it says a “Real estate broker means a person who, for another and for compensation or with the intention or expectation of receiving compensation Sells, exchanges, options, purchases, rents or leases, or negotiates or offers, attempts or agrees to negotiate the sale, exchange, option, purchase, rental or lease of, or lists or solicits prospective purchasers, lessees or renters of, any real estate or the improvements thereon or any modular homes, used manufactured homes, used mobile homes or other housing offered or conveyed with any interest in real estate" 

This is black and white - if you try to sell a house you do not own, you are brokering. What the wholesaling debate is about is how to do this legally by selling what you own, which is the contract, and not the property. That is legal, however, you can still violate the law if you aren't careful. You are limited in what you can and can not do and people are getting busted for taking strolls across that black and white line in the sand.


-Christopher

P. S. You should read up on some contract law to understand how real estate rights are conveyed. Once you understand the basics, you will agree with me and see that your interpretation of contract law is incorrect.


P. P. S. You are still wrong :)

Disclose Disclose Disclose.

1) Make sure everyone in the transaction knows that you intend to purchase the property within the stipulated period and sign an agreement to that effect.  If the seller has a problem with 120 days then the deal may not work for this type of transaction.

2) When you secure a buyer (it really helps to have a buyer ready before you sign the property - find the buyer before the property).

3) Actually buy the property.  Then transfer it to the new owner.  

4) Keep the difference in purchase and sale price.

@Felix Goldstein

@Eric Beale

@Christopher Brainard

@Russell Brazil l

steven,yes sounds like you are on the right track.  i only see two problems. u say it helps to have a buyer ahead of signing the property.  that sounds like you are brokering.  for you to have a buyer  ahead of time, you would have to  be selling it to your  buyer. until you have it under contract, u cant sell it.  the other problem is 120days, really that is way to long i ask for 20 days. im not looking to mess arnd with a prop forever.

well i hvae to admit i had to go to dictionary.com and look up execute here is what it says:

"verb (used with object), executed, executing.

1. to carry out; accomplish: to execute a plan or order.

2. to perform or do: to execute a maneuver; to execute a gymnastic feat.

3. to inflict capital punishment on; put to death according to law.

4. to murder; assassinate.

5. to produce in accordance with a plan or design: a painting executed by an unknown artist.

6. to perform or play (a piece of music).

7. Law.

  1. to give effect or force to (a law, decree, judicial sentence, etc.).
  2. to carry out the terms of (a will).
  3. to transact or carry through (a contract, mortgage, etc.) in the manner prescribed by law; complete and give validity to (a legal instrument) by fulfilling the legal requirements, as by signing or sealing."

i bolded teh part that i was thinkinf of when i was talking about executing a purchase agreement. apparently it sounds like you were talking about the other definitions right above it. we are both right it looks like on that.

i studied contract law. i took a couple semesters of it in college. about teh only class that was usful. that doesn't make me a guru, but i know a thing or two.

you say "Based on your logic, you don't need to pay the sellers at all. Since you already own the house by signing a contract, why bother closing? Just keep writing contracts and you'll own all of Ohio in a week." no i would still ahve to pay sellers. that is what i agreed to do (if there is no contingency). if i don't i would be breaching teh contract. plus in the contract it would say how long i ahve to close. so at that point the seller would say well you agreed to pay me the purchase price of the house within XX days(the time to close), pay up! if i don't i would be breaching the contract.  i sign with contingencies, since i'm not sitting on a pile of cash.

oh here is something else taht is intersting this city around here told me. when i was calling them to find something out. don't remember what(its not important). they asked me who i was, i said i just bought it i have it under contract, but we didn't close yet. they said i have to register, since all owners need to register with the city.  apparently they don't care about taht that much becuase i never did and they never bothered me about that.  since my contarct was good for less then a month, i didn't bother.

wooho now we got the law for two states.  yes looks like nevada's statute is pretty much teh same as ohio's.  what i just noticed is that both statutes don't even mention ownership of the property. what they say is if someone is doing this for another or for oneself. if somone is brokering then either the broker asked the seller to sell their property or vise versa.  there fore there is a principal/agent relationship formed.  again i'm not a lawyer, so consult an attorney. becuase of this the broker is acting onbealf of the owner.  if you think i'm wrong explain how i'm selling a property for another. you keep disagreeing with me, but you don't offer a logical explanation. i have people tell me all the time. Find me a buyer for my property, and i will pay you. if i agree i would be their agent. that is why i say no.  i also have people ask me all the time "what kind of properties do your buyers like?" i say i'm the buyer, it doesn't matter what those people like.  i buy...  and then i tell them what properties i like.


@Felix Goldstein

So I won't be responding to this thread anymore, its clear that Ron White was right, "You can't fix stupid." You can't go to dictionary.com and claim you know about contract law. Even in your bolded statement, it says you must fulfill your legal obligations, which as a buyer in a real estate transaction, is to pay for the house, not sign a piece of paper. 

Again, you ARE selling someone else's property, because you do not own the property until the deed is recorded and the property is legally conveyed to you. I can't help that you're ignorant and don't understand how real estate is conveyed, therefore, I can't offer a logical explanation. 

Please stop pretending that you know what you're talking about - it will be misleading to others who want to stay within a confines of the law. If you want to do a test, send me information on the last property you wholesaled, your address, and I'll turn it into the Ohio Real Estate Board and we'll see how much they fine you.

-Christopher

@Felix Goldstein

Eric, next you mention "you can supposedly act as a licensed agent and wholesale as long as you are completely up front about the fact that you are NOT representing the seller but, rather, yourself as a business that is seeking to earn a profit." um that doesn't make anysense. either you are a broker and representing someone. in which case they decide waht to do. or you are representing yourself. in which case the person that sold you the house can not tell you how to market it, etc. if you are not representing the seller then you are not an agent. this is something that any attorney should explain to you. you say it would be a conflict of interest. how so? for who? you lost me on that one. please explain.

In regards to your first point I would have to look into that more. It was, however, mentioned several times, in the initial thread I posted, by people who seemed to have a significant amount of experience. It was stated that if you were a licensed RE Agent you are ALLOWED to engage in the practice (with disclosure) while, being unlicensed, you are not (fair or not, the NAR is a powerful lobby). Again, I've never bought or sold a piece of real estate in my life and I've just put my toe in the water. I'm here to learn as much as possible as quickly as I can.

As to the second point it seems like a conflict due to what you are licensed to do, which includes being a fiduciary, and what you are actually doing, wholesaling. I'm paraphrasing what I read before so you probably shouldn't listen to a word I say! However I am appreciating this conversation as it is leading me into doing more research. I have so much to learn. With a RE license you to have access to the MLS and can find good deals for whatever you want to do with them. Here is an article on that:

  http://www.biggerpockets.com/renewsblog/2013/07/27...

But, from what I've been told by a close friend who has been successfully doing real estate for the past 16 years or so, most killer deals are found off of the MLS.

  Anyway, I've read some other articles, this morning, both pro and anti-wholesaling and it seems like if you are a licensed realtor, you are against it and, if you aren't, you are for it.  I've got a lot of research to do which is probably going to include re-reading that thread and taking copious notes so I can deeply look up, and attempt to fact check, in some way, everything I read.


Originally posted by @Russell Brazil :

Whether wholesaling is illegal or not is going to vary from state to state...and could even vary within local municipalities.  

In Maryland I am going to say it is a bit of a gray area.  Can you assign a contract? The answer seems to be yes.  Can you show the property to the person you are assigning that contract to....that seems like a no according to the Maryland Real Estate Commission. Does this happen? Of course.  Would you be in a legal or civil situation if an agent reported you? Possibly, but who knows?

 I concur!

Originally posted by @Russell Brazil :

Whether wholesaling is illegal or not is going to vary from state to state...and could even vary within local municipalities.  

In Maryland I am going to say it is a bit of a gray area.  Can you assign a contract? The answer seems to be yes.  Can you show the property to the person you are assigning that contract to....that seems like a no according to the Maryland Real Estate Commission. Does this happen? Of course.  Would you be in a legal or civil situation if an agent reported you? Possibly, but who knows?

 I concur!

As long as you disclose I don't see what the problem is with wholesaling.

@Eric Beale   

Yes, looking into it is a good idea. i would say calling the cali dept of real estate or whatever dept licenses agents is a good start. i would love to know what they tell you about wholesaling. disclosures are unneccessary when someone is wholesaling/investing.  when you say disclosure i'm thinking of the state form that agents have you sign which simply states who all the brokers are representing.  they are required to have buyer and seller sign that by law when they are brokering. that form is probably on the dept of real estates site.  if someone is investing for tehmselves, they don't have to follow any of the brokering statutes. those don't apply to them. the only one that they need to be careful about is that they don't end up brokering without a license.  why would you disclose, if you are not licensed?  if someone is a licnesed RE agent, why would they wholesale? they could just broker the deals.  if they did decide that they wanted to wholesale(buy for themselves instead of for someone else), then there license would be irrelavent/unnecessary.  if someone is brokering a deal they talk different, act different, and sign different contracts then if they are buying for themselves (investing/wholesaling).  

Yes it would be conflict of interest.  like that attorney said in that youtube video(see link earlier in this post) when someone is wholesaling they are acting against the person that is selling them the property.  just like any other buyer, i'm trying to get the best possible price for me. so yes we are on the opposite side of the table.  I'm not reping the seller, and i'm not reping the person that i'm selling the property too. i'm acting on my own behalf. since i have a company formed, i happen to rep  my own investment company.  i don't have a fiduciary duty to anyone.  if someone is brokering i would have a fiduciary duty to whoever iam representing.  a wholesaler is licensed to buy for themselves, if someone doesn't ahve a company, then they have no license at all.  if someone happens to be a broker, then there license plays no part in a deal that they are wholesaling.  they would not have a fiduciary duty to anyone, there would be no disclosures. i was talking to this broker once who invests himself (i found a whole bunch of brokers do taht. i don't understand why brokers don't invest with all the great deals that just happen to fall on their lap).  

yes most great deals aren't on the mls.  a good RE agent should be able to make a phone call and get an offer for a seller.  according to Will Bernard ( think that was his name)  a good reason to get a license is so that you have access to the mls not for the properties listed on there, but for the other resources that would be available. but with loopnet.com these days i'm not sure that is accurate. that is in that one podcast taht you pointed me to earlier. i did listen to it. good stuff.  

No not all realtors are against wholesaling. i have realtors on my list. they know that i'm wholesaling.  most of them happen to be investors themselves so they are happy to get an email from me offering them personally a property at a great price.  i also work with realtors privately.  I tell realtors i got this property under contract. i'm selling it. find me a buyer and we can split the assignment fee 50/50.  i don't want you to list the property, at this price you can probably make a call to an investor, and get me an offer at my asking price.  the ones taht are against wholeslaing just don't understand it.  or they are just talking nonsense needlessly scaring you into getting in trouble.  they are ussually the ones whos niche is finding someone that wants to sell a nice pretty house at retail price, listing it for taht person on the mls and waiting for the offers to come in.  some realtors don't even want to work with investors. probably becuase we don't pay retail price LOL.  i could never figure that out.  a regualar person buys a house every 7 years or so. i could be off on the number but that is the last number that i heard.  an investor is always buying/selling. the second type of client seems like a way better client to me.  plus most people wont buy a hosue with no kitchen and no plumbing, but an investor would. yes fact cheking is good. too many people give their opinion who don't know what they are talking about. 

 

@Anil Samuel, i think i pretty much covered your question above but...  the problem is you sound like a broker, act like a broker, but you are not licensed to be a broker. just becuase you disclose, that doesn't take away that problem.  plus like i mentioned before, disclosures are for brokers, why would you disclose if you are not licensed. there is nothing to disclose since you are not reping anyone.

Felix, it is really very simple.  Call the real estate commission and ask them.  

No matter what you think you know, the state of Ohio has vastly greater resources at its disposal. Therefore, as a practical matter, if they say it's illegal, it's illegal.

@Richard C. when i asked them to show me the law that they were claiming states wholesaling is illegal. they never did. they sent me the statute that says selling property for another requires a license.  that is why i called the investigator manager a goober. funny their attorney that the manager got on the phone on a conference call didn't say that she really had nothing to say. oh and by the way he did say that you can assign a contract.  he also did say that i can not market the property, but only the fact taht i ahve a contract. that is nonsense what if i only want to double close? then i'm not assigning anything.  besides like  i mentioned before, the statute says for another and it says for a fee. so the question isn't even who owns the property, but whether you are buying/selling for another or for someone else.  now they go hand in hand. if i don't own the property, then i have to be selling it for someone else. if i own the property, then i have to be selling it for another (namely the owner)

Originally posted by @Felix Goldstein :

@Richard C. when i asked them to show me the law that they were claiming states wholesaling is illegal. they never did. they sent me the statute that says selling property for another requires a license.  that is why i called the investigator manager a goober. funny their attorney that the manager got on the phone on a conference call didn't say that she really had nothing to say. oh and by the way he did say that you can assign a contract.  he also did say that i can not market the property, but only the fact taht i ahve a contract. that is nonsense what if i only want to double close? then i'm not assigning anything.  besides like  i mentioned before, the statute says for another and it says for a fee. so the question isn't even who owns the property, but whether you are buying/selling for another or for someone else.  now they go hand in hand. if i don't own the property, then i have to be selling it for someone else. if i own the property, then i have to be selling it for another (namely the owner)

 My sincere advice to you is this:  Prepare yourself, because they are going to break you.  Absolutely break you.  It may not happen immediately, they have a lot on their plate.  But one whisper of a complaint, whether from a seller, a licensee, even someone annoyed by your marketing, and you are toast.

@Richard C. I'll keep your sincere advise in mind.  why would they break me? if i'm not breaking the law, then it doesn't matter how much resources they have. yes i agree with you, the state has more resources then me.  plus i emailed them my purchase agreement that i use. enough said about though.

@Russell Brazil

@Eric Beale

here is what found in the maryland code about what brokering is.  I'm kind of burned out and don't want to be on the phone making offers. I'm tired. this seems to be similar to ohio's law.  I bolded/underlined the parts that are important.  i just called the maryland people waiting for the guy to call me back. AGAIN I'M NOT AN ATTORNEY (even though i sound like one) CONSULT AN ATTORNEY. ALSO YOU AGREE TO NOT HOLD ME RESPONSIBLE IF YOU READ THE STUFF BELOW AND GET IN TROUBLE. perhaps there are some attorneys here that are willing to join this discussion.

Annotated Code of Maryland
Copyright © 2015 by Matthew Bender and Company, Inc., a member of the LexisNexis Group
All rights reserved.
*** Statutes current through 2014 legislation ***
BUSINESS OCCUPATIONS AND PROFESSIONS
TITLE 17. REAL ESTATE BROKERS
SUBTITLE 1. DEFINITIONS; GENERAL PROVISIONS
Md. BUSINESS OCCUPATIONS AND PROFESSIONS Code Ann. § 17-101 (2014)
§ 17-101. Definitions


(a) In general. -- In this title the following words have the meanings indicated.

(b) Affiliate. -- "Affiliate" means, unless the context requires otherwise, to establish between an individual and a real estate broker an employment or other contractual relationship under which the individual is authorized to provide real estate brokerage services on behalf of the real estate broker.

(c) Associate real estate broker. -- "Associate real estate broker" means an individual:

(1) who meets the requirements for a real estate broker license under § 17-305 of this title but who applies for and is granted an associate real estate broker license under §§ 17-307 and 17-309 of this title; and

(2) who, under the associate real estate broker license, may provide real estate brokerage services on behalf of a licensed real estate broker with whom the associate real estate broker is affiliated.

(d) Commission. -- "Commission" means the State Real Estate Commission.

(e) Guaranty Fund. -- "Guaranty Fund" means a real estate guaranty fund established by the Commission under § 17-402 of this title.

(f) Hearing board. -- "Hearing board" means a real estate hearing board appointed by the Commission under § 17-325 of this title.

(g) License. --

(1) "License" means, unless the context requires otherwise, a license issued by the Commission.

(2) "License" includes, unless the context requires otherwise:

(i) a real estate broker license;

(ii) an associate real estate broker license; and

(iii) a real estate salesperson license.

(h) Licensed associate real estate broker. -- "Licensed associate real estate broker" means, unless the context requires otherwise, an associate real estate broker who is licensed by the Commission to provide real estate brokerage services on behalf of a licensed real estate broker with whom the associate real estate broker is affiliated.

(i) Licensed real estate broker. -- "Licensed real estate broker" means, unless the context requires otherwise, a real estate broker who is licensed by the Commission to provide real estate brokerage services.

(j) Licensed real estate salesperson. -- "Licensed real estate salesperson" means, unless the context requires otherwise, a real estate salesperson who is licensed by the Commission to provide real estate brokerage services on behalf of a licensed real estate broker with whom the real estate salesperson is affiliated.

(k) Licensee. -- "Licensee" means a licensed real estate broker, a licensed associate real estate broker, or a licensed real estate salesperson.

(l) Provide real estate brokerage services. -- "Provide real estate brokerage services" means to engage in any of the following activities:

(1) for consideration, providing any of the following services for another person:

(i) selling, buying, exchanging, or leasing any real estate; or

(ii) collecting rent for the use of any real estate;

(2) for consideration, assisting another person to locate or obtain for purchase or lease any residential real estate;

(3) engaging regularly in a business of dealing in real estate or leases or options on real estate;

(4) engaging in a business the primary purpose of which is promoting the sale of real estate through a listing in a publication issued primarily for the promotion of real estate sales;

(5) engaging in a business that subdivides land that is located in any state and sells the divided lots; or

(6) for consideration, serving as a consultant regarding any activity set forth in items (1) through (5) of this subsection.


(m) Real estate. --

(1) "Real estate" means any interest in real property that is located in this State or elsewhere.
(2) "Real estate" includes:

(i) an interest in a condominium; and

(ii) a time-share estate or a time-share license, as those terms are defined in § 11A-101 of the Real Property Article.

(n) Real estate broker. -- "Real estate broker" means an individual who provides real estate brokerage services.

(o) Real estate salesperson. -- "Real estate salesperson" means an individual who, while affiliated with and acting on behalf of a real estate broker, provides real estate brokerage services.

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here