Disclosure Requirements for RE Agents Engaged in Wholesaling?
I'm working on getting my RE Sales Agent license here in Utah and I also have an interest in wholesaling. The topic of disclosure requirements for agents engaged in wholesaling surfaces every now and again, but there definitely seems to be a lot of confusion on the subject. I know there are quite a few of you out there that are licensed wholesalers - what are the disclosure requirements (assuming these may vary by state)? Have you ever had a situation that made it difficult to properly disclose everything? Any tips for dotting all the "I"s and crossing your "T"s with this requirement?
As always make sure you disclose that a party to the REPC is a licensed agent.
Next, since you need to use the Utah REPC, which is not assignable, you have to either use the assignment addendum, or create your own addendum getting seller's permission to assign. I prefer customizing your own rather than the Utah one.
The rest are the standard wholesaling disclosures that all wholesalers use to protect themselves. It's a long list to put here. But if you have good wholesaling documents, they will be in there.
Jeff
To add to @Jeffrey S. Breglio's post,
Make sure you have the sellers acknowledge in writing that you do not represent them. This is as important as disclosing the license. Otherwise you might run afoul of net listing prohibitions.
We can actually use any contracts we want as long as they were drafted by an attorney. If you're using non-state approved forms, make sure your broker is okay with them.
The general rules of thumb apply: Disclose everything and get it in writing.
Yes, Bill is referring to the FSBO acknowledgment. You should definitely get that doc anytime you, as a licensed agent, work a deal with a party that is not represented by an agent, whether or not you're wholesaling.
I do create simple contracts for my licensed clients and if your broker approves, it's all good. I still "recommend" using the state forms.
AND A FOLLOW UP: Another client came to me this week (non-licensed) for getting busted by the DRE for wholesaling without a license. You do NOT need a license for the wholesale transaction itself (the assignment of the contract), but... how you market that could be a red flag with the DRE if it looks like you're selling a house, not a contract. This is the second time this summer it's happened. Maybe I'll have to put a webinar together on this. Fun stuff.
Jeff
Excellent points, @Jeffrey S. Breglio and @William Hochstedler! Thanks for the feedback - gave me some terms to add to my "figure out what _____ is" list!
Jeff, when you present your webinar on the DRE Marketing Crack-Downs, let me know and I'll be sure to sign up! Looking forward to your upcoming presentation at the NUREIA meeting as well.
Cheers,
Drew