What is this called and do I have to have real estate license?

Question

When you go to a property owner to make a deal? For the house contract rights then I go out to find a buyer the property. And sell the contract to the buyer for a profit? What is this title called and do I need a real estate license for it? Please help me and Future thank you for the advice.

Jon Holdman · Answer

What you're describing is wholesaling or brokering. Really, they're the same thing. You find a seller, find a buyer, put them together, collect a fee.

The difference is that brokering property requires a license in every state. Wholesalers try to avoid being "unlicensed brokers" by becoming a principal in the transaction. They might get the property under contract, then assign the contract for a fee. Or, buy an option on the property, then sell the option. Or do a double closing where they buy it, then immediately re-sell it. Or various other options.

As far as the legality, that seems to vary from state to state. In theory, because you're a principal in the transaction, rather than just facilitating a transaction involving other people, you're not brokering. But judges and RE licensing boards sometimes take the view that you are in fact acting as a broker.

Jacqueline Carrington · Answer

Sounds like wholesaling which is a very gray area and basically you are doing things a real estate agent does without a license. Some states are coming down on wholesalers.

Adam Bartomeo · Answer

@Jon Holdman Good lord, man. That is the best discription that I have ever heard of wholesaling. There are so many people on BP that say it's illegal when that is not entirely correct. Great job!

David Dachtera · Answer

Yes, that is wholesaling. It DEFINITELY DOES NOT REQUIRE a license, but that doesn't stop some states - OH, for instance - from regulating it as licensable.

Brokers (and agents, where they still exist) do not put properties under any contract other than a listing agreement which temporary and renewable. So, it's not brokering.

What you ARE doing is acquiring what's known as "equitable interest", and THAT is what you are selling: your position in the purchase contract, not the property itself. This is the concept with which the states which object take exception.

Your RE attorney can explain it more clearly - I'm not one.

What is this called and do I have to have real estate license?

What is this called and do I have to have real estate license?

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