Wholesale Owner finance.
Wholesaler · saginaw, MI · Member since 2015 · 74 posts · 15 votes
Hi BP!
I have a question for the more experienced wholesalers out here.
I have a home under contract and my seller is open to owner financing. I have a cash offer on it but it is taking a bit longer for me to sell this property. However I have had several people interested in owner financing. My question is: is it possible to structure a wholesale deal for owner finance? If so how? The house is owned free and clear. The seller wants at least 20k down and 12 % interest. The asking price of the home is 100k for owner finance. I would really appreciate any feedback and direction on structuring this deal if it is possible. Thanks in advance!
A friend was reading this thread, and had some comments that may or may not be worthy of attention, but I'll pass them on for possible entertainment value. As for my own thoughts, I'll refrain. So, without further adieu, from said friend:
.........................
There are a lot of wonderful, well-meaning people on here trying to help others, that's a good thing… sometimes.
Sometimes they are, well, uninformed or misinformed. To paraphrase a famous quote, “It isn't so much that some people are ignorant. It's just that they know so many things that aren't so.”
Some points to consider on the topic of this thread:
The Texas laws, as originally written, regarding certain types of transactions discussed here caused quite an uproar.
What happened later was virtually overlooked, in that the laws were significantly revised before they were passed.
But almost everyone out there still believes that the original proposal with it's complexity and flaws, was what was signed into law. Might want to read the actual law.
There seems to be confusion as to some things, reminiscent of
Abbott and Costello's "Who's On First?" routine ( you younger kids can Google it).
So, in a listed property transaction (Which this WAS NOT), you traditionally have a SELLER, represented by a SELLER’S AGENT, and a BUYER, represented by, you guessed it, BUYER”S AGENT.
(We won’t talk about side issues, such as where a lender might fit in, or of cases wherein an agent is also the seller, or wherein an agent is representing both buyer and seller (dual agency), not important today, and, likely to make some folks dizzy).
In said transaction, normally, the AGENTS have NO VESTED INTEREST in the parcel for sale. They are NOT PRINCIPALS in the purchase of the REAL PROPERTY. They connected the BUYER and the SELLER, and rightfully were paid handsomely for their efforts when title transferred at closing from the SELLER to the BUYER.
To contrast that with the transaction conducted by astute real estate entrepreneur Josselyne Lugo (watch closely), the parties are:
*SELLERS, who have elected to sell on their own, thus creating the mythical and elusive deal, a For Sale By Owner (FSBO) situation.
*BUYER, the aforementioned astute real estate entrepreneur Josselyne Lugo, who is a WHOLESALER.
One will note, NO AGENTS were involved or even aware this was going down.
The BUYER/WHOLESALER finds the SELLER, evaluates the deal, negotiates an agreement with Sellers, and SELLERS and BUYER execute a mutually agreeable CONTRACT, wherein
the SELLERS and the BUYER are the PRINCIPALS in this deal.
BUYER now has Vested Interest via the CONTRACT, said CONTRACT is PERSONAL PROPERTY of BUYER/WHOLESALER, it is not REAL PROPERTY (Simple way to think of this, your mileage may vary: Real Property has a Parcel Number, a Deed, and Address, Personal Property doesn’t).
BUYER/WHOLESALER then elects to TRANSFER her interest in her CONTRACT, which is PERSONAL PROPERTY of BUYER/WHOLESALER,
to a THIRD PARTY.
BUYER/WHOLESALER transfers the CONTRACT, with all it’s rights, to THIRD PARTY, via an Assignment of Contract, for an Assignment Fee.
THIRD PARTY now holds the CONTRACT and ‘steps into BUYER/WHOLESALER’s shoes’, with the lawful ability to execute the CONTRACT under it’s terms and conditions. Still reading?
BUYER/WHOLESALER was NOT representing SELLER or THIRD PARTY BUYER in any capacity. BUYER/WHOLESALER was a PRINCIPAL in every step of the process. BUYER/WHOLESALER was never acting as an AGENT or “BIRD DOG”, rather only on her own behalf. She had no intent or agreement to charge any other party to act as their agent, rather she was a PRINCIPAL PARTY, contracting for an agreement to purchase Real Property, and also contracting to sell Personal Property (a Contract).
Sorry, Brokers and Agents, BUYER/WHOLESALER did NOT poach a deal from your part of the world, which also has free-range real estate entrepreneurs also making deals happen sans a real estate license (Gasp! The horror!), nor did she perform a dreaded ‘Commissiondectomy”, the source of terrifying nightmares for Agents everywhere. She conducted an ethical and legal transaction that was beneficial to the involved parties, by applying her resources, skills, intellectual capital, and hard work.
.........
Please don’t send hate mail, remember, this was the rambling of another party, who is actually quite fond of Agents, but likes to mercilessly tease them. I’m only the messenger, shucks, I can barely spell ‘real estate’.
@Account Closed
No worries. These "wholesaling" techniques were taught on BP by others so it must be ok!
Very clear that this is unlicensed brokerage activity. I would suggest the O.P. look into becoming a real estate agent if she wishes to earn fees or commissions by brokering deals between a buyer and a seller.
I was unaware of this I set it up under my name the owner finance and later assigned it to the end buyer for a fee as I do with any other assignments of contract. The home was owned free and clear. Is it still violating laws this way? I would not like to be in another transaction this way if it is illegal.
To make things incredibly simple this is what you need to take away from this thread.
This applies to all of your wholesale transactions---If you are attempting to sell a property that you do not own you are brokering real estate. It is that simple. Having a purchase contract does not mean you own it. Once you close on it and take title you own it, not a moment sooner.
Another thing in this current transaction that throws a wrench into things is the owner financing component. Has the buyer underwrote you as a potential borrower? In theory the seller would also want to underwrite the "actual" buyer as well. I don't think the owner financing part of this deal should be the focus right now though. We should always stop and remember attempting to sell a property that you do not own is brokering real estate.
@Josselyne Lugo as Guy stated, if you TAKE ownership you are a principal to the transaction. You can buy and sell all you want. If you OWN the property, no license needed.
What hasn't been mentioned is what is a "principal" in a contract. Read the requirements for a valid contract. Such terms such as "Arm's Length", "Meeting of the Minds", "Consideration", "Good Faith" ,"Bilateral and Unilateral", "Laws of Agency" "Servant and Master" and "Intent", "Ability to Perform" what "Fraud" is, different types of fraud.
You are or can be a principal when you have the capacity to contract, give consideration, have the intent to perform as stated in the contract, have the ability to perform, that you deal in good faith in your own best interest, that you disclose facts that put another party at a significant disadvantage, do not mislead or misrepresent yourself or material facts, that the purpose of the transaction and the means used to perform are lawful, having a lawful purpose. Violate any one of these areas and your contract or deal may be thrown out.
The best way to understand if you're on the right track is to call the regulatory agency that supervises that the conduct and business contemplated. Usually they will tell you!
You need to be truthful in explaining what you want to do, touch on the aspects above, leaving out information that may apply is simply going to get you the wrong answer if you try to hide some aspect. Lay all the cards on the table!
The best way is to write a letter asking for a determination as to compliance with their regulations. You will get a reply in writing, stay within the scope of work as you explained and you may have a get out trouble card.
Why do investors not ask?
1. They fear daddy will say no and they want to go out and play.
2. They don't know enough to ask the right questions.
3. They believe they can't do it, but don't want to hear no officially.
4. Some think they will be watched, as if cluing in the cops a robbery is about to happen....No! They get calls all the time and don't use questions to investigate things, they have enough to do.
So, ask the state regulators! If they say no, then go find another way.
There are 3 simple ways to have the intent, ability and deal in good faith and re-sell what you buy. Learn them. :)
Seek legal advice from an attorney that's familar with how wholesailing real estate contracts work.
Jarrett,
Unfortunately there a lot of attorneys out there that think they know how to structure real estate deals that really don't have a clue, and when it comes to wholesaling they have even less knowledge.
Nick
A friend was reading this thread, and had some comments that may or may not be worthy of attention, but I'll pass them on for possible entertainment value. As for my own thoughts, I'll refrain. So, without further adieu, from said friend:
.........................
There are a lot of wonderful, well-meaning people on here trying to help others, that's a good thing… sometimes.
Sometimes they are, well, uninformed or misinformed. To paraphrase a famous quote, “It isn't so much that some people are ignorant. It's just that they know so many things that aren't so.”
Some points to consider on the topic of this thread:
The Texas laws, as originally written, regarding certain types of transactions discussed here caused quite an uproar.
What happened later was virtually overlooked, in that the laws were significantly revised before they were passed.
But almost everyone out there still believes that the original proposal with it's complexity and flaws, was what was signed into law. Might want to read the actual law.
There seems to be confusion as to some things, reminiscent of
Abbott and Costello's "Who's On First?" routine ( you younger kids can Google it).
So, in a listed property transaction (Which this WAS NOT), you traditionally have a SELLER, represented by a SELLER’S AGENT, and a BUYER, represented by, you guessed it, BUYER”S AGENT.
(We won’t talk about side issues, such as where a lender might fit in, or of cases wherein an agent is also the seller, or wherein an agent is representing both buyer and seller (dual agency), not important today, and, likely to make some folks dizzy).
In said transaction, normally, the AGENTS have NO VESTED INTEREST in the parcel for sale. They are NOT PRINCIPALS in the purchase of the REAL PROPERTY. They connected the BUYER and the SELLER, and rightfully were paid handsomely for their efforts when title transferred at closing from the SELLER to the BUYER.
To contrast that with the transaction conducted by astute real estate entrepreneur Josselyne Lugo (watch closely), the parties are:
*SELLERS, who have elected to sell on their own, thus creating the mythical and elusive deal, a For Sale By Owner (FSBO) situation.
*BUYER, the aforementioned astute real estate entrepreneur Josselyne Lugo, who is a WHOLESALER.
One will note, NO AGENTS were involved or even aware this was going down.
The BUYER/WHOLESALER finds the SELLER, evaluates the deal, negotiates an agreement with Sellers, and SELLERS and BUYER execute a mutually agreeable CONTRACT, wherein
the SELLERS and the BUYER are the PRINCIPALS in this deal.
BUYER now has Vested Interest via the CONTRACT, said CONTRACT is PERSONAL PROPERTY of BUYER/WHOLESALER, it is not REAL PROPERTY (Simple way to think of this, your mileage may vary: Real Property has a Parcel Number, a Deed, and Address, Personal Property doesn’t).
BUYER/WHOLESALER then elects to TRANSFER her interest in her CONTRACT, which is PERSONAL PROPERTY of BUYER/WHOLESALER,
to a THIRD PARTY.
BUYER/WHOLESALER transfers the CONTRACT, with all it’s rights, to THIRD PARTY, via an Assignment of Contract, for an Assignment Fee.
THIRD PARTY now holds the CONTRACT and ‘steps into BUYER/WHOLESALER’s shoes’, with the lawful ability to execute the CONTRACT under it’s terms and conditions. Still reading?
BUYER/WHOLESALER was NOT representing SELLER or THIRD PARTY BUYER in any capacity. BUYER/WHOLESALER was a PRINCIPAL in every step of the process. BUYER/WHOLESALER was never acting as an AGENT or “BIRD DOG”, rather only on her own behalf. She had no intent or agreement to charge any other party to act as their agent, rather she was a PRINCIPAL PARTY, contracting for an agreement to purchase Real Property, and also contracting to sell Personal Property (a Contract).
Sorry, Brokers and Agents, BUYER/WHOLESALER did NOT poach a deal from your part of the world, which also has free-range real estate entrepreneurs also making deals happen sans a real estate license (Gasp! The horror!), nor did she perform a dreaded ‘Commissiondectomy”, the source of terrifying nightmares for Agents everywhere. She conducted an ethical and legal transaction that was beneficial to the involved parties, by applying her resources, skills, intellectual capital, and hard work.
.........
Please don’t send hate mail, remember, this was the rambling of another party, who is actually quite fond of Agents, but likes to mercilessly tease them. I’m only the messenger, shucks, I can barely spell ‘real estate’.
Greg,
Great outline on how it would work in a perfect world, my guess is that it didn't come close to happening this way. I have seen and researched too many wholesale deals and the paperwork accompanying them to ever believe that someone asking for help on this forum or any other could pull off what you just wrote.
Nick
"Well Greg and J.S. obviously are suffering from cognitive bias, appears Greg also suffers from the effects of his legal education at Internet University."
.......................................................
Thanks for bringing that to my attention Mr. Gulley. I shall take that under advisement, and consider seeking professional treatment so that I might be relieved of my suffering.
Accordingly, in the meantime, I will take my 37 years of literally blood, sweat, tears and scars experienced as a real estate entrepreneur, and refrain from ever posting on BP again, deferring to more the more experienced and enlightened. I am also immediately suspending any further activity in real estate related spaces, including mentoring, coaching, commercial project development, etc. What was I thinking?? My humblest thanks, I've have seen the light. Perhaps I can find work with the government...
Farewell and Best of Success in the New Year to everyone on BP.
Classic reply Greg. Gotta love those investors who who are experts in every manner of investing and more informed that most of the attorney's who are practicing what they preach. The arrogance never ceases to amaze me. God Bless them....for they don't know what they don't know.
And by the way Greg, thanks for giving me the perfect scenario that never happens...I'll cease contracting on 4 to 7 homes a month since I too have been enlightened how the process I've used for years is illegal, immoral and never works out that way.
I will now stand aside for the next diatribe from the Guru's around the country who clearly don't practice their craft in Texas.
As you can see Josselyne, there is no shortage of opinion. My philosophy has always been, "believe half of what you see and none of what you hear"...and that includes my comments.
I will only say that I am a full-time Texas real estate investor and Texas broker and have been investing in Texas and only Texas for 16 years. I seldom make a move without one or more attorney's seal of approval. I do these deals all the time, as do my unlicensed investor/partners. I have spoken directly with our State association's legal counsel about this very issue and they believe exactly what has been stated...assigning a contract as a principal is not the practice of real estate regardless the terms of the contract (as long as it is in fact a legal contract). I would advise you to seek the advice of Texas legal counsel (when doing Texas deals) over outside experts and do your own due diligence...which doesn't typically include BP. There is no such thing as real estate expert in all 50 states.
Thank you Very Much Guy.
I will definitely take your advice. I really appreciate your input.
@Account Closed
No worries. These "wholesaling" techniques were taught on BP by others so it must be ok!
Very clear that this is unlicensed brokerage activity. I would suggest the O.P. look into becoming a real estate agent if she wishes to earn fees or commissions by brokering deals between a buyer and a seller.
I was unaware of this I set it up under my name the owner finance and later assigned it to the end buyer for a fee as I do with any other assignments of contract. The home was owned free and clear. Is it still violating laws this way? I would not like to be in another transaction this way if it is illegal.
To make things incredibly simple this is what you need to take away from this thread.
This applies to all of your wholesale transactions---If you are attempting to sell a property that you do not own you are brokering real estate. It is that simple. Having a purchase contract does not mean you own it. Once you close on it and take title you own it, not a moment sooner.
Another thing in this current transaction that throws a wrench into things is the owner financing component. Has the buyer underwrote you as a potential borrower? In theory the seller would also want to underwrite the "actual" buyer as well. I don't think the owner financing part of this deal should be the focus right now though. We should always stop and remember attempting to sell a property that you do not own you is brokering real estate.
Im not exactly sure I fully understood you. So are you saying wholesaling in general is illegal? Please clarify this for me. Thank you
@Account Closed
No worries. These "wholesaling" techniques were taught on BP by others so it must be ok!
Very clear that this is unlicensed brokerage activity. I would suggest the O.P. look into becoming a real estate agent if she wishes to earn fees or commissions by brokering deals between a buyer and a seller.
I was unaware of this I set it up under my name the owner finance and later assigned it to the end buyer for a fee as I do with any other assignments of contract. The home was owned free and clear. Is it still violating laws this way? I would not like to be in another transaction this way if it is illegal.
To make things incredibly simple this is what you need to take away from this thread.
This applies to all of your wholesale transactions---If you are attempting to sell a property that you do not own you are brokering real estate. It is that simple. Having a purchase contract does not mean you own it. Once you close on it and take title you own it, not a moment sooner.
Another thing in this current transaction that throws a wrench into things is the owner financing component. Has the buyer underwrote you as a potential borrower? In theory the seller would also want to underwrite the "actual" buyer as well. I don't think the owner financing part of this deal should be the focus right now though. We should always stop and remember attempting to sell a property that you do not own you is brokering real estate.
Im not exactly sure I fully understood you. So are you saying wholesaling in general is illegal? Please clarify this for me. Thank you
Yes that is what I am saying.
Buying low and reselling would be what I would call "wholesaling" However the term as it is commonly used today is nothing more then brokering real estate. You must be licensed to broker real estate.
@Account Closed
No worries. These "wholesaling" techniques were taught on BP by others so it must be ok!
Very clear that this is unlicensed brokerage activity. I would suggest the O.P. look into becoming a real estate agent if she wishes to earn fees or commissions by brokering deals between a buyer and a seller.
I was unaware of this I set it up under my name the owner finance and later assigned it to the end buyer for a fee as I do with any other assignments of contract. The home was owned free and clear. Is it still violating laws this way? I would not like to be in another transaction this way if it is illegal.
To make things incredibly simple this is what you need to take away from this thread.
This applies to all of your wholesale transactions---If you are attempting to sell a property that you do not own you are brokering real estate. It is that simple. Having a purchase contract does not mean you own it. Once you close on it and take title you own it, not a moment sooner.
Another thing in this current transaction that throws a wrench into things is the owner financing component. Has the buyer underwrote you as a potential borrower? In theory the seller would also want to underwrite the "actual" buyer as well. I don't think the owner financing part of this deal should be the focus right now though. We should always stop and remember attempting to sell a property that you do not own you is brokering real estate.
Im not exactly sure I fully understood you. So are you saying wholesaling in general is illegal? Please clarify this for me. Thank you
Yes that is what I am saying.
Buying low and reselling would be what I would call "wholesaling" However the term as it is commonly used today is nothing more then brokering real estate. You must be licensed to broker real estate.
Okay So basically everything that is on Bigger Pockets from Podcast to blogs about wholesaling is all illegal? I cant agree with you on that. I do however agree that there is certain things that can make a wholesale deal illegal but not the wholesaling in general is illegal. Than a lot of people including the founders of biggerpockets would be in serious legal issues. Just my opinion though.
@Account Closed
It is responses like this why wholesalers need to contact their state agency. Call TREC first thing Monday morning, tell them exactly the deal, your capacity in the deal, your representations to the seller, etc and ask them if this is legal or not. Your response that others are acting in the same manner has NO bearing on whether YOU are acting within the law or YOUR state. Now, if you want to 100% protect yourself, just BUY the property and do as you wish. You can do one or ten thousand and there is no law in Texas prohibiting you from doing so. There ARE laws in most every state that defines what constitutes brokering and what actions are considered brokering. Sure, we all know how others opinions on BP MAY OR MAY NOT be correct--so call the state Monday morning and get your answers. I am sure TREC is easy enough to locate:) Let us know what TREC has to say and please post it here. Internet know-it-alls want to know!
As a wholesaler, the rule of thumb is "keep it simple." If the owner wants to do owner financing, that's fine. Let the buyer work out the terms with the seller. Your job is straightforward: 1) Get the property under contract, 2) negotiate your fee with the buyer (since you're not representing the seller), 3) assign the contract to the buyer, 4) collect your fee and 5) move on to the next deal. Whether you're working with a realtor or directly with a buyer, it's all the same. The more you deviate from the above workflow, the less your transaction conforms to the legal description of an assignment. I commend you on seeking counsel given the complexity of your deal. However, you should address any legal questions to a licensed attorney. BP is a great resource, but often you will get conflicting answers. Great job getting the deal done!
As a wholesaler, the rule of thumb is "keep it simple." If the owner wants to do owner financing, that's fine. Let the buyer work out the terms with the seller. Your job is straightforward: 1) Get the property under contract, 2) negotiate your fee with the buyer (since you're not representing the seller), 3) assign the contract to the buyer, 4) collect your fee and 5) move on to the next deal. Whether you're working with a realtor or directly with a buyer, it's all the same. The more you deviate from the above workflow, the less your transaction conforms to the legal description of an assignment. I commend you on seeking counsel given the complexity of your deal. However, you should address any legal questions to a licensed attorney. BP is a great resource, but often you will get conflicting answers. Great job getting the deal done!
Lawrence, John mentioned me which brought me back here, I then read this.
I see you're new to posting on BP, perhaps you haven't been around the site seeing the opinions of attorneys and regulators.
I'd much rather bring peace on this battlefield about wholesaling through better education, but posts like this are adding fuel to the flame with those 5 steps and the comment that you don't represent the seller. That is guru talk. I'm not busting your chops here, but saying wholesalers simply keep repeating what gurus put out as if that is correct.....it is not correct in any state.
Good advice in saying see an attorney. In reality, I'd say 99 out of a 100 wholesalers won't darken the door of an attorney's office. My insight as to what you posted tells me you haven't sat down with an attorney. My gut tells me that the only attorneys in this entire country that would promote or defend wholesaling as it is generally done are either gurus selling materials or they are the guru's defense attorney.
In over 6 years on BP, not once has a real estate attorney (or any attorney) posted in support of the wholesaling tactics taught by gurus, not one and we have had (and still do have) attorneys from across the country on BP. That should tell wholesalers something from common sense.
It all boils down to intent and the ability to perform under a sale contract. Forget real estate license laws, the contract used is the issue, the buyer's true intent is the issue, the fact that someone executes a purchase contract who personally does not have the ability to perform or keep the promises made in that contract as it is written......that's the issue. What becomes secondary is using the contract to circumvent licensing laws, the sale contract is simply a means to gain a position to list a property for sale.....selling the contract not the property is nothing more than a side step to facilitate a sale.
Wholesaling can be accomplished without issues, by taking a title interest in the property, buy it! There is no law that requires a buyer of any property to have a job, to have money, to have good credit, to fog a mirror, pass an IQ test, or not live under a bridge!
I keep thinking about or picturing the image of the three monkeys, see no evil, speak no evil and hear no evil, pretty much sums it up for wholesalers who flip sale contracts. They don't want to know. Deny the facts and keep things simple. Remaining ignorant of reality is for the simple minded. A good education only complicates your life. :)
Hello Bill Gulley. Since BP has an entire section devoted to wholesaling (Education -> Blog Topics -> Wholesaling), I don't quite understand your disdain for it. Maybe your experience with wholesalers has been skewed by the volume of inexperienced guys out there who don't have a clue but are trying to find their way. The meat of my suggestion was to "address any legal questions to a licensed attorney." Also, if wholesaling were simply a matter of purchasing the property outright, then most wholesalers starting out with no resources would have never chosen real estate as a business. I do agree that the contract used and the buyer's true intent are the real issues. That's why a wholesaler should have a relationship with a licensed real estate agent and an investor friendly attorney. That way, the buyer's true intent is known and nobody's time is wasted. Every wholesaler I know personally has an attorney on his team; that said, I hear horror stories all the time about wholesalers who don't have a clue.
@Account Closed
No worries. These "wholesaling" techniques were taught on BP by others so it must be ok!
Very clear that this is unlicensed brokerage activity. I would suggest the O.P. look into becoming a real estate agent if she wishes to earn fees or commissions by brokering deals between a buyer and a seller.
I was unaware of this I set it up under my name the owner finance and later assigned it to the end buyer for a fee as I do with any other assignments of contract. The home was owned free and clear. Is it still violating laws this way? I would not like to be in another transaction this way if it is illegal.
To make things incredibly simple this is what you need to take away from this thread.
This applies to all of your wholesale transactions---If you are attempting to sell a property that you do not own you are brokering real estate. It is that simple. Having a purchase contract does not mean you own it. Once you close on it and take title you own it, not a moment sooner.
Another thing in this current transaction that throws a wrench into things is the owner financing component. Has the buyer underwrote you as a potential borrower? In theory the seller would also want to underwrite the "actual" buyer as well. I don't think the owner financing part of this deal should be the focus right now though. We should always stop and remember attempting to sell a property that you do not own you is brokering real estate.
Im not exactly sure I fully understood you. So are you saying wholesaling in general is illegal? Please clarify this for me. Thank you
Yes that is what I am saying.
Buying low and reselling would be what I would call "wholesaling" However the term as it is commonly used today is nothing more then brokering real estate. You must be licensed to broker real estate.
Okay So basically everything that is on Bigger Pockets from Podcast to blogs about wholesaling is all illegal? I cant agree with you on that. I do however agree that there is certain things that can make a wholesale deal illegal but not the wholesaling in general is illegal. Than a lot of people including the founders of biggerpockets would be in serious legal issues. Just my opinion though.
As James Wise stated wholesaling the way it is being done by 99.9% of the people is violation of the Various State licensing laws for real estate. Some of what is being practiced could be pursued criminally. I don't like the term wholesaling either. There is a very legal and ethical way to enter into a purchase contract and assign it to another prior to closing, but that isn't being taught by anyone!
@Account Closed
It is responses like this why wholesalers need to contact their state agency. Call TREC first thing Monday morning, tell them exactly the deal, your capacity in the deal, your representations to the seller, etc and ask them if this is legal or not. Your response that others are acting in the same manner has NO bearing on whether YOU are acting within the law or YOUR state. Now, if you want to 100% protect yourself, just BUY the property and do as you wish. You can do one or ten thousand and there is no law in Texas prohibiting you from doing so. There ARE laws in most every state that defines what constitutes brokering and what actions are considered brokering. Sure, we all know how others opinions on BP MAY OR MAY NOT be correct--so call the state Monday morning and get your answers. I am sure TREC is easy enough to locate:) Let us know what TREC has to say and please post it here. Internet know-it-alls want to know!
Most State Agencies will have no idea what you are talking about or have knowledge on how the process as it is currently practiced is done. I am not sure why anyone believes that the government is knowledgeable about anything, it usually just adds to the problem.
@Account Closed I was told there are at least three locals under investigation for brokering without a license. I have no doubt there are probably many more. Word will spread when these operators get fined (or whatever the state pursues). The REIA just north of me supposedly teaches "wholesalers" how to get written permission to "market, advertise, show" the house once under contract. The DBPR allegedly has a copy of this agreement. It will be interesting to see if they produce that at our next REIA meeting. Some people allegedly PAID for a copy of this to operate. I suspect they didn't get their moneys worth:) When you have BP members posting like the OP in this thread it would seem like a slam dunk case for them to make. With more and more homeowners being victimized, and the finding out their house is not sold, it is no surprise to see the rise in unlicensed brokering complaints. I am in FL, and this OP is in Tx. Wonder if any brokers or agents bothered to contact TREC re: this poster. What happened in OH is probably well known by operators in that state, and word does spread. As to your doubts as to the competency of government officials I must agree.
Disclaimer/Disclosure: I should have added this eight months ago, but have been busy doing real estate, in spite of being ‘retired’. The thoughts I have posted on this website in the past are only my opinions or ideas, to encourage further investigation. I advise people to regard them as such and to seek local, experienced, professional counsel on matters of legal and financial concern.
It may be a sound idea to remember that almost all the posts on here are simply opinions. Those opinions are created based on the writer’s own scope of experiences and beliefs, and sometimes are presented here as the ultimate truth and fact.
Understandably, it’s fair for them to think that they are bringing the ultimate truth and fact, based on their own personal reality. However, what is often overlooked is that no two sets of reality, experience, and beliefs (true or false) are exactly the same. For many people, their reality is their comfort zone, and they are convinced there is no other reality but theirs. If they are confronted with a reality that differs from theirs, they may react in a way to allow them to maintain their comfort zone and defend their reality, often by utilizing ridicule, insults, or derision to avoid further discussion and any facts emerging that threaten their position, beliefs, perception, comfort zone and feeling of authority. This is not to say their reality is wrong, but rather that it is limited to their personal experience, education, and beliefs, regardless of how extensive.
And just for the record, contrary to disparaging comments, I am not suffering from “cognitive bias”.... or “the effects of ... legal education at Internet University”. Wow. Stunning, thanks for that, I clearly shouldn’t have shared my opinion in this environment, but rest assured, if I ever elect to do so again in the future, well, actually, that will be an exceptional rarity. The personal smackdown was successful, I apologize for attempting to contribute and unintentionally trespass on someone else’s turf in this hallowed space.
How did I form the opinion I wrote? I’m not a guru, I don’t present myself as an expert or authority, I don’t have a website promoting myself, or late-night TV commercials. I’m not an attorney nor do I play one on TV. However, I have been a real estate entrepreneur for almost 40 years. I have done projects ranging from single family fix and flips to developing a 72 unit luxury town home community, and every imaginable strategy in between. I have learned from the school of hard knocks, and invested tens of thousands in education from highly successful real estate investors. I’ve been self-employed since my first business in the fifth grade. I love the business and learn new things every day. I’ve bought and sold properties or wholesaled contracts in multiple states, in person or virtually. In the early days I totally rehabbed houses with my own two hands and my own tools, although I almost never did roofing, sheetrock, or carpet myself, LOL. I have created all the contracts, notes, deeds, and closing statements, and docs needed to close and record many, many of my deals. All parties involved walked away satisfied, and no laws were bent or broken. I’ve written a book addressing the ‘Zero Down’ strategy; I have advised and educated, at no cost, attorneys, real estate brokers and agents, escrow officers, sellers, homebuyers, beginner real estate investors, and others from time to time, in the course of doing this business over the years. The sum of that results in, yes, just my opinion, based on my reality. At best, I see my opinion as only a springboard to create questions that form a starting point and set of questions from whence to launch a comprehensive course of due diligence.
So, I am suffering from “cognitive bias”.... or “the effects of ... legal education at Internet University” ?? Anything is possible, it depends on one’s personal reality and own cognitive bias. Which I understand is a condition often studied in psychology and behavioral economics.
Cheers