Illegal to advertise property under contract?

Question

I have my first bank owned property under contract, I'm going to do a double closing on it..

My marketing team put it on craigslist to advertise it and get some buyers....

However, I was just informed from my realtor that its illegal to advertise and to take it off immediately.....is this true?

Since I'm a newbie wholesaler...can I get some input from the more experienced ones?  Thanks.

Scott Hubbard · Answer

I'd take it one step further and explain to the agent that they are not allowed to give legal advice and that you will lodge a complaint against them for practicing law without a license.

Stephani Davis · Answer

Ditto what Ryan and Curt said.

Agents LOVE to throw the "illegal" word around.

I'd ask politely to see the law/statute that you are violating so you can be sure to be in compliance.

That usually shuts people up in a hurry.

Steph

Ryan Webber · Answer

Most states real estate licensing laws say that as a real estate agent you can not list or market a property unless you have contracted with the owner to do so.

I have never seen any non-real estate agent laws that say you can not market a property unless you own it.  And legally you do have an equitable interest in the property through your contract, which means that you are not acting as an agent.  As a wholesaler you are attempting to sell YOUR interest in the property which is via a contract to purchase it.

I would relay to you that most realtors are deeply ingrained with the idea that everything outside of their box is "illegal", and many times for a licensed real estate agent it very well may be.

For non-agents, though, the laws aren't as thorough or detailed and many things that are "illegal" for a realtor are perfectly legal for a non-agent.  I would recommend that you stop talking to your agent about wholesaling.  They don't understand it and most of them have very negative ideas about it.

James Ward · Answer

Priscilla,

This is exactly what my attorney told me to put into every contract.

- Seller gives permission for Buyer to list for sale, market, negotiate, and enter into a contract to sell the property immediately to a third party for profit.  All documentation in connection to the sale will be made availible at the written request of any Lender or Buyer.

Hope this helps,
James

-p.s.: this is for Florida, I can not make any claims for any other state!

Jon Holdman · Answer

Its a REO, though.  Do you think a bank would accept that language in a contract?  Seems unlikely to me, since they disallow assignments.

James Ward · Answer

I always have a friendly lender waiting in the wings, if any problems arise.

James Ward · Answer

Justin,

We have had several buyers lenders want to see the paperwork.  Mostly due to the fact of us not being on the title.  Most of them were a request by the mortgage broker or underwriter.  When we noted that the request was required to be in writing.  It was almost always forgotten.  But the few that supplied us the documentation, we sent over the requested documents.

The sellers lenders- I can't think of any of them requesting anything.  But I have to look to prove my answer.

Justin S. · Answer

Aaaah, I was not even thinking on the B-C side, only the A-B.  So the end buyers lender requested to see the paperwork, interesting.  Any issues ever come up with that?  I go a different route and make the buyers use my lender if their lender does not approve the sale.

Justin S. · Answer

James-

Has a lender ever asked for the documentation?  I have a similar clause in my contract, except for the part about providing documentation to the lender.

Thanks,
Justin

James Ward · Answer

Jon,

This is only when you plan to buy, then sale.  I have never been able to assign anything where a lender was envolved.

We have used this mostly when perfroming short sales.  But I have given this to a few people that do REO's.

James

Illegal to advertise property under contract?

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