Are we breaking the law? BUSINESS LICENSE, required or not?

Question

Ok my question is, as real estate investors, do we actually need a business license to buy and sell houses via our registered entities/companies? When I first opened my business (about three years ago) I went to my local city hall (In the small town of Manning, SC) and asked if I was required to have a business license. Looking a ted confused the clerk asked me “where was my office located.” I informed her that my home-office was located just outside of the city in an adjacent county. She then proceeded to ask if I was a real estate broker, I of course replied” no.” She then asked me if I was a real estate consultant, I again replied with a polite “no I’m not I’m a real estate investor.” She then stared at the computer for about five minutes or so and proceeded to tell me that she found a category to list my business in. After that she finally proceeded to answer my original question. She said that in order for me to legally buy and sell houses in that particular City as a company I “needed to be licensed.” Does anyone have some info that could shed some light on this matter? Thanks in advance for all of your comments and helpful insight.

Reginald S. · Answer

Charlie thanks for the reply. However F.Y.I., I’ve been a real estate wholesaler for three years now. Your reply is typical of an uninformed agent. Don’t get me wrong I have nothing against real estate agents. In fact I have some awesome real-estate agents that I work with in my business on a regular basis. Without them Charlie I couldn’t effectively do what I do. Also I am currently helping my daughter study to get her SC. state RE license. I used to be so confused when I heard agents talk about wholesaling being illegal. However after looking through my daughters study guides I was able to connect the dots and am no longer confused. That gibberish is designed to keep real estate professionals like yourself in fear of ever venturing out from under their 35% tax bracket to invest in real estate on their own. Kudos to all of the investor savvy agents out there! You are amongst the steady growing informed. Now pay attention Charlie because I’m about to take you where the book of gibberish obviously did not. First of all about 90% of my clients are people that own dilapidated houses that agents like yourself refused to help them sell because the commissions are too low and your typical retail buyer could never get a conventional lender to loan them the funds to purchase a junker. I actually learned of this from the people that have come to me begging me to help them out of a property that in most cases there family and kids didn’t even want. Now here’s how it works. When I agree to buy a person’s house I actually have to give them an earnest money deposit/consideration. That consideration actually gives me equitable interest in the property which in turns make it perfectly LEGAL for me to market the property as an owner not a broker. I than find a buyer/investor that does nothing but fix and flip these homes and assign my rights in the deal over to them for a fee. Did you see that Charlie everyone wins, the seller, myself, my investor/buyer, the attorney, the people in the neighborhood where the dilapidated property was sitting, etc. Go check your book of gibberish Charlie. It is NOT illegal to market/sell a property that you have equitable interest in. You know Charlie perhaps the whole wholesaling process is indeed the product of a legal loophole. However let’s not forget that the fat cats in Washington D.C. and beyond are the ones that created it, not me. Be real Charlie, does it really make me a crook because I (through nonconventional means) have educated myself enough to learn how to use the legal loopholes to feed my family? Trust me Charlie the fat cats in Washington didn’t create those loopholes in an effort to help me and you feed our families. They created and hid them for themselves and the informed have simply learned how to legally invade their very legal stash. Some of the people that I have helped with my home buying service had been (property) tax paying owners of properties that they no longer wanted for over a decade. It is their heartfelt thank you’s that really make me love what I do. So in closing, how about we all try an use this platform for what the awesome creators actually designed it for. How about we try an use it to actually build each other up and not discourage, accuse, and tear each other down. Again thank you to all of the wonderful real estate agents out there who have actually taken the time to educate themselves as to what it really is that we RE investors do. Your expertise, commitment, loyalty, and wisdom is truly the heartbeat of the real estate industry. Thank you and God bless. P.S. Pray for Trump!

Charlie MacPherson · Answer

@Reginald S. You need to have a long hard look at your state's laws regarding real estate.

In any place I know of, the only legal way to wholesale properties or sell any property that you don't already own is to buy them and re-sell them.

Wholesalers and their gurus try to skirt the licensing laws that are put in place to protect the public. There are all sorts of sketchy legal theories that wholesalers cloak themselves in to convince themselves that they're doing a wonderful service to sellers, when most often, they're cashing in on a homeowner's distress.

Most likely, you really DO need to be licensed as a real estate salesperson and probably need a business license as well.

Are we breaking the law? BUSINESS LICENSE, required or not?

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