Save my self the heartache, and get a real estate license! No w

Investor · Euclid, OH · Member since 2017 · 8 posts · 2 votes

Hello! I just joined this group today, and hoping to find some input on a nagging question I have. Is it really possible to do wholesaling of houses without money out of your pocket, or doing and rehabe work?

Like, just getting a finder's fee for finding a seller and buyer?

Preparing to get real estate license, too dangerous in Ohio to do wholesaling!

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David Dachtera

Rental Property Investor · Rockford, IL · Member since 2014 · 4k+ posts · 2k+ votes

@Heidi Green,

If you do back-to-back closings, that should keep the Ohio dogs at bay. Since you'll actually be closing on the acquisition of the property, you won't be "selling" someone else's property by doing a contract assignment.

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David Dachtera
Rental Property Investor · Rockford, IL · Member since 2014 · 4k+ posts · 2k+ votes
9y
@Heidi Green,
If you do back-to-back closings, that should keep the Ohio dogs at bay. Since you'll actually be closing on the acquisition of the property, you won't be "selling" someone else's property by doing a contract assignment.
3 Reply
Kevin Wang
Real Estate Agent · Plano, TX · Member since 2013 · 106 posts · 54 votes
9y
Hi @Heidi Green
It's possible but not probable, out of money pocket opens more opportunities.
1 Reply
Heidi Green
OP
Investor · Euclid, OH · Member since 2017 · 8 posts · 2 votes
9y
Thanks David, and that might be possible for you in your state, but in Ohio, what you described is considered illegal activities without a license in Ohio! I know 4 wholesalers who where hit with heavy fines for doing that in Ohio! Doing wholesaling in Ohio is tough without a license!
0 Reply
Heidi Green
OP
Investor · Euclid, OH · Member since 2017 · 8 posts · 2 votes
9y
One in Ohio got a fine of 2,100, a misdemeanor, and 180 days in jail, happened in July of 2017!
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John Thedford
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
9y
Contrary to what others may believe, brokering without a license is NOT legal in many states. There are obvious reasons for NOT using unlicensed brokers. He is what I suggest to all considering using unlicensed brokers:
BEFORE you deal with any unlicensed broker consider these ideas:
1. Always require WRITTEN comps that can be substantiated
2. Always require WRITTEN bids from LICENSED contractors
3, Always require WRITTEN comps to substantiate ARV
4. NEVER pay a non-refundable fee
5. Always correspond via email so there is written record to bring suit in the event of misrepresentation.
6. Always demand to see a copy of their contract.
Remember, these are middlemen trying to play RE agent without a license. Make sure they provide GOOD comps. Make sure if they are representing an ARV value make them provide ARV comps. If they make claims about rehab costs, make them provide WRITTEN bids from contractors. They are brokering real estate so make them PROVIDE good quality information like you could get from a licensed broker. Many of these unlicensed brokers simply make up figures that sound good but cannot back them up.
Unlicensed brokers generally have no insurance. From personal experience most just pull their ARV out of thin air. Lets see: claim it costs x and it will sell for y. If someone uses an agent, an agent won't provide or should NOT provide the BS an unlicensed broker does. They should not or do not provide rehab figures (to protect themselves). They should tell a prospective buyer to get their own bids. They can provide comps in some situations on an updated unit vs an original unit. Agents have something to lose, can be fined, and have their license suspended or revoked. Unlicensed brokers, acting as fringe operators skirting the laws have nothing to lose. They are acting as an agent without the laws, ethics requirements, education, and insurance that are vital IMO.
BTW--using contracts to circumvent licensing law is now prohibited in several states including FL. You can get hit with a 5K fine, a 3rd degree felony, etc. That is something people should not want on their record.
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David Dachtera
Rental Property Investor · Rockford, IL · Member since 2014 · 4k+ posts · 2k+ votes
9y
@Heidi Green,
Hhhhmmm... Interesting that in Ohio can be found guilty of selling a property you legally own...
1 Reply
Heidi Green
OP
Investor · Euclid, OH · Member since 2017 · 8 posts · 2 votes
9y
David, that only applies to peole trying to do wholesaling in Ohio, who are not license as brokers or real estate sales license. I was warned by a real estate lawyer not to even try to do back to back contracts wirhout license! Ohio is just BS when it comes to the real estate laws! They make it really tough for those without license!
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Heidi Green
OP
Investor · Euclid, OH · Member since 2017 · 8 posts · 2 votes
9y
Agree John, but some hire contractors to inspect the home, also use home inspectors. I believe it's just better to play by the rules and get the education and licensing you need.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
9y
@David Dachtera David its respa violation to use pass through money to close deals.. even though some closing attornies will do it..
also whats the difference of advertising a home you don't own.. with advertising a home you don't own.
when you do what your advocating you have to advertise it to find a buyer yet you don't own it .. so whats the difference.
you need to close first advertise second.. then resell.. that's what Ohio is looking for people to do.
now its documented you can assign your contract you simply cant advertise the home.. so how many wholesalers do you think can sell a home without advertising it on Craigslist etc.. No many I can tell U that..
its illegal in all states but its really up to which state wants to follow up.. you advertise a home you don't own in Oregon and someone files a complaint your going to get a cease and desist and a fine .. no question..
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David Dachtera
Rental Property Investor · Rockford, IL · Member since 2014 · 4k+ posts · 2k+ votes
9y
@Jay Hinrichs,
Ok. Let's look again the back-to-back closing ...
A -> B happens using B's funds - stand-alone. B will typically use transactional funding to close, then repay the TF lender using the funds from the next closing.
B -> C is, again, a stand-alone closing. The fact that it happens between hours and weeks later should not be an issue. All of the funds are entirely proper and legal.
How many wholesalers can sell a property without advertising it? Any who have done well building their buyers list before seeking properties to get under contract. They just become "order takers" for their buyers, finding properties in the market matching the buyer's investment criteria.
... and, again, advertising "the home" is where typically wholesalers go wrong. If you advertise at all, you advertise offering YOUR POSITION IN THE CONTRACT - NOT THE PROPERTY ITSELF.
A subtle distinction? Certainly, and the courts (and prosecutors) will quibble about it.
All the more reason to the have the buyer first and the property second.
Here's a local wholesaler (direct link - NOT an affiliate link). They've been in business for a while. They even keep a limited inventory of properties they've not yet resold.
Contract assignment is legal in all 50 states, to my knowledge, and happens every day, mostly in the business world.
1 Reply
David Dachtera
Rental Property Investor · Rockford, IL · Member since 2014 · 4k+ posts · 2k+ votes
9y
@Heidi Green,
See my response to Jay, above.
Selling a property you own is 100% legal in all 50 states.
If anyone raises a problem about what you're doing, you're doing it wrong.
0 Reply
Heidi Green
OP
Investor · Euclid, OH · Member since 2017 · 8 posts · 2 votes
9y
I just rather play it safe and successfully get a real estate license.
1 Reply
Jonathan Damon
Chesterfield, SC · Member since 2017 · 142 posts · 73 votes
9y
Just double close in Ohio. The real estate mafia can't touch you then. It's amazing to see how much disinformation goes on in this site. If you're looking to be a wholesaler be careful on here.
1 Reply
John Thedford
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
9y
@David Dachtera
Contract assignment is legal in FL. However, the State of FL has amended their RE regs noting that using contracts, as a manner of circumventing licensing law, is NOT legal.
475.43 Presumptions.—In all criminal cases, contempt cases, and other cases filed pursuant to this chapter, if a party has sold, leased, or let real estate, the title to which was not in the party when it was offered for sale, lease, or letting, or such party has maintained an office bearing signs that real estate is for sale, lease, or rental thereat, or has advertised real estate for sale, lease, or rental, generally, or describing property, the title to which was not in such party at the time, it shall be a presumption that such party was acting or attempting to act as a real estate broker, and the burden of proof shall be upon him or her to show that he or she was not acting or attempting to act as a broker or sales associate. All contracts, options, or other devices not based upon a substantial consideration, or that are otherwise employed to permit an unlicensed person to sell, lease, or let real estate, the beneficial title to which has not, in good faith, passed to such party for a substantial consideration, are hereby declared void and ineffective in all cases, suits, or proceedings had or taken under this chapter; however, this section shall not apply to irrevocable gifts, to unconditional contracts to purchase, or to options based upon a substantial consideration actually paid and not subject to any agreements to return or right of return reserved.
1 Reply
Chris Martin
Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
9y
Regarding "Selling a property you own is 100% legal in all 50 states." This is true. However, if you don't have a recorded deeded interest, then in you don't own the property, per Ohio interpretation and by . Some key wording in the exemption part of the ORC is "...acquired on its own account..." A typical 'wholesaler' does not acquire the property and therefore isn't party to the exemption.
As others said, OH and FL have cracked down. So adjust accordingly. As @John Thedford pointed out, the is pretty damn clear about where thee line is.
There are lots of other discussions about OH 'wholesaling' on BP.
And many states, like NC, are not nearly as sensitive to the concept of selling your personal property interest which happens to be a contractual OTP. For me, though, if I were in this space (I am not -- I don't 'wholesale' or flip properties) I would close then sell as a 'wholetail' operator because in this market you can make way more money. Just my view.
2 Reply
Tan Mehedi
Engineer · Douglasville, GA · Member since 2016 · 90 posts · 31 votes
9y
I am a buy and hold investor ( BRRRR sta from Brandon
0 Reply
Tan Mehedi
Engineer · Douglasville, GA · Member since 2016 · 90 posts · 31 votes
9y
I am a buy and hold investor ( BRRRR) but I would like to hear from a RE attorney's point of view on this matter
1 Reply
Chris Martin
Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
9y
@Tan Mehedi there were some attorney's input on this . Specifically, I looked at the ORC changes that happened, and when, posted about it and other OH regulatory implications.
1 Reply
David Dachtera
Rental Property Investor · Rockford, IL · Member since 2014 · 4k+ posts · 2k+ votes
9y
Originally posted by @Chris Martin:

Regarding "Selling a property you own is 100% legal in all 50 states." This is true. However, if you don't have a recorded deeded interest, then in you don't own the property, per Ohio interpretation and by . Some key wording in the exemption part of the ORC is "...acquired on its own account..." A typical 'wholesaler' does not acquire the property and therefore isn't party to the exemption.
As others said, OH and FL have cracked down. So adjust accordingly. As @John Thedford pointed out, the is pretty damn clear about where thee line is.
There are lots of other discussions about OH 'wholesaling' on BP.
And many states, like NC, are not nearly as sensitive to the concept of selling your personal property interest which happens to be a contractual OTP. For me, though, if I were in this space (I am not -- I don't 'wholesale' or flip properties) I would close then sell as a 'wholetail' operator because in this market you can make way more money. Just my view.
Once you close in the A -> B portion, you are the legal owner. You DO "acquire" the property, which you then sell to the end-buyer. Problem solved. Whether the B -> C sale occurs hours later or weeks later is irrelevant. If necessary, wait for the documents to be recorded before completing the B -> C sale.
That said, see my earlier response to Jay. If you advertise the property rather than your position in the contract prior to the A -> B sale, you WILL run afoul of the law. Get the buyer FIRST! THEN, lock up the property. No advertising needed.
1 Reply
John Thedford
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
9y
Originally posted by @David Dachtera:

Originally posted by @Chris Martin:
Regarding "Selling a property you own is 100% legal in all 50 states." This is true. However, if you don't have a recorded deeded interest, then in you don't own the property, per Ohio interpretation and by . Some key wording in the exemption part of the ORC is "...acquired on its own account..." A typical 'wholesaler' does not acquire the property and therefore isn't party to the exemption.
As others said, OH and FL have cracked down. So adjust accordingly. As @John Thedford pointed out, the is pretty damn clear about where thee line is.
There are lots of other discussions about OH 'wholesaling' on BP.
And many states, like NC, are not nearly as sensitive to the concept of selling your personal property interest which happens to be a contractual OTP. For me, though, if I were in this space (I am not -- I don't 'wholesale' or flip properties) I would close then sell as a 'wholetail' operator because in this market you can make way more money. Just my view.
Once you close in the A -> B portion, you are the legal owner. You DO "acquire" the property, which you then sell to the end-buyer. Problem solved. Whether the B -> C sale occurs hours later or weeks later is irrelevant. If necessary, wait for the documents to be recorded before completing the B -> C sale.
That said, see my earlier response to Jay. If you advertise the property rather than your position in the contract prior to the A -> B sale, you WILL run afoul of the law. Get the buyer FIRST! THEN, lock up the property. No advertising needed.
This is going to depend on the state law. In FL, you cannot do showings if you are not licensed regardless if you have a contract. Locking up property, and then walking if not able to assign, and no intention to purchase is FRAUD BY INDUCEMENT. We have a local "buyer" that is being sued for that locally, plus being sued for deceptive trade practices. Using contracts to broker, without a license, is specifically mentioned and that person CAN be charged with a 3rd degree felony in FL.
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Susan K.
Real Estate Agent · Palm Beach Gardens, FL · Member since 2017 · 205 posts · 124 votes
9y
I vote you get the RE license. Even though there are a gazillion sites out there, I believe MLS is still a great tool to look at comps in the areas you are investing. I like the convenience of having this tool. You can also deduct the expenses at tax time. Just my 2 cents.
1 Reply
David Dachtera
Rental Property Investor · Rockford, IL · Member since 2014 · 4k+ posts · 2k+ votes
9y
@John Thedford,
If you do ANYthing "wrong" enough, you can get yourself in trouble.
There are work-arounds to most any issue, though not all.
Learn from the mistakes of others, but do not repeat them!
@Heidi Green, the license can be a help in many ways. It can also be a burden in some ways. Just understand what you need to disclose and when, and you'll do fine!
Focus your attentions on the positive. Let go of the past, and remember to learn from the lessons taught by others' faux pas.
You could probably have benefitted from a workshop my investing group held last week. Our wholesaling expert was here to talk about it. His company has done over $300 million in business so far this year.
1 Reply
Richard Dale-Mesaros
Investor · Campton, NH · Member since 2010 · 287 posts · 144 votes
9y
Hmmmm....... so what about buying an option on the real estate and getting paid out of sellers proceeds by way of an 'option cancellation fee' as the buyer you have found closes on their purchase from the property owner - my attorney suggested I go about using options in this manner, as opposed to assigning my option to the buyer, or doing double closings..... thoughts?
0 Reply
Brett Snodgrass
Investor · Indianapolis, IN · Member since 2014 · 2k+ posts · 601 votes
9y
@Heidi Green Welcome to BP!
I’d encourage you to try all you can to get a marketing budget. Now there are a lot of ways to get started in real estate investing using other people’s money, but there is nothing wrong with the old fashion way of saving up and paying for things on your own. That said, I think one of the easiest ways to find deals is to go to Craigslist and filter through all the
crappy stuff to find the gold. In my market at least, there are still great deals to be had on Craigslist, it just takes a lot of time to find them. If you dedicate yourself and create a system, and you stick to it, Craigslist can be a source for your first couple of deals until you can save up for a direct mail campaign. A good guide to help with this is:
https://www.biggerpockets.com/renewsblog/2014/04/2...
Having a license has helped me immensely as a wholesaler.
1. I have full access to the MLS, so I can look and compare Sold properties (Comps) in the area I am buying in.The software exceeds any other public software out there like Zillow or Redfin.
2. Saying I'm a broker gives a level of trust to people selling you their property. It gives a level of professionalism.
3. If you don't sell your property to a Cash Buyer right away, You can list it on the MLS and save your broker fee. and it gets your property out there for all to see.
Hope this helps!
1 Reply
Heidi Green
OP
Investor · Euclid, OH · Member since 2017 · 8 posts · 2 votes
9y
Thanks everyone for your great replies! I agree with Susan K on obtaining a RE license, and pursuing that now! Thanks! :-)
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