Is wholesaling legal?

8 Replies

As a wholesaler, I always get realtors telling me stop selling real estate without a license and to get my realtor's license.  I usually respond "I'm not marketing the property, I'm marketing the assignable purchase agreement". 

What's your BEST response when realtors tell you this?

@Michael Biggs   from what i know Ohio is one of those states that is quite agreesive on the wholesaler cum real estate agent.  

the reality is marketing a contract for most is pretty tough.. without describing the ASSET  and I think thats where Ohio laws come into play.. 

@Nick Gory , I get marketing ads from Wholesalers all the time. But never have I received an ad saying: "Because I'm not Licensed, I can't sell you the property (therefore I can't tell you anything about the property), I'm only selling an assignable purchase agreement. Oh, but I do want to sell you that Agreement for the full wholesale value of the property that is mentioned on it".

Can you please show us an example of your ads? Thanks...

[Btw, the Wholesalers who send me ads are Licensed].

@Nick Gory In your state you're playing with fire. The only way you can really do what you want to do is if you're taking title and flipping the house. (Even if you've done no work)

While your above justification sounds "mentally sound" most judges I know especially ones that Ohio is putting wholesalers infront of will "Judge Judy" that response so fast you won't know what hit you. 

If you can't personally close on the deals... No sweat! Just network at REIA meetups and find someone who can.

Those agents you're getting sassy with are the very ones who will hand you over..... 

Originally posted by @Nick Gory :

As a wholesaler, I always get realtors telling me stop selling real estate without a license and to get my realtor's license.  I usually respond "I'm not marketing the property, I'm marketing the assignable purchase agreement". 

What's your BEST response when realtors tell you this?

 It is complicated. Some states dislike it more than others. I have heard from a lot of people that they do not trust wholesalers. 

One thing I have noticed nation wide is the states are far less likely to do something to someone who always closes on the transactions one way or the other.

I assume they consider that a victimless technicality.

Florida says that if you are assigning a contract you are bringing a buyer. Because that is a licensed brokerage activity you must be licensed. Florida goes after people that are doing this illegally and usually issues them a cease-and-desist on their first offense but can charge them with a 3rd degree felony if they feel it is warranted.

Some states are cracking down on wholesaling, and I've heard that Ohio is one of them.

As powerful as TAR and its PAC are, I'm surprised they haven't gone after wholesalers here in Texas. The legislature did pass a law last year that said wholesalers must have a disclaimer in their marketing materials that they intend to assign the contract to a third party. So far, I haven't seen one wholesaler ad with that disclaimer.

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