Is Wholesaling Allowed in Delaware?

Question

Hello,

Is wholesaling allowed in Delaware? If so, are there any attorneys that you can recommend ?

Karen Rittenhouse · Answer

@Kelly Claiborne

Wholesaling is a normal selling transaction and, therefore, should be perfectly legal in all states. Simply contact a local real estate attorney to confirm.

To wholesale, you have purchased a property. Once you purchase, you can do anything you want with it. And, because you own it, you do not need a license of any type. You can for-sale-by-owner or use an agent to sell.

When you sell a property wholesale, you simply mark it up a small amount from your purchase price (the word "small" is relative to what you paid and the ARV - many investors have made six figures off a wholesale deal) and typically sell in a "relatively" short time frame.

Assignments are not necessarily legal in all states but that is an entirely different type of transaction.

Jennifer Nicole Lapinsky · Answer

+1 to @ Eric Armstrong... Find a local attorney that you can trust and use often.  They are a wealth of information, especially when they know they get the majority of your business.  You can often get free advice.  Idk what I would do without mine!

James Masotti · Answer

I'm going to answer this with a tentative "yes, but". which of course is the appropriate CYA response.  People do wholesale in DE all the time (I know because I have purchased properties from them). How you go about wholesaling is often what is going to determine whether or not your brokering real estate without a license. As for an attorney who could specifically assist you with understanding the intricacies of staying legal...I don't think my attorney could help with that, but I'd encourage you to go to the DelREIA facbook page and ask the question there. You'll get many more specific responses from investors that are active in the market to steer you in the appropriate direction.

Karen Rittenhouse · Answer

@Jay Hinrichs So well said. It's just that 99% of the people here are so confused and it's because no one is educating them as to the reality of these (and other) strategies.

Lack of education ends up costing and, for some, takes them out of the business. I do what I can....

:)

Karen Rittenhouse · Answer

@Jay Hinrichs Again, wholesaling by definition requires that the buyer close on the deal and resell. Not closing is selling only a contract which is an assignment. 2 different selling techniques - 1 deals with the contract, 1 deals with the property.

Karen Rittenhouse · Answer

@Cody L. All wholesalers buy first. If you don't buy, then you're simply assigning the contract which is called an assignment. Assignments and wholesales are not the same thing.

If you buy right, your selling price for wholesale can be huge. I wholesaled one the beginning of the year for an $80,000 profit. That's a normal wholesale profit for my friends in Baltimore.

Wholesaling, done right, is hugely profitable. If it wasn't, I wouldn't be doing it full time.

:)

Cody L. · Answer

What % of wholesalers are buying first then selling? My guess is it’s near zero. And I assume you know that?

At a small mark up any profit would be lost to the closing costs (mostly title, lender fees, etc)

Cody L. · Answer

Looks like you beat me to it.  I just made a similar reply.

Cody L. · Answer

Respectfully, you can say "If you don't buy first then you're not a wholesaler" all you want.  I'm just saying that 99.99999...% of the time when someone talks about wholesaling, they're talking about assigning.  So maybe they're using it wrong but it's use so commonly in that regard that perhaps you might say the official definition is now incorrect (or sort of meaningless)

Jay Hinrichs · Answer

Karen you and i totally agree  .. but the wholesaling Guru's and folks on BP did not get that memo.. you see it everyday.. BP members defending the position that assisting is wholesaling..   But the reality is unless a state is keying in on it.. its just like going 70 in a 45 its against the law but if there is no cop with radar to catch you.. you can just do it for years.

Is Wholesaling Allowed in Delaware?

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