Squashing the "Wholesaling is illegal/legal" argument!!!

94 Replies

Originally posted by @Juensy Pierre :

@Jay Hinrichs It’s pretty clear this particular wholesaler might get into some serious trouble if he/she marketed the property instead of marketing the contract, although if he/she double closes or has a license he/she can pull through this situation. This is one of many benefits of having a license in a situation such as this one but again it’s not required when selling a contract.

when I had my two sit downs with the state regulator they don't buy the double close..  their position is they still had to market the house before they owned it.. they consider a double close just as bad as its a rouse to circumvent the laws.. owning a house for one hour does not make you an owner in their eyes.. and they defiantly don't buy the equitable interest theory of 100 dollar EM is equitable interest. 

people assign deals.. I paid 125k assignment fee last summer.. but it was for a 5 million dollar development deal.. that the guy had put up 50k in EM on and spent 18 months getting the property to the position that it could be developed.. that is equitable interest. not what is taught in guru wholesale school.  plus he never advertised anything.. it was referral word of mouth..  

This whole discussion is very interesting, and I appreciate the interests and views of parties expressed.
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I doubt we'll solve the debate.  I "wholetale".  For those unfamiliar with the term: I purchase the property, do little to no work to it other than clean it up and ensure title is clear, then resell to another investor.  That's another way to avoid the issue without needing a real estate license.  In addition, I'm also a buy and hold land lord.

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I don't flip contracts unless I'm in the position to close the contract if I can't flip it by closing day.  Too much can go wrong leaving both the Buyer and Seller in the lurch.  The wholesaler contracts I've seen basically transfer all the risk to the Buyer and/or Seller if the deal goes bad.

@Juensy Pierre One last try and I will quote directly from the only source that matters - the state law.  This law describes license-required activities and I encourage you to try to read it objectively - not through the eyes of someone who is attempting to rationalize a loophole in the law.

While the whole counsel of the law is in play, the meaningful excerpts are:

1. ...for another person...   You are dealing with a property that you don't already own.  That's for another person.

2. ...does any of the following: sells, exchanges, purchases, rents or leases, or negotiates, or offers, attempts or agrees to negotiate the sale, exchange, purchase, rental or leasing of any real estate, or lists or offers, attempts or agrees to list any real estate, or buys or offers to buy, sells or offers to sell

Note that it says "ANY of the following".  Not all.  Not some combination.  It clearly says ANY of the following.

3. "...otherwise deals in options on real estate" This part covers the dodge of "I'm not selling real estate - I'm selling a contract"

4. ...assists or directs in the procuring of prospects...  Which is exactly what you're attempting to do when you assign your contract.

5. ...any agreement or transaction which results or is intended to result in the sale, exchange, purchase, leasing or renting of any real estate."  That covers it all.

Not only is there zero wiggle room there, my own broker who is also a MA state commissioner confirms it.

Originally posted by @Mike Hendrickson :

I have read through a lot of forum post about the topic of wholesaling (the latest by @Brittany Witt) and it seems like the argument of wholesaling being legal/illegal could be squashed once and for all by getting your RE license.

With your RE license, you are required to hold your clients interest above your own by law. So if your client's interest is selling their property quickly and you can satisfy that interest with a cash buyer, regardless of the price, I don't see how that could be looked at as unethical.

On the other side of the coin, if your clients interest is to get the most money from the of their property as they can (as a licensed RE agent with your clients interest before your own) most likely it would be listed on the MLS.

I am curious to here what others here have to say!! Especially you @John Thedford

 I was expecting some bombshell post, where some genius found some loophole in the law..LOL.  What a downer.. You didn't squash nothin'... 

@Jay Hinrichs In your first comment you touched on how wholesalers illegally market properties they have under contract as a licensed broker would. So if I got a property under an assignment contract, how would I LEGALLY market the CONTRACT? Not trying to make a point. Just asking a question so I can do everything legally and aboveboard.

@Charlie MacPherson .  Very well-stated!  I agree with all of your points.  As another post mentioned, there's no way to effectively police these policies broadly: too many small timers out there to catch them all.   


Some people like to drive 10+ mph over the speed limit.  They take their chances because they know many other drivers are also speeding and there's only one patrolman for every x-miles stretch of road, so they cross their fingers they won't get caught, and if they do, they'll say "I didn't know" and hope the fine is less value lost than all the time they have saved over the years getting to their destination faster.  "Beg forgiveness vs. asking permission."  It's an old and oddly effective strategy for many people.  
My guess is if the penalty were far worse: say, a minimum of 3 years incarceration for the first offense, there would be fewer wholesalers willing to risk taking this route.  


As it stands, I think the theory is: don't get caught, if you do get caught plead ignorance, and hope the penalty is way less than all the money collected by doing these deals.  Really, what can you do to a penniless wholesaler via civil suit?

Originally posted by @Spencer Wilson :

@Jay Hinrichs In your first comment you touched on how wholesalers illegally market properties they have under contract as a licensed broker would. So if I got a property under an assignment contract, how would I LEGALLY market the CONTRACT? Not trying to make a point. Just asking a question so I can do everything legally and aboveboard.

 seems to me you would simply call your top 5 buyers on the phone and say you have contract for sale. 

just like the guy that I paid the 125k for he knows I am a developer and can buy 5 million dollar deals.. he calls me. :) plus to be fair I have coveted that parcel for years I tried to buy it pre GFC but market crashed and I was not in a position for a 5 million dollar deal in 07 08 as I was chasing down defaulted borrowers left and right LOL.. but this year.. we took it down.. But again this guy did way more than just tie up a SFR and try to flip a contract he put money time effort into land use etc etc.. so I don't know.

I just got curious is why I sent the copy of a blast e mail I got on a SFR in Portlandia and wanted the state to finally tell me what they require and what they will enforce.. and keep in mind in many states even though the law reads the way it does its Never inforced.

Same can be said for those that buy off bidders at auctions.. it can be rampant in some areas.  IE hey don't bid on this one I will give you a grand or five grand to just walk away..  Well that is illegal happens all the time in some markets.. up until the FBI runs a sting and you get hammered there was a group in either NC or SC that got hammered fine was over 800k. 

@Brian Pulaski

You’re right! Trust but verify each and every source you come across. Legal advices are given on these sources but I do take notes and spend hours researching to make sure they’re creditable.

The contract I would agree to is one that is assignable:

“Make sure to involve a real estate attorney in finalizing the contract to ensure the terms of the agreement are legally sound for all parties. The Purchase Agreement with the seller must include an Assignment Clause, which allows the wholesaler to transfer the rights to a new buyer. There are many wholesale real estate contract templates on the web, but nevertheless, don’t discount an attorney to look things over. The real estate attorney is an independent third party hired to make sure the deal is fair and the property’s records are in check as agreed upon in the contract.“ -mashvisor

With an attorney at your side, one that not only “reads over” a contract but is able to write one up as well, is proof enough that you can be well protected in this business if you abide by the contract and the law of course.

@Brian Jordan I would agree, that in the scenario you used, they are a customer. They are selling YOU their property. When you put the property under contract with the intention of finding them a buyer, they are a client. You are helping them market their property in order to sell it.

"Wholesalers" claim that they are selling a contract, but no buyer will simply look at the contract and buy it. The contract has no value without the property that is attached to it. So you HAVE to market the property, along with the contract that is attached.

If you really want to wholesale, you have to purchase the property, then resell via double close or by other means of marketing. Assigning a contract with no intention to purchase, and then marketing that contract, is not leagal in any state that I can think of

Originally posted by @Juensy Pierre :

@Brian Pulaski

You’re right! Trust but verify each and every source you come across. Legal advices are given on these sources but I do take notes and spend hours researching to make sure they’re creditable.

The contract I would agree to is one that is assignable:

“Make sure to involve a real estate attorney in finalizing the contract to ensure the terms of the agreement are legally sound for all parties. The Purchase Agreement with the seller must include an Assignment Clause, which allows the wholesaler to transfer the rights to a new buyer. There are many wholesale real estate contract templates on the web, but nevertheless, don’t discount an attorney to look things over. The real estate attorney is an independent third party hired to make sure the deal is fair and the property’s records are in check as agreed upon in the contract.“ -mashvisor

With an attorney at your side, one that not only “reads over” a contract but is able to write one up as well, is proof enough that you can be well protected in this business if you abide by the contract and the law of course.

the issue is your intentions and your ability.. If you say your a cash buyer and your not.. which is 95% of what beginner wholesalers are and you don't specifically tell the seller that you have no financial ability to buy and your only interested in making an assignment fee.. and if you cant assign it your not going to close.. that's full disclosure.. short of that your entering into contract in what is called

Fraud in the inducement.. the attorney is just writing the contract they are not defending you when you don't close and walk away.  

Originally posted by @Jason D. :

@Brian Jordan I would agree, that in the scenario you used, they are a customer. They are selling YOU their property. When you put the property under contract with the intention of finding them a buyer, they are a client. You are helping them market their property in order to sell it.

"Wholesalers" claim that they are selling a contract, but no buyer will simply look at the contract and buy it. The contract has no value without the property that is attached to it. So you HAVE to market the property, along with the contract that is attached.

If you really want to wholesale, you have to purchase the property, then resell via double close or by other means of marketing. Assigning a contract with no intention to purchase, and then marketing that contract, is not leagal in any state that I can think of

I went into depth with the Oregon regulator that I had a sit down with on this issue of double close..  and it presents the exact same problem you are marketing a home you don't own.. what is legal is close on the sucker then put it on your website.. 

or maybe you can say coming soon.. that kind of thing.. but going into contract to sell a home before you own it. in the state of Oregon is no different than assignments and is a violation.   but again like the state says its complaint driven.. so don't piss off realtors and sellers or buyers.. LOL its free and takes all of 5 minutes to file a complaint. 

@Jay Hinrichs that's a great point. I guess my thinking is that if you are double closing, with the intent to buy if you cant find a buyer, it's a little more "legal". At least the wholesaler isnt defrauding the seller....

Originally posted by @Jason D. :

@Jay Hinrichs that's a great point. I guess my thinking is that if you are double closing, with the intent to buy if you cant find a buyer, it's a little more "legal". At least the wholesaler isnt defrauding the seller....

 I am just relaying what my regulator in Oregon said.. but it makes sense its the same thing.. you don't own it and your advertising it.. just like a realtor that's the rub.. how you close it is immaterial 

@Jay Hinrichs - In my investment strategy - I have three (+) investors that will purchase land deals. I find the deals and tie the land up with an assignable contract and 10%EM. I assign the contract to the investor of choice and he/she closes on the deal. The purpose of this is so my money isn’t tied up into land - I use my money to build the house/apartment/building. After it’s built, we sell or refinance and get both of our cash back out. Seems reasonable to me. Except... that I have a real estate license, too. I don’t have any responsibilities to the seller. My fiduciary responsibility, to me, is the investor that will take over my contract. Am I right?

Originally posted by @James Saturley :

@Jay Hinrichs - In my investment strategy - I have three (+) investors that will purchase land deals. I find the deals and tie the land up with an assignable contract and 10%EM. I assign the contract to the investor of choice and he/she closes on the deal. The purpose of this is so my money isn’t tied up into land - I use my money to build the house/apartment/building. After it’s built, we sell or refinance and get both of our cash back out. Seems reasonable to me. Except... that I have a real estate license, too. I don’t have any responsibilities to the seller. My fiduciary responsibility, to me, is the investor that will take over my contract. Am I right?

 FLA has issues with non licensed wholesaling.. I funded a bunch of stuff in 2012 to 2104 ish for turnkey companies and they got a lot of their inventory from wholesaler.. but that wholesaler was licensed they had a full blown real estate company.. etc.

Also it goes to intent and how you market this stuff. seems to me your more in the JV business.

remember your not whole"Sale"ing anything.. you are ASSIGNING equitable interest in a contract.. nothing else.. but i would not recommend getting your RE license I would suggest staying an investor, educating yourself, and networking with agents and brokers that can assist you with the very things they are necessary for

Originally posted by @Jason D. :

@Mike Hendrickson so if, as a RE license holder, your supposed to uphold your client's (the seller) best interest, how would you reconcile getting the most money for your client, with not listing it to get the most exposure, and therefore, the highest price? And, I dont know a single realtor that would accept an assignable contract from a buyer on a listed property, so haw are you best representing your client, by offering an assignable contract?

The problem lies in the fact that you can not be a wholesaler, and represent the seller at the same time, because those are conflicting goals.

 I generally agree that for most properties, listing it will get the most money.  However, certain properties I can sell for more money by never listing them.  By creating an air of exclusivity around the property on some high end stuff....and even on some medium to lower end stuff, not allowing the entire market to see it and judge it to be worth less....in these instances I can sell a property for more off market.  I probably do about 3 deals a year off market where the price is higher than it would have been if I listed it. 

Even with a license,CO has some issues with some of these operators (and for good reason IMO)

Consumer Advisory: Long-term Home Ownership Concerns(Wholesaling/Assigning Transactions and Distressed Rescue Transactions).
The Division of Real Estate is seeing an uptick in cases involving two types of cases involving long-term home ownership: Wholesaling/Assigning Transactions and Distressed Rescue Transactions. Wholesaling/Assigning Transactions Investors and real estate brokers are targeting people with home ownership of over 20 years. This targeting translates to people over the age of 50 who are close to paying down their mortgage and holding equity in their property. The investor will offer the following:
  • Cash transaction;
  • A quick sale closing with no inspection; and
  • You can leave behind any items you don’t want.

The problems begin when the homeowner is elderly, alone, and doesn’t know the true market value of their property:

  • They may have purchased their property over 20 years ago for $50,000, $100,000, or maybe $200,000.
  • That same property now could have a market value of $300,000, $400,000 or even $500,000.
  • The idea that they purchased the property 20 years ago for $120,000 and are now being offered $220,000 sounds appealing to these homeowners – their mortgage might be paid off and they will make $100,000 – sounds good right?
  • They don’t realize that an investor or real estate broker who knows the true market value of the property may be taking advantage of them by actively misleading the homeowner as to the true market value.

The problems arise when the investor or real estate broker:

  • Drives down the property value in the seller’s mind by showing them comparable properties that aren’t really comparable.
  • Talks to the homeowner about all of the deferred maintenance that the property needs (which may or may not be true).
  • Allows the homeowner to leave items behind (What is that “convenience” worth - the costs of renting a dumpster, hiring two-three workers for a day to unload your house? Is it worth a homeowner giving up $20,000 - $50,000 - $100,000 – or more of their equity?)
  • Fails to tell the homeowner that they are actively marketing the property for market value and that the investor or real estate broker plans to assign their rights in their contract with the homeowner to another investor/buyer.
  • Fails to tell the homeowner that they intend to make a profit by accomplishing an assignment of the contract.
  • Fails to tell the homeowner when the contract is assigned to a different investor/buyer.
Investigated Case Example

Below is an example of a case that we investigated where the broker involved in the deal was referred criminally and her real estate license was revoked.

The victim had the misfortune of being on her front porch when an “investor” and his real estate partner approached her and told her they used to live in the neighborhood and wanted to move back.

They figured out her weaknesses and used them against her.

  • After “working” on her for a few days, the investor and real estate agent had a meeting with her that lasted hours. At the end of the meeting they had talked her into a purchase price of $200,000 for a property she didn’t even plan on selling.
  • At the same time, they had already assigned the contract to a second investor for $300,000 – with the agreement that the second investor would pay a $100,000 assignment fee to the original investor and real estate broker.
  • The second investor sold the property to a third investor for $360,000 two weeks after the closing.
  • Finally, the third investor held the property for eight months and sold it for $520,000.

That wouldn’t happen to any of us right? Think again. This type of thing can happen to anyone – young, old, rich, poor, no education, or highly educated. The reason it works is because people who perpetrate fraud are good at what they do – separating you from your money.

  • Unfortunately, some of our victims became victims because they responded to an unsolicited mailer, phone call, or knock on the door. Once the “investor” makes contact with someone, they start “working” on them. They are professionals at getting close and gaining trust.
  • They are charming and know how to obtain information about you that will help in their dealings with you. In just a few short conversations they will find out private information about you and then use it against you.
Things to Keep In Mind
  • Be wary if someone approaches you about something you weren’t even thinking about doing.
  • If you want to sell your property, you should contact someone you have been referred to by family, friends, or do research on real estate brokers working in your neighborhood.
  • Go to our website and see if the person has a real estate license and if they have any disciplinary history – dora.colorado.gov/dre
  • Go to the City and County of Denver website to check on neighborhood sales – denvergov.org
    • Click Search Property Information, then enter your address and click Search. In the Results link click on your address where there are various tabs and click on Neighborhood Sales.
  • If you have a hard time with technology, you can always ask friends or family members to help you navigate the web to do some research about property values in your area.

If you do find yourself entertaining an offer from an unsolicited investor:

  • Ask to obtain, and keep, a list of the comparable property sales in your neighborhood the investor used to come up with their purchase price offer.
  • Always keep someone else in the loop – your children, good friends, or someone you trust.
  • Always know that you can seek legal advice – in the end, it might be worth the money you spend on a consultation with an attorney.
  • Review the contract closely to see if it is assignable. Inquire into why it is assignable, for instance: to whom it is assigned and why, and how much the new buyer is paying the original buyer - AKA – an assignment fee.
  • Do not sign an assignable contract until you have had the opportunity to investigate the true value of your property and the legal implications with an attorney.
  • Take responsibility for being informed about the value of your property and the contracts that you areconsidering signing.
Distressed Rescue Transactions

Investors and real estate brokers are approaching distressed homeowners (those behind in their payments, facing foreclosure, or experiencing a medical issue). They offer the homeowner an “out” by agreeing to make the mortgage payments for them.

Problems arise when the investor does not explain how this will be accomplished. The unscrupulous investor will:

  • Have the homeowner sign a Quit Claim Deed in which the homeowner signs over their ownership in the property.
  • Fail to explain to the homeowner that they, the homeowner, are still responsible for the mortgage.
  • Fail to warn the homeowner that they could be violating their “due on sale clause” with their lender.

The homeowner is usually elderly or part of an at-risk population (English isn’t their first language, disability of some kind, etc.).

The Division advises the following when it comes to these types of rescue transactions:

  • Don’t sign any documents or a deed to anyone until you have had a chance to talk with your lender and an attorney about your mortgage obligations and your legal rights.
  • Colorado has a Foreclosure Protection Act that affords you certain rights when you are financially distressed.
  • It’s best to take proactive steps when you first start having financial problems, and here are some resources that you can contact:
Originally posted by @James Saturley :

@Jay Hinrichs - In my investment strategy - I have three (+) investors that will purchase land deals. I find the deals and tie the land up with an assignable contract and 10%EM. I assign the contract to the investor of choice and he/she closes on the deal. The purpose of this is so my money isn’t tied up into land - I use my money to build the house/apartment/building. After it’s built, we sell or refinance and get both of our cash back out. Seems reasonable to me. Except... that I have a real estate license, too. I don’t have any responsibilities to the seller. My fiduciary responsibility, to me, is the investor that will take over my contract. Am I right?

 As long as your broker is OK with the practice and the fees pass through the broker it is legal. The State of FL has told me they have open cases against agents for brokering without a license because the fees are not passed through to the BOR and then to the agent. 

Originally posted by @Russell Brazil :
Originally posted by @Jason DiClemente:

@Mike Hendrickson so if, as a RE license holder, your supposed to uphold your client's (the seller) best interest, how would you reconcile getting the most money for your client, with not listing it to get the most exposure, and therefore, the highest price? And, I dont know a single realtor that would accept an assignable contract from a buyer on a listed property, so haw are you best representing your client, by offering an assignable contract?

The problem lies in the fact that you can not be a wholesaler, and represent the seller at the same time, because those are conflicting goals.

 I generally agree that for most properties, listing it will get the most money.  However, certain properties I can sell for more money by never listing them.  By creating an air of exclusivity around the property on some high end stuff....and even on some medium to lower end stuff, not allowing the entire market to see it and judge it to be worth less....in these instances I can sell a property for more off market.  I probably do about 3 deals a year off market where the price is higher than it would have been if I listed it. 

Russ I just closed on 7 new st Charleston SC..  when I bought the lot I was thinking 2 mil .. it never hit the market.. my agent says hey I got someone who is interested.. I said tell them 2.250  and we settled at 2.2..  its in the can.. never hit the market and my agent brought the buyer made their 88k and all its well in the world  at least for us  :) 

Originally posted by @Jay Hinrichs :
Originally posted by @Russell Brazil:
Originally posted by @Jason DiClemente:

@Mike Hendrickson so if, as a RE license holder, your supposed to uphold your client's (the seller) best interest, how would you reconcile getting the most money for your client, with not listing it to get the most exposure, and therefore, the highest price? And, I dont know a single realtor that would accept an assignable contract from a buyer on a listed property, so haw are you best representing your client, by offering an assignable contract?

The problem lies in the fact that you can not be a wholesaler, and represent the seller at the same time, because those are conflicting goals.

 I generally agree that for most properties, listing it will get the most money.  However, certain properties I can sell for more money by never listing them.  By creating an air of exclusivity around the property on some high end stuff....and even on some medium to lower end stuff, not allowing the entire market to see it and judge it to be worth less....in these instances I can sell a property for more off market.  I probably do about 3 deals a year off market where the price is higher than it would have been if I listed it. 

Russ I just closed on 7 new st Charleston SC..  when I bought the lot I was thinking 2 mil .. it never hit the market.. my agent says hey I got someone who is interested.. I said tell them 2.250  and we settled at 2.2..  its in the can.. never hit the market and my agent brought the buyer made their 88k and all its well in the world  at least for us  :) 

 Perfect example. $200k or so premium to buy it off market.  I like the off market brokering.  It's old school. It is making money through connections and networking.  It is really brokering, bringing buyer and sellers together.  Listing it, that is marketing. It is an entirely different skill set.  I see some agents get angry at the pocket listings....but sometimes that is how you get your client more money.

Im likely going to sell one of my own properties off market here soon. I wont use the exact number in case someone stumbles upon this later.  But I received an offer of $X, and it is not listed.  I told the agent representing this buyer, Id sell if I can get $x plus $39k.  They thought I was ridiculous, (Which I was  little but). They came back a week later at $X plus $25k. I turned them down.  I think this week I'll hear from them again at about $X plus $35k which I'll probably do.  But if I put it on the market, the market would judge it to be worth right about $X.

Originally posted by @Russell Brazil :
Originally posted by @Jay Hinrichs:
Originally posted by @Russell Brazil:
Originally posted by @Jason DiClemente:

@Mike Hendrickson so if, as a RE license holder, your supposed to uphold your client's (the seller) best interest, how would you reconcile getting the most money for your client, with not listing it to get the most exposure, and therefore, the highest price? And, I dont know a single realtor that would accept an assignable contract from a buyer on a listed property, so haw are you best representing your client, by offering an assignable contract?

The problem lies in the fact that you can not be a wholesaler, and represent the seller at the same time, because those are conflicting goals.

 I generally agree that for most properties, listing it will get the most money.  However, certain properties I can sell for more money by never listing them.  By creating an air of exclusivity around the property on some high end stuff....and even on some medium to lower end stuff, not allowing the entire market to see it and judge it to be worth less....in these instances I can sell a property for more off market.  I probably do about 3 deals a year off market where the price is higher than it would have been if I listed it. 

Russ I just closed on 7 new st Charleston SC..  when I bought the lot I was thinking 2 mil .. it never hit the market.. my agent says hey I got someone who is interested.. I said tell them 2.250  and we settled at 2.2..  its in the can.. never hit the market and my agent brought the buyer made their 88k and all its well in the world  at least for us  :) 

 Perfect example. $200k or so premium to buy it off market.  I like the off market brokering.  It's old school. It is making money through connections and networking.  It is really brokering, bringing buyer and sellers together.  Listing it, that is marketing. It is an entirely different skill set.  I see some agents get angry at the pocket listings....but sometimes that is how you get your client more money.

Im likely going to sell one of my own properties off market here soon. I wont use the exact number in case someone stumbles upon this later.  But I received an offer of $X, and it is not listed.  I told the agent representing this buyer, Id sell if I can get $x plus $39k.  They thought I was ridiculous, (Which I was  little but). They came back a week later at $X plus $25k. I turned them down.  I think this week I'll hear from them again at about $X plus $35k which I'll probably do.  But if I put it on the market, the market would judge it to be worth right about $X.

now to be fair we had the ONLY new construction south of Broad  so RARE yes  cash buyer yes .. money was secondary to being able to buy a new home all turnkey that is over the top cool.  these are not investors of course but emotional homeowners who want perfection and location. 

Originally posted by @Juensy Pierre :

@Charlie MacPherson I re-read it (5x to be exact because I really am trying my best to see it from your point of view) and broke it down paragraph by paragraph. I’ve even googled “is wholesaling real estate illegal in any state?” then I got a little bit more specific: “is it illegal in MA?” And “is a license required in any state to wholesale real estate?” The answers I repeatedly came across is that wholesaling is not illegal and no license is required (sources: BiggerPockets.com, Wholesale Elite by Max Maxwell, Wholesale Inc by Tom Krol and Cody Hofhine. Forbes... the list is endless.) I get that you need a license to sell a property, that’s as clear as day. However, you really cannot say the same about selling a contract. Although having a license can be beneficial to a wholesaler, it is not required. Adding on, it is highly recommended to have an attorney look over or create a contract for a wholesaler. That being said, a wholesaler can be well protected in the court of law.

 Not attacking you but Google is not an attorney and getting advice from this website (which is very pro wholesaling) is not wise. Go call up your local state real estate commission and tell them what you're doing. My guess is they will say it's illegal. 

If Wholesaling was illegal, why would Biggerpockets have a 'Wholesaling' calculators or as a 'Main' topic in the education forum.  Wholesaling IS legal, you just have to know the legal way to process each transaction based on that states' laws.  PLEASE PLEASE PLEASE talk to YOUR real estate attorney, not a random person on a forum (I guess I am including myself, but listen to me about contacting your real estate attorney..lol).  Real Estate Agents are awesome, Wholesalers are awesome, Real Estate Attorneys are awesome, EVERYTHING IS AWESOME!!!  Everyone has one goal it is to be successful in whatever field you are in.

Go forth and find amazing deals people!!!!

My take is that my local wholesaling community is bereft of professionalism and (arguably) ethical behavior.  

Examples are outrageously outlandish ARV projections. Brokering deals they do not personally have under contract. And engaging in situations where a real estate license is required.

There are a few good ones, and they usually are prepared to close on their contracts if needed.  The good ones know the law and stay within the boundaries.  

Yet I bought a property from a wholesaler recently, knowing exactly that he was marking up the property 10%.  It was still a good deal.   I have no problem with people trying to purchase properties below market value.  

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