Listing a Wholesale Deal in the MLS
Real Estate Agent · Charlotte, NC · Member since 2019 · 20 posts · 8 votes
Good afternoon everyone. I hope you all are well today. I'm reaching out today for some advice. I landed my first wholesale deal and I'm at a shortage of interested buyers.
I'm a licensed realtor in NC and I would like to list this property in the MLS. I've heard of other investors doing so and I just need someone to point me in the right direction to find the information on how. I really would like to know the rules. The do's and don'ts.
I do have equitable interest in the title bc I'm on the assignable contract. Any information you guys or gals might have for me would be greatly appreciated.
Best regards,
A. Hollis
@Anthony Hollis I would be very careful wholesaling as a real estate agent. You are a fiduciary and can face some serious legal issues if the seller decides they were cheated. Definitely talk to your principal agent about the situation.
@Anthony Hollis
Well, since I've kind of touched on it before but you didn't quite get the gist of it, you legally can't put a assignable contracted property on the MLS. The reason for this is because you don't own the property or have the legal rights to sell the property. The entire reason why a person can wholesale "the standard way" is because they're not selling a property, they're selling a contract. Btw, some courts still consider flipping a contract selling a house so check your local jurisdiction
The only way to place a wholesale property on the MLS is by double closing on the property. I'm sure you're aware of the term but just in case....purchase the property by going to closing and then selling it after you have taken legal title of it. The problem with this scenario is that most wholesalers don't have the liquid cash to make the purchase and then hold the property while the next buyer is being obtained. In this situation directly, you would need to purchase to place it on the MLS and wait for a buyer to come, which is the issue.
Don’t get me wrong. Few wholesalers double close all the time and never assign a contract, most of those are agents. Difference is they have their buyer already locked up so the purchase and sale both happen the same day. You have to disclose less when you actually are buying, closing, and then selling it as the owner of record when you are licensed hence the reason why that’s the preferred method for RE agents.
There have been about 10 podcasts here on wholesalers out of the 372(??)ish out. Half of them are agents double closing.
If you do happen to have liquid funds on hand to double close, ¿why don’t you consider wholetailing instead?
Thread just demonstrates how fraudulent wholesaling is. It's not allowed and you being a realtor makes it twice as bad because you have a fiduciary responsibility to the client.
Thread just demonstrates how fraudulent wholesaling is. It's not allowed and you being a realtor makes it twice as bad because you have a fiduciary responsibility to the client.
While I agree that this particular situation is one of many ways to wholesale wrong or illegally, wholesaling in of itself is NOT illegal or fraudulent. There are many ways to properly and legally wholesale and many do it the wrong way but that does not make wholesaling fraudulent. This is why it is important for members of BP to learn from posts like this one and of course this one -
https://www.biggerpockets.com/forums/93/topics/58383-the-truth-about-wholesaling-
Thread just demonstrates how fraudulent wholesaling is. It's not allowed and you being a realtor makes it twice as bad because you have a fiduciary responsibility to the client.
While I agree that this particular situation is one of many ways to wholesale wrong or illegally, wholesaling in of itself is NOT illegal or fraudulent. There are many ways to properly and legally wholesale and many do it the wrong way but that does not make wholesaling fraudulent. This is why it is important for members of BP to learn from posts like this one and of course this one -
https://www.biggerpockets.com/forums/93/topics/58383-the-truth-about-wholesaling-
I'm not reading a 31 page thread that I have already commented in. Call up your state Real Estate Commission and tell them what you're doing. I have yet to see where it's legal. It's more of a people being cute with semantics.
@Will Barnard I disagree In California if you wholesale more than six or seven properties a year you have to be licensed as a real estate agent. It’s written in the law and it’s pretty black and white about it. Also assuming your just selling the contract your selling a security and your breaking security laws and need to be a licensed broker dealer. Just because wholesaling isn’t really enforced against, doesn’t mean it’s not illegal.
@Anthony Hollis
Well, since I've kind of touched on it before but you didn't quite get the gist of it, you legally can't put a assignable contracted property on the MLS. The reason for this is because you don't own the property or have the legal rights to sell the property. The entire reason why a person can wholesale "the standard way" is because they're not selling a property, they're selling a contract. Btw, some courts still consider flipping a contract selling a house so check your local jurisdiction
The only way to place a wholesale property on the MLS is by double closing on the property. I'm sure you're aware of the term but just in case....purchase the property by going to closing and then selling it after you have taken legal title of it. The problem with this scenario is that most wholesalers don't have the liquid cash to make the purchase and then hold the property while the next buyer is being obtained. In this situation directly, you would need to purchase to place it on the MLS and wait for a buyer to come, which is the issue.
Don’t get me wrong. Few wholesalers double close all the time and never assign a contract, most of those are agents. Difference is they have their buyer already locked up so the purchase and sale both happen the same day. You have to disclose less when you actually are buying, closing, and then selling it as the owner of record when you are licensed hence the reason why that’s the preferred method for RE agents.
There have been about 10 podcasts here on wholesalers out of the 372(??)ish out. Half of them are agents double closing.
If you do happen to have liquid funds on hand to double close, ¿why don’t you consider wholetailing instead?
You seem very knowledgable in this area. I wonder if you understand the legality behind listing wholesale deals on Zillow? I personally wholesale from time to time when I can't personally take on the deal and do not carry any sort of fiduciary responsibility as I'm not a licensed agent. The wholesale deals I've done I disclose I'm not an agent and I'm going to make an assignment fee on this transaction. I've yet to have a bad experience on either side of the closing table doing this and truly feel it's solving a real need for a lot of homeowners left behind due to the condition of their property or personal financial situation.
Has anyone here listed an assignment deal on Zillow or heard of any stipulations against doing so?
Yes you can list on the MLS. You do have to disclose that you have the property under contract and that you are wholesaling (selling the contract to purchase) the property. If the property is not vacant, then you also need to coordinate the showings with the seller/occupant which can mess the deal up.
My question is why are you considering wholesaling it on the MLS. if you got the property for the right price/terms, then you should be able to find a buyer at your local REIA, facebook, Craigslist or even on here. If you have had several real buyers look at it, then maybe you offered to much to wholesale the property. That doesn't mean that you offered to much for the property, just that your offer or asking price is higher than the market is willing to pay as a wholesale deal.
@Will Barnard I disagree In California if you wholesale more than six or seven properties a year you have to be licensed as a real estate agent. It’s written in the law and it’s pretty black and white about it. Also assuming your just selling the contract your selling a security and your breaking security laws and need to be a licensed broker dealer. Just because wholesaling isn’t really enforced against, doesn’t mean it’s not illegal.
What exactly do you disagree with me on? As to your message above, where in the law does it state that 6 or 7 wholesale deals in one year constitutes the requirement to hold a real estate license? Please point us to the exact verbiage of the law that specifies this as I have never heard of such a thing.
Lastly, as I have stated many times, wholesaling is a term to use to buy and quickly resale. There are many ways to do so legally, not just one way. There are many ways to do it illegally as well, none of them constitute wholesaling being fraudulent or illegal, only the manner in which one does it wrong could it be that.
@Anthony Hollis
This is a “slippery slope. There is just about no way that you can be providing the best fiduciary responsibility to the consumer if you locked this up in a wholesale deal. My recommendation is to cancel the contract and list the property as a licensed agent. There is a far greater chance you will fetch the seller the most amount of of money with the largest audience of buyers possible. As a licensed real estate agent, that is your PRIMARY goal, not wholesaling for a profit. The same buyers (cash too!!) will still be there on the mls as long as you are listing the property correctly and pricing aggressively enough to get multiple offers. My $.02
@Anthony Hollis - Not enough buyers? Get more creative. Join the wholesaling Facebook group, put bandit signs around the neighborhood, outside Home Depot, 7/11, etc. 4/1 Fixer Upper $75k Call my google voice! Call other wholesalers with bigger buyer lists and offer them part of the deal. Start working on your rich uncle to potentially close on the deal if your wholesale falls through. Call agents who work with cash investors and offer them $$ to find you a buyer. Call agents who list foreclosures. Post the deal with all its terms (ARV, rehab) here on BiggerPockets marketplace, post on Facebook marketplace and yardsale, post on Zillow, post on craigslist. I had a failed wholesale (4/1 for 80k, tried to sell for 90k splitting 5k/5k with other wholesalers.) No luck. Found a money partner on BP instead. 7 months later I sold it fully rehabbed for 190k and paid him 150k and he got a 20% annualized ROI. So instead of making 5k, I learned more and made more.
@Anthony Hollis
Can you close on the deal? Then list it on mls as agent/seller??
This is what happens mostly here in va. I’m sure there are some that do it the way you’re wanting to. But I’d be hesitant to risk my livelihood for some quick cash.
@Rickey Wallace
It’s not illegal to list an assignable contract if it’s been disclosed to the seller
@Will Barnard I disagree In California if you wholesale more than six or seven properties a year you have to be licensed as a real estate agent. It’s written in the law and it’s pretty black and white about it. Also assuming your just selling the contract your selling a security and your breaking security laws and need to be a licensed broker dealer. Just because wholesaling isn’t really enforced against, doesn’t mean it’s not illegal.
What exactly do you disagree with me on? As to your message above, where in the law does it state that 6 or 7 wholesale deals in one year constitutes the requirement to hold a real estate license? Please point us to the exact verbiage of the law that specifies this as I have never heard of such a thing.
Lastly, as I have stated many times, wholesaling is a term to use to buy and quickly resale. There are many ways to do so legally, not just one way. There are many ways to do it illegally as well, none of them constitute wholesaling being fraudulent or illegal, only the manner in which one does it wrong could it be that.
It is unlawful for any person to engage in the business of, act in the capacity of, advertise as, or assume to act as a real estate broker or a real estate salesperson within this state without first obtaining a real estate license from the department, or to engage in the business of, act in the capacity of, advertise as, or assume to act as a mortgage loan originator within this state without having obtained a license endorsement.
The commissioner may prefer a complaint for violation of this section before any court of competent jurisdiction, and the commissioner and his or her counsel, deputies, or assistants may assist in presenting the law or facts at the trial.
It is the duty of the district attorney of each county in this state to prosecute all violations of this section in their respective counties in which the violations occur.
10131.A real estate broker within the meaning of this part is a person who, for a compensation or in expectation of a compensation, regardless of the form or time of payment, does or negotiates to do one or more of the following acts for another or others:
(a) Sells or offers to sell, buys or offers to buy, solicits prospective sellers or buyers of, solicits or obtains listings of, or negotiates the purchase, sale, or exchange of real property or a business opportunity.
(b) Leases or rents or offers to lease or rent, or places for rent, or solicits listings of places for rent, or solicits for prospective tenants, or negotiates the sale, purchase, or exchanges of leases on real property, or on a business opportunity, or collects rents from real property, or improvements thereon, or from business opportunities.
(c) Assists or offers to assist in filing an application for the purchase or lease of, or in locating or entering upon, lands owned by the state or federal government.
(d) Solicits borrowers or lenders for or negotiates loans or collects payments or performs services for borrowers or lenders or note owners in connection with loans secured directly or collaterally by liens on real property or on a business opportunity.
(e) Sells or offers to sell, buys or offers to buy, or exchanges or offers to exchange a real property sales contract, or a promissory note secured directly or collaterally by a lien on real property or on a business opportunity, and performs services for the holders thereof.
10131.1.(a) A real estate broker within the meaning of this part is also a person who engages as a principal in the business of making loans or buying from, selling to, or exchanging with the public, real property sales contracts or promissory notes secured directly or collaterally by liens on real property, or who makes agreements with the public for the collection of payments or for the performance of services in connection with real property sales contracts or promissory notes secured directly or collaterally by liens on real property.
(b) As used in this section:
(1) “In the business” means any of the following:
(A) The acquisition for resale to the public, and not as an investment, of eight or more real property sales contracts or promissory notes secured directly or collaterally by liens on real property during a calendar year.
(B) The sale to or exchange with the public of eight or more real property sales contracts or promissory notes secured directly or collaterally by liens on real property during a calendar year. However, no transaction negotiated through a real estate licensee shall be considered in determining whether a person is a real estate broker within the meaning of this section.
(C) The making of eight or more loans in a calendar year from the person’s own funds to the public when those loans are held or resold and are secured directly or collaterally by a lien on residential real property consisting of a single dwelling unit in a condominium or cooperative or on any parcel containing only residential buildings if the total number of units on the parcel is four or less. However, no transaction negotiated through a real estate broker who meets the criteria of subdivision (a) or (b) of Section 10232 shall be considered in determining whether a person is a real estate broker within the meaning of this section.
(2) “Sale,” “resale,” and “exchange” include every disposition of any interest in a real property sales contract or promissory note secured directly or collaterally by a lien on real property, except the original issuance of a promissory note by a borrower or a real property sales contract by a vendor, either of which is to be secured directly by a lien on real property owned by the borrower or vendor.
(3) “Own funds” means either of the following:
(A) Cash, corporate capital, or warehouse credit lines at commercial banks, savings banks, savings and loan associations, industrial loan companies, or other sources that are liability items on the person’s financial statements, whether secured or unsecured.
(B) Cash, corporate capital, or warehouse credit lines at commercial banks, savings banks, savings and loan associations, industrial loan companies, or other sources that are liability items on the financial statement of an affiliate of the person, whether secured or unsecured.
(4) “Own funds” does not include funds provided by a third party to fund a loan on condition that the third party will subsequently purchase or accept an assignment of the loan.
10136.No person engaged in the business or acting in the capacity of a real estate broker or a real estate salesperson within this state shall bring or maintain any action in the courts of this state for the collection of compensation for the performance of any of the acts mentioned in this article without alleging and proving that he or she was a duly licensed real estate broker or real estate salesperson at the time the alleged cause of action arose.
This is not legal advice, I'm not an attorney. Please don't sue me.
@Ryan D.
Good for you! I’m glad that you fully disclose the information and they are willing to go through with it that way. It makes wholesaling MUCH easier when done appropriately lol
Now, about the Zillow thing...if you were to put the “listing” up, showing the property and/or address and pictures of it, you are basically acting as if you are an agent since that’s exactly what agents do. It’ll be completely fine....till someone sees it that doesn’t approve and snitches on you lol. The repercussions won’t be as severe since you aren’t an agent but you definitely can be fined for such acts depending on the jurisdiction
One of the reasons why everyone gets their panties in a bunch on this site is because it’s a fine line a wholesaler walks wholesaling since it’s nearly identical to acting as an agent. The only real difference is the product being sold....but everyone has their own opinion about the process lol
@Marshall Hooper
Okay so riddle me this then, Batman....
If you have a contract under agreement to purchase with a seller, then later go to the seller and ask for and get permission to list their property on the MLS, but don't have a contract stating that you are working for the seller in a situation that's almost exactly like what a RE licensee should do, ¿at what point in time does his agency card get pulled into question?
If he was working as a transaction licensee, there’s a contract for that.
If he was working as brokerage that lists the property for a client but does no actual RE agent stuff for them, there’s a contract for that
All clients are customers till they sign a contract and become clients. Under PA state law, only properties that are under contract in some shape or form of exclusivity are allowed on our MLS. If they're not, broker of record gets a huge slap on his wrist and they won't be happy about that
@Rickey Wallace
The riddle is incomplete, Robin
You’re giving advice based on your own states law. Might be good advice for your state, but it’s bad advice otherwise.
@Marshall Hooper
Minus the state part, everything else is valid information for a RE agent. Do you have an answer or no?
@Rickey Wallace
I answered your question in my original post. In Texas, we can disclose in the contract if we plan on marketing the property before the close date.
@Marshall Hooper
2 things:
1) if you had stated that in your original post, that post must’ve been somewhere else due to that not showing up in this current thread. If I am reading correctly, your first comment here was in response to my previous comment
2) Texas or not, regardless of if you make a line in your contract or not stating that you will be given authorization to market their property as you see fit, that doesn't negate the standard operating procedures of the MLS in your area.
Out of curiosity, are you even an agent? If so, why are we debating this since this is information you should already be aware of. If not, why are we still debating this?
@Anthony Hollis I am a wholesaler in Charlotte and have done this a few times successfully. My contract states that I am allowed to market the property, including on the MLS.
When I market it on the MLS you need to select the option of "Seller Does Not Own Property." Additionally, you're going to need to do a double closing if you find a buyer that way. You're also still limited to cash buyers or buyers with private/hard money, as traditional banks won't touch deals like this with any kind of loan.
I am not sure what rules you need to follow since you have your brokers license, but I recommend finding out. I specifically didn’t get my brokers license for these reasons - if the seller finds out you listed it and they feel scammed, they can call the NC Realtors commission and report you. Not trying to scare you, just want you to be aware.
With having a license, best to be fully upfront with the seller on what you may be doing with the contract, before they even sign the contract.
@Will Barnard I disagree In California if you wholesale more than six or seven properties a year you have to be licensed as a real estate agent. It’s written in the law and it’s pretty black and white about it. Also assuming your just selling the contract your selling a security and your breaking security laws and need to be a licensed broker dealer. Just because wholesaling isn’t really enforced against, doesn’t mean it’s not illegal.
What exactly do you disagree with me on? As to your message above, where in the law does it state that 6 or 7 wholesale deals in one year constitutes the requirement to hold a real estate license? Please point us to the exact verbiage of the law that specifies this as I have never heard of such a thing.
Lastly, as I have stated many times, wholesaling is a term to use to buy and quickly resale. There are many ways to do so legally, not just one way. There are many ways to do it illegally as well, none of them constitute wholesaling being fraudulent or illegal, only the manner in which one does it wrong could it be that.
It is unlawful for any person to engage in the business of, act in the capacity of, advertise as, or assume to act as a real estate broker or a real estate salesperson within this state without first obtaining a real estate license from the department, or to engage in the business of, act in the capacity of, advertise as, or assume to act as a mortgage loan originator within this state without having obtained a license endorsement.
The commissioner may prefer a complaint for violation of this section before any court of competent jurisdiction, and the commissioner and his or her counsel, deputies, or assistants may assist in presenting the law or facts at the trial.
It is the duty of the district attorney of each county in this state to prosecute all violations of this section in their respective counties in which the violations occur.
10131.A real estate broker within the meaning of this part is a person who, for a compensation or in expectation of a compensation, regardless of the form or time of payment, does or negotiates to do one or more of the following acts for another or others:
(a) Sells or offers to sell, buys or offers to buy, solicits prospective sellers or buyers of, solicits or obtains listings of, or negotiates the purchase, sale, or exchange of real property or a business opportunity.
(b) Leases or rents or offers to lease or rent, or places for rent, or solicits listings of places for rent, or solicits for prospective tenants, or negotiates the sale, purchase, or exchanges of leases on real property, or on a business opportunity, or collects rents from real property, or improvements thereon, or from business opportunities.
(c) Assists or offers to assist in filing an application for the purchase or lease of, or in locating or entering upon, lands owned by the state or federal government.
(d) Solicits borrowers or lenders for or negotiates loans or collects payments or performs services for borrowers or lenders or note owners in connection with loans secured directly or collaterally by liens on real property or on a business opportunity.
(e) Sells or offers to sell, buys or offers to buy, or exchanges or offers to exchange a real property sales contract, or a promissory note secured directly or collaterally by a lien on real property or on a business opportunity, and performs services for the holders thereof.
10131.1.(a) A real estate broker within the meaning of this part is also a person who engages as a principal in the business of making loans or buying from, selling to, or exchanging with the public, real property sales contracts or promissory notes secured directly or collaterally by liens on real property, or who makes agreements with the public for the collection of payments or for the performance of services in connection with real property sales contracts or promissory notes secured directly or collaterally by liens on real property.
(b) As used in this section:
(1) “In the business” means any of the following:
(A) The acquisition for resale to the public, and not as an investment, of eight or more real property sales contracts or promissory notes secured directly or collaterally by liens on real property during a calendar year.
(B) The sale to or exchange with the public of eight or more real property sales contracts or promissory notes secured directly or collaterally by liens on real property during a calendar year. However, no transaction negotiated through a real estate licensee shall be considered in determining whether a person is a real estate broker within the meaning of this section.
(C) The making of eight or more loans in a calendar year from the person’s own funds to the public when those loans are held or resold and are secured directly or collaterally by a lien on residential real property consisting of a single dwelling unit in a condominium or cooperative or on any parcel containing only residential buildings if the total number of units on the parcel is four or less. However, no transaction negotiated through a real estate broker who meets the criteria of subdivision (a) or (b) of Section 10232 shall be considered in determining whether a person is a real estate broker within the meaning of this section.
(2) “Sale,” “resale,” and “exchange” include every disposition of any interest in a real property sales contract or promissory note secured directly or collaterally by a lien on real property, except the original issuance of a promissory note by a borrower or a real property sales contract by a vendor, either of which is to be secured directly by a lien on real property owned by the borrower or vendor.
(3) “Own funds” means either of the following:
(A) Cash, corporate capital, or warehouse credit lines at commercial banks, savings banks, savings and loan associations, industrial loan companies, or other sources that are liability items on the person’s financial statements, whether secured or unsecured.
(B) Cash, corporate capital, or warehouse credit lines at commercial banks, savings banks, savings and loan associations, industrial loan companies, or other sources that are liability items on the financial statement of an affiliate of the person, whether secured or unsecured.
(4) “Own funds” does not include funds provided by a third party to fund a loan on condition that the third party will subsequently purchase or accept an assignment of the loan.
10136.No person engaged in the business or acting in the capacity of a real estate broker or a real estate salesperson within this state shall bring or maintain any action in the courts of this state for the collection of compensation for the performance of any of the acts mentioned in this article without alleging and proving that he or she was a duly licensed real estate broker or real estate salesperson at the time the alleged cause of action arose.
This is not legal advice, I'm not an attorney. Please don't sue me.
Unless I missed it, nowhere in here does it explain that wholesaling 5 or 6 properties in one year constitutes the need for a RE license. Secondly, as stated, there are many ways to wholesale and not break RE agency laws in all states. If done correctly and legally, you do not need a license. That said, it is also my recommendation that people do get their sales license anyways to avoid all the pitfalls, stay on the legal side, and have all the benefits that agency offers.
@Will Barnard I disagree In California if you wholesale more than six or seven properties a year you have to be licensed as a real estate agent. It’s written in the law and it’s pretty black and white about it. Also assuming your just selling the contract your selling a security and your breaking security laws and need to be a licensed broker dealer. Just because wholesaling isn’t really enforced against, doesn’t mean it’s not illegal.
What exactly do you disagree with me on? As to your message above, where in the law does it state that 6 or 7 wholesale deals in one year constitutes the requirement to hold a real estate license? Please point us to the exact verbiage of the law that specifies this as I have never heard of such a thing.
Lastly, as I have stated many times, wholesaling is a term to use to buy and quickly resale. There are many ways to do so legally, not just one way. There are many ways to do it illegally as well, none of them constitute wholesaling being fraudulent or illegal, only the manner in which one does it wrong could it be that.
It is unlawful for any person to engage in the business of, act in the capacity of, advertise as, or assume to act as a real estate broker or a real estate salesperson within this state without first obtaining a real estate license from the department, or to engage in the business of, act in the capacity of, advertise as, or assume to act as a mortgage loan originator within this state without having obtained a license endorsement.
The commissioner may prefer a complaint for violation of this section before any court of competent jurisdiction, and the commissioner and his or her counsel, deputies, or assistants may assist in presenting the law or facts at the trial.
It is the duty of the district attorney of each county in this state to prosecute all violations of this section in their respective counties in which the violations occur.
10131.A real estate broker within the meaning of this part is a person who, for a compensation or in expectation of a compensation, regardless of the form or time of payment, does or negotiates to do one or more of the following acts for another or others:
(a) Sells or offers to sell, buys or offers to buy, solicits prospective sellers or buyers of, solicits or obtains listings of, or negotiates the purchase, sale, or exchange of real property or a business opportunity.
(b) Leases or rents or offers to lease or rent, or places for rent, or solicits listings of places for rent, or solicits for prospective tenants, or negotiates the sale, purchase, or exchanges of leases on real property, or on a business opportunity, or collects rents from real property, or improvements thereon, or from business opportunities.
(c) Assists or offers to assist in filing an application for the purchase or lease of, or in locating or entering upon, lands owned by the state or federal government.
(d) Solicits borrowers or lenders for or negotiates loans or collects payments or performs services for borrowers or lenders or note owners in connection with loans secured directly or collaterally by liens on real property or on a business opportunity.
(e) Sells or offers to sell, buys or offers to buy, or exchanges or offers to exchange a real property sales contract, or a promissory note secured directly or collaterally by a lien on real property or on a business opportunity, and performs services for the holders thereof.
10131.1.(a) A real estate broker within the meaning of this part is also a person who engages as a principal in the business of making loans or buying from, selling to, or exchanging with the public, real property sales contracts or promissory notes secured directly or collaterally by liens on real property, or who makes agreements with the public for the collection of payments or for the performance of services in connection with real property sales contracts or promissory notes secured directly or collaterally by liens on real property.
(b) As used in this section:
(1) “In the business” means any of the following:
(A) The acquisition for resale to the public, and not as an investment, of eight or more real property sales contracts or promissory notes secured directly or collaterally by liens on real property during a calendar year.
(B) The sale to or exchange with the public of eight or more real property sales contracts or promissory notes secured directly or collaterally by liens on real property during a calendar year. However, no transaction negotiated through a real estate licensee shall be considered in determining whether a person is a real estate broker within the meaning of this section.
(C) The making of eight or more loans in a calendar year from the person’s own funds to the public when those loans are held or resold and are secured directly or collaterally by a lien on residential real property consisting of a single dwelling unit in a condominium or cooperative or on any parcel containing only residential buildings if the total number of units on the parcel is four or less. However, no transaction negotiated through a real estate broker who meets the criteria of subdivision (a) or (b) of Section 10232 shall be considered in determining whether a person is a real estate broker within the meaning of this section.
(2) “Sale,” “resale,” and “exchange” include every disposition of any interest in a real property sales contract or promissory note secured directly or collaterally by a lien on real property, except the original issuance of a promissory note by a borrower or a real property sales contract by a vendor, either of which is to be secured directly by a lien on real property owned by the borrower or vendor.
(3) “Own funds” means either of the following:
(A) Cash, corporate capital, or warehouse credit lines at commercial banks, savings banks, savings and loan associations, industrial loan companies, or other sources that are liability items on the person’s financial statements, whether secured or unsecured.
(B) Cash, corporate capital, or warehouse credit lines at commercial banks, savings banks, savings and loan associations, industrial loan companies, or other sources that are liability items on the financial statement of an affiliate of the person, whether secured or unsecured.
(4) “Own funds” does not include funds provided by a third party to fund a loan on condition that the third party will subsequently purchase or accept an assignment of the loan.
10136.No person engaged in the business or acting in the capacity of a real estate broker or a real estate salesperson within this state shall bring or maintain any action in the courts of this state for the collection of compensation for the performance of any of the acts mentioned in this article without alleging and proving that he or she was a duly licensed real estate broker or real estate salesperson at the time the alleged cause of action arose.
This is not legal advice, I'm not an attorney. Please don't sue me.
Unless I missed it, nowhere in here does it explain that wholesaling 5 or 6 properties in one year constitutes the need for a RE license. Secondly, as stated, there are many ways to wholesale and not break RE agency laws in all states. If done correctly and legally, you do not need a license. That said, it is also my recommendation that people do get their sales license anyways to avoid all the pitfalls, stay on the legal side, and have all the benefits that agency offers.
10131.1.
(a) A real estate broker within the meaning of this part is also a person who engages as a principal in the business of making loans or buying from, selling to, or exchanging with the public, real property sales contracts or promissory notes secured directly or collaterally by liens on real property, or who makes agreements with the public for the collection of payments or for the performance of services in connection with real property sales contracts or promissory notes secured directly or collaterally by liens on real property.
(b) As used in this section:
(1) “In the business” means any of the following:
(A) The acquisition for resale to the public, and not as an investment, of eight or more real property sales contracts or promissory notes secured directly or collaterally by liens on real property during a calendar year.
(B) The sale to or exchange with the public of eight or more real property sales contracts or promissory notes secured directly or collaterally by liens on real property during a calendar year. However, no transaction negotiated through a real estate licensee shall be considered in determining whether a person is a real estate broker within the meaning of this section.
This part is what I am referencing. It defines a broker as a principle who sells 8 or more purchase and sales agreements a year. If people want to legally wholesale they need to close on the property and take on some risk and not just skim equity from the owner with no risk to them.
@Anthony Hollis why would you rather Wholesale it ?