Wholesaling with a realtor

[Xavier Nguyen]

Wholesaling with a realtor, can it be profitable and worth it? A lot of YouTube videos say yes but I’m still nervous. Working on a deal right now.

[Charlie MacPherson]

@Xavier Nguyen There are a lot of moving parts here.  I don't know where you are located, but here in MA and in many (probably most) other states, putting a property under contract and selling your position in that contract is a license-required activity.  That's the usual model for wholesalers.

If you actually close on the property, you're free to re-sell - but otherwise, wholesaling as it's commonly practiced is unlicensed real estate brokering.  In other words, illegal.

There's an additional risk.  A wholesaler is causing someone to enter into a contract that they have neither the intent nor the ability to perform to. That seems to meet the textbook definition of "fraud in the inducement".

If you do get your license, you face another challenge.  Even if you close and re-sell, that's virtually indistinguishable from a "net listing".  That's a listing where the seller agrees to a certain price and you as the agent get to keep anything above that.  Net listings are illegal in most states.

Here in MA, a net listing will at least get you some serious fines and will probably get your license suspended or revoked.

As I understand it, those kinds of laws aren't universal.  I believe wholesaling is legal in TX and although they're discouraged, net listings are legal in NC.  

As to working with a Realtor, that's a non starter. My job when working with someone who wants to sell their home is to get them the most money and best terms. That means exposing the property to the widest pool of buyers and that's always done with an MLS listing and an aggressive marketing program. Wholesalers by definition need a below-market price.

The bottom line is that instead of listening to gurus, Youtubers or bloggers, research and read your state's real estate laws and you'll avoid trouble.