Full time wholesalers
Flipper/Rehabber · Jacksonville, FL · Member since 2019 · 30 posts · 53 votes
Full time wholesalers
Most Popular Reply
Wholesaler · Mansfield, TX · Member since 2015 · 216 posts · 146 votes
7yI tend to scroll through BP when I’m laying my son down but rarely post. This discussion spurred me to make a rare exception.
Wholesaleing is not illegal or at least not in Texas. I’ve closed 8 deals in 2017, 21 in 2018, and 9 so far this year. Why only 9, because I’ve graduated to the next stage and involved in 2 flips. Wholesaleing has been and always will be my baseline to find deals for whatever strategy I want to pursue ( rehabs, rentals, owner finance, etc).
On to the seller side of things. Most of these properties need a ton of work and most agents won’t touch them without a cleanup and work done to them that costs money that the seller doesn’t have. They are distressed and need someone with knowledge to help them. That’s where I come in and I am compensated well for it.
EVERY one of my sellers have said thank you when it’s all said and done with many testimonials.
Heck I can confidently say I know more about the market as a wholesaler than probably 90% of the realtors in my markets. How??? Because I talk to 20-30 sellers per month and run mls based comps and submit offers to almost all the sellers I talk to. Why would I want to settle for 3% commission with the knowledge I have and the time and energy I spend helping the seller? There is nothing wrong with getting paid well for knowledge and your time.
The key thing I will say is to know what your doing and don’t lock up the property if your not confident you have a buyer for it at the contracted price. That just gets the sellers hopes up and they come crashing down when you back out. No one deserves to be treated like that. At a minimum pay a reasonable earnest money deposit fee if you do need to back out as that’s doing the right thing which I have done on the very few properties I was unable to close on.
Anyway just my thoughts.
216 Replies
- Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes7y
Originally posted by @Dean Letfus:
@Jay Hinrichs, we need virtual popcorn Jay! James is the best stand up comedian I've seen in a long time :-).
...............virtual popcorn. Crushed that one Dean.
- Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes7y
Originally posted by @Quinton Bogle:
@Bob Daniels I understand what you are saying about Wholesaling but if its do illegal why are nobody going to jail for it but steady getting rich off of it, and posting YouTube Videos about it, and why the Title Companies are saying that they are Wholesale friendly
Don't think jail, think fines. I've seen hefty fines out there for unlicensed activity. One report I saw from Ohio had several six figure and one or two seven figure fines.
As for the title co the title co is regulated by a different body altogether. Brokers and Title companies work together yes, but they do not necessarily police one another.
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Bob Daniels:
Originally posted by @Quinton Bogle:
@Bob Daniels I understand what you are saying about Wholesaling but if its do illegal why are nobody going to jail for it but steady getting rich off of it, and posting YouTube Videos about it, and why the Title Companies are saying that they are Wholesale friendly
Why don't wholesalers go to jail? Because there is a difference between something being illegal, and something being a crime. It's a matter of is it a judicial matter, or a civil matter. Speeding down the interstate is illegal, but nobody has ever gone to jail for going 10mph over because its a civil fine, not a criminal matter. Secondly, selling dime bags of weed on the street corner is illegal, but cops tend not to care too much because it takes too much time and effort to track down each individual low level dealer. Similarly the RE Commission doesn't have the time or resources to go after every minor infraction, instead they pursue cases where a formal complaint is lodged against someone.
Why are title companies wholesale friendly? Because they are in the business of getting paid, they are not in the business of overseeing your every business move to ensure you are doing it ethically and honestly.
@Austin Smither Langley Wholesaling in general is legal if done perfectly, but I would argue that what guru's teach people, that wholesaling is a way to break into RE when you are flat broke is completely wrong and likely illegal.
I got a cease and desist order after my complaint was filed against me, I immediately called a RE lawyer and explained in detail what I was doing, he said I was fine. So I continued doing what I was doing, and that's when they brought the hammer. Just because a lawyer says you are fine doesn't necessarily mean they are right, remember every courtroom has two lawyers, both equally skilled in their profession and yet they have drastically different views on the current situation. The only opinion that matters is that of the Judge.
I'm not a lawyer, and this was several years ago so I don't remember the fine point details, but essentially they argued that I didn't have equitable interest because I had no intention of ever purchasing the home. I had never purchased a home, didn't have the funds to purchase it, never attempted to obtain financing, and had wholesaled several deals in the past indicating that I was using this purchase agreement as a way to circumvent license law.
They said that by signing an agreement to purchase the home, when I had no actual intention of purchasing the home was a willful misrepresentation of present fact, which is the basis of fraud.
And to be honest it just makes sense, both from a legal standpoint and based on common sense. Don't sign a contract that you don't have any intention of fulfilling. My hopes of later finding an end buyer to be order to fulfill my contractual obligations didn't cut it.
I don't have anything against wholesalers, and I'm not a 'hater', in fact I have since purchased a few properties from wholesalers. But it is my opinion that the overwhelming majority of wholesalers do at least one thing wrong and could easily get in hot water as soon as a complaint is filed against them. If people want to do it then I'm not going to stand in their way, but I do feel that it's great disservice to tell them that there are no risks involved and that everything is roses.
Exactly its about complaints.. the few on my team in Oregon went through what you did.. and at least as it relates to Oregon they do not buy the equitable interest theory as told by those in this thread.. there needs to be a lot more to a transaction than 200 dollar EM and a signed contract to have equitable interest.. at least according to my interview with the regulators.
And my client in MS he got in Mucho hot water..
Very good post from someone who has actually been through it.. I love my attorneys but they are not paying your fines and such you are paying them to argue a position and in our state they will lose that one. LIke you I could give a rip .. The gurus do a disservice in many things around real estate making it sound so easy and everyone for whatever reason wants to quite their day job and be a real estate player.
It simply is not that easy .. of course those that do really well at wholesaling or flipping they would do good at virtually any business is my thought.. they are winners.. and fact is not everyone can be a first team all American..
- Investor · Boston, MA · Member since 2015 · 1k+ posts · 3k+ votes7y
Not that you particularly care, but you may: The TREC equitable interest rule that was posted yesterday wasn't the whole story. Another user posted this rule which complicate things but does clear up the question about why won't people stop become brokers in TX and sell their equitable interest.
It all comes back to how TREC interprets the definition of brokerage. I don't care nearly enough to look it up, but I wonder if there have been any rulings that clear this up...Maybe not since the law passed in 2017.
- Flipper/Rehabber · Winston Salem, NC · Member since 2018 · 33 posts · 24 votes7y
@Jay Hinrichs
I have to disagree with you. The guy was wanted in Philippines. There are real estate brokers who are wanted and run also. We don’t know the reason. It could have nothing to do with real estate. On a person having an alias name on a pod cast, again we don’t know the reason. Maybe he didn’t want the publicity. Who knows.
On bigger pockets not caring and it’s entertainment and they just need ears. If you listen to Brandon he says he wants to educate and help not entertain. Though they need ears they also want to help and guide in the right direction. Brandon talks about wholesaling in his books. So those are entertainment also? Message the owner of bigger pockets and Brandon and tell them this whole webpage and podcast is fake and just for entertainment and I think they would have a big difference of opinion with you.
- Investor · Joplin, MO · Member since 2015 · 76 posts · 78 votes7y
@Matt Hatton, you do not have to have your real estate license to wholesale. What you have to do is get the property under contract to purchase. Do not rely on assignments, in most states that could be interpreted as selling a property you do not owe without your re license.
1. Get the contract
2 find a buyer
3 close with your seller
4. Close with your buyer.
Also wholesaling is HARD WORK, anyone who says it isn't is full of something you might step in when you are in a barnyard.
Hope this helps.
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Derek Joyner:
@Jay Hinrichs
I have to disagree with you. The guy was wanted in Philippines. There are real estate brokers who are wanted and run also. We don’t know the reason. It could have nothing to do with real estate. On a person having an alias name on a pod cast, again we don’t know the reason. Maybe he didn’t want the publicity. Who knows.
On bigger pockets not caring and it’s entertainment and they just need ears. If you listen to Brandon he says he wants to educate and help not entertain. Though they need ears they also want to help and guide in the right direction. Brandon talks about wholesaling in his books. So those are entertainment also? Message the owner of bigger pockets and Brandon and tell them this whole webpage and podcast is fake and just for entertainment and I think they would have a big difference of opinion with you.
my point is just being on a POD CAST does not legitimize the person being interviewed I was on a pod cast they did no back ground on me.. But to their credit when things come to light about bad acts of those on a pod cast they take them down.. IE Clayton Morris and this other guy I can recall his name.. I have first hand knowledge on the other guy.. from 3 sources.. one was a lady who was behind me at a Alaska airline lounge and when you sign in your name pops up.. she says are you the Jay Hinrichs that is a frequent poster.. so instead of spending a quite hour before my flight she went into detail about the 200k she lost with this guy.. So once BP realized this that guy is no longer here and his pod cast is taken down.. and for sure this is for entertainment its social media this is all entertainment.. And of course its to usually promote the brand of who ever is on the pod cast that's a given.. having Morris on BP created a false sense of security with his brand and about 700 investor lost millions of dollars... not all from BP pod cast but there were many I am sure that made the jump because of his BP podcast the Bp podcast is huge and spreads a wide net.. Not sure if your up to speed on Clayton Morris but it well chronicled on this site.
- Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes7y
Originally posted by @Jay Hinrichs:
Originally posted by @Derek Joyner:
@Jay Hinrichs
I have to disagree with you. The guy was wanted in Philippines. There are real estate brokers who are wanted and run also. We don’t know the reason. It could have nothing to do with real estate. On a person having an alias name on a pod cast, again we don’t know the reason. Maybe he didn’t want the publicity. Who knows.
On bigger pockets not caring and it’s entertainment and they just need ears. If you listen to Brandon he says he wants to educate and help not entertain. Though they need ears they also want to help and guide in the right direction. Brandon talks about wholesaling in his books. So those are entertainment also? Message the owner of bigger pockets and Brandon and tell them this whole webpage and podcast is fake and just for entertainment and I think they would have a big difference of opinion with you.
my point is just being on a POD CAST does not legitimize the person being interviewed I was on a pod cast they did no back ground on me.. But to their credit when things come to light about bad acts of those on a pod cast they take them down.. IE Clayton Morris and this other guy I can recall his name.. I have first hand knowledge on the other guy.. from 3 sources.. one was a lady who was behind me at a Alaska airline lounge and when you sign in your name pops up.. she says are you the Jay Hinrichs that is a frequent poster.. so instead of spending a quite hour before my flight she went into detail about the 200k she lost with this guy.. So once BP realized this that guy is no longer here and his pod cast is taken down.. and for sure this is for entertainment its social media this is all entertainment.. And of course its to usually promote the brand of who ever is on the pod cast that's a given.. having Morris on BP created a false sense of security with his brand and about 700 investor lost millions of dollars... not all from BP pod cast but there were many I am sure that made the jump because of his BP podcast the Bp podcast is huge and spreads a wide net.. Not sure if your up to speed on Clayton Morris but it well chronicled on this site.
Wendall De Guzman was his alias here on BP. I think his real name was Rodriguez or Hernandez.
As for BP vetting people for thsir podcasts they do a their best to present the best possible lineup of guests but if you read the disclosures around the site they fully explain that they do not endorse them or anything of that nature. A hold harmless disclosure like that is the norm for this type of business. It would be impractical to hold BP responsible for knowing everything about the guests that appear on their show. It is up to the viewers to take the information and do their due diligence.
- Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes7y
Originally posted by @James Wise:
Originally posted by @Jay Hinrichs:
Originally posted by @Derek Joyner:
@Jay Hinrichs
I have to disagree with you. The guy was wanted in Philippines. There are real estate brokers who are wanted and run also. We don’t know the reason. It could have nothing to do with real estate. On a person having an alias name on a pod cast, again we don’t know the reason. Maybe he didn’t want the publicity. Who knows.
On bigger pockets not caring and it’s entertainment and they just need ears. If you listen to Brandon he says he wants to educate and help not entertain. Though they need ears they also want to help and guide in the right direction. Brandon talks about wholesaling in his books. So those are entertainment also? Message the owner of bigger pockets and Brandon and tell them this whole webpage and podcast is fake and just for entertainment and I think they would have a big difference of opinion with you.
my point is just being on a POD CAST does not legitimize the person being interviewed I was on a pod cast they did no back ground on me.. But to their credit when things come to light about bad acts of those on a pod cast they take them down.. IE Clayton Morris and this other guy I can recall his name.. I have first hand knowledge on the other guy.. from 3 sources.. one was a lady who was behind me at a Alaska airline lounge and when you sign in your name pops up.. she says are you the Jay Hinrichs that is a frequent poster.. so instead of spending a quite hour before my flight she went into detail about the 200k she lost with this guy.. So once BP realized this that guy is no longer here and his pod cast is taken down.. and for sure this is for entertainment its social media this is all entertainment.. And of course its to usually promote the brand of who ever is on the pod cast that's a given.. having Morris on BP created a false sense of security with his brand and about 700 investor lost millions of dollars... not all from BP pod cast but there were many I am sure that made the jump because of his BP podcast the Bp podcast is huge and spreads a wide net.. Not sure if your up to speed on Clayton Morris but it well chronicled on this site.
Wendall De Guzman was his alias here on BP. I think his real name was Rodriguez or Hernandez.
As for BP vetting people for thsir podcasts they do a their best to present the best possible lineup of guests but if you read the disclosures around the site they fully explain that they do not endorse them or anything of that nature. A hold harmless disclosure like that is the norm for this type of business. It would be impractical to hold BP responsible for knowing everything about the guests that appear on their show. It is up to the viewers to take the information and do their due diligence.
Derek here is the link to the disclosure absolving BP of any responsibility of user generated content. Again this is going to be par for the course for any education / entertainment content creation business.
- 7yScott JohnsonBusiness MemberSpecialist · Greenville, NC · Member since 2019 · 673 posts · 408 votes
@Matt Hatton, wow! This post took a big turn.
To answer your question, find a mentor. All states have different laws and as long as you’re up front with your sellers about your plans and have contracts/assignments that have been reviewed and confirmed by an attorney in your state, you’ll be fine.
If it were an illegal act, attorneys wouldn’t close our deals... but they do...
Just make sure you NEVER give anyone the idea that you’re selling THE PROPERTY. We sell CONTRACTS, not real estate. Leave that to the brokers/realtors.
What you’re seeing in this post is typical “realtor vs. wholesaler” banter. It won’t be the last time you hear it.
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Scott Johnson:
@Matt Hatton, wow! This post took a big turn.
To answer your question, find a mentor. All states have different laws and as long as you’re up front with your sellers about your plans and have contracts/assignments that have been reviewed and confirmed by an attorney in your state, you’ll be fine.
If it were an illegal act, attorneys wouldn’t close our deals... but they do...
Just make sure you NEVER give anyone the idea that you’re selling THE PROPERTY. We sell CONTRACTS, not real estate. Leave that to the brokers/realtors.
What you’re seeing in this post is typical “realtor vs. wholesaler” banter. It won’t be the last time you hear it.
Yup in two weeks it will fire back up again LOL.. this one will be forgotten just like half the long threads on BP..
- Attorney · Boston, MA · Member since 2018 · 109 posts · 63 votes7y
Did anybody with an actual law license comment on this thread? The real estate agents or brokers that provided their legal interpretation are not qualified to tell you whether wholesaling is legal. They also have a vested interest in spreading this misinformation about wholesaling. Only a lawyer licensed in your state is qualified to tell you whether something is illegal--not even the real estate licensing board can provide you with the answer.
I can tell you as an actual lawyer myself that wholesaling is generally legal, and that under the US Constitution states have limited power to intrude into private contracts. So, it is arguably unconstitutional for the states to require private parties to seek out a license (i.e., state permission) at significant cost simply to exercise their common law right to assign a contract to another party. However, there are definitely major missteps you can take which would get you in trouble, such as holding yourself out as the agent of another. When wholesaling you should always be acting in your individual capacity.
Seek a professional opinion in your state, and take any advice from these forums with a grain of salt.
- Member since 2018 · 1 post · 0 votes7y
@Priscilla Z. That was the best one I read so far
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Patrick M Nichols:
Did anybody with an actual law license comment on this thread? The real estate agents or brokers that provided their legal interpretation are not qualified to tell you whether wholesaling is legal. They also have a vested interest in spreading this misinformation about wholesaling. Only a lawyer licensed in your state is qualified to tell you whether something is illegal--not even the real estate licensing board can provide you with the answer.
I can tell you as an actual lawyer myself that wholesaling is generally legal, and that under the US Constitution states have limited power to intrude into private contracts. So, it is arguably unconstitutional for the states to require private parties to seek out a license (i.e., state permission) at significant cost simply to exercise their common law right to assign a contract to another party. However, there are definitely major missteps you can take which would get you in trouble, such as holding yourself out as the agent of another. When wholesaling you should always be acting in your individual capacity.
Seek a professional opinion in your state, and take any advice from these forums with a grain of salt.
ya I have been down that road with regulators you get caught between your attorneys interpretation of the law and the regulators..
the last one I had cost me 30k and a cease and desist all this based on my attorney telling me I was OK for the model I was doing. .. but of course my attorney said we could fight it at administrative law court for another 100k or so.. LOL.
And for a fact I know of Cease and desist in Oregon and MS from folks advertising properties they don't own.. these are my clients I know personally.
so we have to take all of this with a grain of salt.. and at least in Oregon that advertising a property you don't own is something that a license is required for.. most bigger wholesalers close on the property and resell.. what's gotten wild is the assigning of contracts and mirroring the activity of brokers.. IE setting up your entire business model to NEVER close on a property and only make assignment fee's. and if you cant close you walk.. this is what hurts the industry.. putting sellers in a pickle when they think they have a sale only to have the person going into contract with them having zero intention of actually closing and no means to close.
at some point a license is required to bring two parties together for compensation that's the first sentence of license law..
But for sure every state has a different take on this.. especially areas of low value assets .
So while I love all my attorneys I have learned the hard way that just because its their opinion does not mean you win at the state level.
- Rental Property Investor · Reading, PA · Member since 2019 · 76 posts · 43 votes7y
@James Wise I respect your position but have you ever listed a property that needs work and is it common to list properties that needs work . Verses advising the seller to make some necessary repairs to get to value. That’s the better question I have no picks I dealt with wholesaler in fact they told me they were making a profit and the deal was still great I purchased it quite a few times .
- Attorney · Boston, MA · Member since 2018 · 109 posts · 63 votes7y
Originally posted by @Jay Hinrichs:
Originally posted by @Patrick M Nichols:
Did anybody with an actual law license comment on this thread? The real estate agents or brokers that provided their legal interpretation are not qualified to tell you whether wholesaling is legal. They also have a vested interest in spreading this misinformation about wholesaling. Only a lawyer licensed in your state is qualified to tell you whether something is illegal--not even the real estate licensing board can provide you with the answer.
I can tell you as an actual lawyer myself that wholesaling is generally legal, and that under the US Constitution states have limited power to intrude into private contracts. So, it is arguably unconstitutional for the states to require private parties to seek out a license (i.e., state permission) at significant cost simply to exercise their common law right to assign a contract to another party. However, there are definitely major missteps you can take which would get you in trouble, such as holding yourself out as the agent of another. When wholesaling you should always be acting in your individual capacity.
Seek a professional opinion in your state, and take any advice from these forums with a grain of salt.
ya I have been down that road with regulators you get caught between your attorneys interpretation of the law and the regulators..
the last one I had cost me 30k and a cease and desist all this based on my attorney telling me I was OK for the model I was doing. .. but of course my attorney said we could fight it at administrative law court for another 100k or so.. LOL.
And for a fact I know of Cease and desist in Oregon and MS from folks advertising properties they don't own.. these are my clients I know personally.
so we have to take all of this with a grain of salt.. and at least in Oregon that advertising a property you don't own is something that a license is required for.. most bigger wholesalers close on the property and resell.. what's gotten wild is the assigning of contracts and mirroring the activity of brokers.. IE setting up your entire business model to NEVER close on a property and only make assignment fee's. and if you cant close you walk.. this is what hurts the industry.. putting sellers in a pickle when they think they have a sale only to have the person going into contract with them having zero intention of actually closing and no means to close.
at some point a license is required to bring two parties together for compensation that's the first sentence of license law..
But for sure every state has a different take on this.. especially areas of low value assets .
So while I love all my attorneys I have learned the hard way that just because its their opinion does not mean you win at the state level.
I don't know how you set up your business specifically, but like I mentioned there are major missteps you can take which will bring you under the purview of the licensure law.
Specifically, it sounds like you got into trouble for advertising to the general public. Advertising the property is probably considered a brokering activity in many states.
- Rental Property Investor · Little Rock, AR · Member since 2017 · 29 posts · 7 votes7y
@James Wise Nope.... You only think they're pretending because you assume that. Did you know by law if I put a house under contract with intent to buy and then afterwards I change my mind for some reason and would like to sell that contract to someone else it's not illegal or bad? You my friend, going behind peoples backs is the very reason why wholesalers use memorandum of agreements to shut your naughty business practice up.
P.S. I know how you think they're scammers, and I sorta feel that way too about them. But I'm just saying if someone literally got a house and changed their mind and sold that contract it's not bad. Even though we all know their intent we can't prove it in a court of law.
- Investor · Boston, MA · Member since 2015 · 1k+ posts · 3k+ votes7y
Originally posted by @Patrick M Nichols:
Did anybody with an actual law license comment on this thread? The real estate agents or brokers that provided their legal interpretation are not qualified to tell you whether wholesaling is legal. They also have a vested interest in spreading this misinformation about wholesaling. Only a lawyer licensed in your state is qualified to tell you whether something is illegal--not even the real estate licensing board can provide you with the answer.
I can tell you as an actual lawyer myself that wholesaling is generally legal, and that under the US Constitution states have limited power to intrude into private contracts. So, it is arguably unconstitutional for the states to require private parties to seek out a license (i.e., state permission) at significant cost simply to exercise their common law right to assign a contract to another party. However, there are definitely major missteps you can take which would get you in trouble, such as holding yourself out as the agent of another. When wholesaling you should always be acting in your individual capacity.
Seek a professional opinion in your state, and take any advice from these forums with a grain of salt.
Is it also true that government entities can and do intrude every day into constitutional protected aspects of citizens lives with the citizen's only recourse being to bring suit against the government and/or go through the appropriate appeals process?
Doesn't that mean wholesaling could very well be legal in every state, but since it is cheaper to pay a fine/get licensed than take a case to either a state or the federal Supreme Court, case law could very well never be created to back up the theory the wholesaling is legal, and thus it becomes de facto illegal in most states?
- Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes7y
Originally posted by @Ricardo L Knight:
@James Wise I respect your position but have you ever listed a property that needs work and is it common to list properties that needs work . Verses advising the seller to make some necessary repairs to get to value. That’s the better question I have no picks I dealt with wholesaler in fact they told me they were making a profit and the deal was still great I purchased it quite a few times .
Yes I only work with investors so I sell homes in disrepair all the time. Foreclosures, burn outs, gut jobs, trashed by tenants etc.....All of it is just another day at the office.
- Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes7y
Originally posted by @James McCray:
@James Wise Nope.... You only think they're pretending because you assume that. Did you know by law if I put a house under contract with intent to buy and then afterwards I change my mind for some reason and would like to sell that contract to someone else it's not illegal or bad? You my friend, going behind peoples backs is the very reason why wholesalers use memorandum of agreements to shut your naughty business practice up.
P.S. I know how you think they're scammers, and I sorta feel that way too about them. But I'm just saying if someone literally got a house and changed their mind and sold that contract it's not bad. Even though we all know their intent we can't prove it in a court of law.
You gotta stick to the facts my man. Government agencies have used intent and levied fines against those acting as a unlicensed agents before......many times. Hell one poster even told his own story here in this thread how he got hammered for wholesaling and it appears intent played a role.
- Rental Property Investor · New York City · Member since 2019 · 703 posts · 538 votes7y
How can I tell the owner of a property that "I am" buying their property and I'm giving them top dollar for their home. I couldn't sit at the closing table with the seller and the "real buyer" when they thought the real buyer was me.... and to top it off the real buyer that the seller never met is paying top dollar for the home.
I don't think id be able to look at the distressed property owners face at the closing table.
Even if i told the seller that i'm "assigning the contract" why should they care, they were told they are getting top dollar when they weren't.I'm not against wholesalers at all if they are legit, honest, upfront and let the seller know exactly what they are doing.
- Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes7y
Originally posted by @Anthony Rosa:
How can I tell the owner of a property that "I am" buying their property and I'm giving them top dollar for their home. I couldn't sit at the closing table with the seller and the "real buyer" when they thought the real buyer was me.... and to top it off the real buyer that the seller never met is paying top dollar for the home.
I don't think id be able to look at the distressed property owners face at the closing table.
Even if i told the seller that i'm "assigning the contract" why should they care, they were told they are getting top dollar when they weren't.I'm not against wholesalers at all if they are legit, honest, upfront and let the seller know exactly what they are doing.
These people routinely make false statements to sellers while ripping tens of thousands of dollars from them.
- Specialist · Purcellville, VA · Member since 2015 · 1k+ posts · 841 votes7y
First off, you have to be honest. This is not a system to deceive people into selling you their property at a discount. If that's what you think it is, you need to go back to the drawing board and learn what this is all about. This is why some people hate wholesalers.
You are not going to be working with 99% of the sellers out there. If I were to sell my house, I would fix it up to get it ready to sell for top dollar on the retail market. That's what 99% of the sellers are doing. Your customer/seller is someone whose top priority is NOT to get top dollar. Their priority is to sell fast or for some other reason they don't want to go through that whole process. There are lots of reasons. As a wholesaler, your job is to find out what they need. If they're looking to sell like I would, you should refer them to a realtor you work with and not try to wholesale their house. Since you have at least one realtor you're work with (you're building a team, right?), you should have someone on your team who can help them. That realtor will be happy you sent them some business, and the seller will be happy they met an honorable person.
If your seller has other motivations (there are a lot), then you can start working with them. Find out what they really need, and help them to get what they need. Maybe they don't have the resources or desire to do extensive work to get the house retail ready. Maybe they need to sell quickly because they took a job across the country and they truly just want to get rid of the house. Whatever the case, they have made it clear to you that top dollar is not what they're looking for.
So, will they care if you're buying it yourself or assigning it? No. Your value is in getting it done quickly while meeting their real needs. So when you say you may/will be assigning the contract to someone else, all they care about is can this be done quickly (and/or meet whatever their needs are).
Now everyone can look at each other across the table and truly be happy with the outcome.
- 7yTom GimerBusiness MemberDMV · Member since 2017 · 3k+ posts · 3k+ votes
Originally posted by @Patrick M Nichols:
Did anybody with an actual law license comment on this thread? The real estate agents or brokers that provided their legal interpretation are not qualified to tell you whether wholesaling is legal. They also have a vested interest in spreading this misinformation about wholesaling. Only a lawyer licensed in your state is qualified to tell you whether something is illegal--not even the real estate licensing board can provide you with the answer.
I can tell you as an actual lawyer myself that wholesaling is generally legal, and that under the US Constitution states have limited power to intrude into private contracts. So, it is arguably unconstitutional for the states to require private parties to seek out a license (i.e., state permission) at significant cost simply to exercise their common law right to assign a contract to another party. However, there are definitely major missteps you can take which would get you in trouble, such as holding yourself out as the agent of another. When wholesaling you should always be acting in your individual capacity.
Seek a professional opinion in your state, and take any advice from these forums with a grain of salt.
I did ... but only to point out that brokers can't give legal advice.
Every single word in a statute has meaning. By the time it becomes law, the text has been drafted, considered, commented on, argued, revised, considered, commented on, etc. ... and eventually finalized.
So to those who ignore the "who for another" language, which applies to all 9 of the paragraphs below it in the statute cited in this thread, you are blind to the fact that an agency relationship is what is being regulated. When you buy and sell for your own account, there is no such relationship.
Some of my best clients find opportunities... and they sell them to people who either didn't have the foresight or weren't quick enough.
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