Full time wholesalers
Flipper/Rehabber · Jacksonville, FL · Member since 2019 · 30 posts · 53 votes
Full time wholesalers
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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
- Attorney · Boston, MA · Member since 2018 · 109 posts · 63 votes7y
Originally posted by @Tom Gimer:
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.
Exactly. It sounds like the guy above in this thread got in trouble for advertising a property without a license. Of course the board will go after you for marketing a property to the general public because you appear to be acting "for another."
Folks, trying to do retail-type activities like advertising a property to the general public without a license will get you in trouble with the people that regulate retail sales. That's why I said above that you can make serious missteps to make an otherwise legal activity illegal. You need to be assigning your contracts in private sales as well, otherwise you aren't wholesaling anymore you are retailing. Establish a network of sophisticated investors that you can assign your P&S agreements to by networking with people in your area.
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Patrick M Nichols:
Originally posted by @Tom Gimer:
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.
Exactly. It sounds like the guy above in this thread got in trouble for advertising a property without a license. Of course the board will go after you for marketing a property to the general public because you appear to be acting "for another."
Folks, trying to do retail-type activities like advertising a property to the general public without a license will get you in trouble with the people that regulate retail sales. That's why I said above that you can make serious missteps to make an otherwise legal activity illegal. You need to be assigning your contracts in private sales as well, otherwise you aren't wholesaling anymore you are retailing. Establish a network of sophisticated investors that you can assign your P&S agreements to by networking with people in your area.
Exactly but that's were the wholesaling gurus or what the wholesaling gurus teach.. these folks will put up a website and show the house and description etc etc.. and at least in Oregon that's a no no..
- Flipper/Rehabber · Roseville, MN · Member since 2018 · 73 posts · 38 votes7y
@Matt Hatton
Well, I bet you didn’t think your post would blow up like this... haha! It’s a bummer to see so many people commenting on the thread and not one real estate attorney. Take everything with a grain of salt on here and do your research (which it sounds like you have)!
A couple things I would say. Go to Real estate Roundup Facebook group. They are a couple guys in SE that are doing wholesaling (they were on the podcast). Their group is very active with people from all over. Find yourself a contract to start with their in their files and posts. Then Find a RE attorney and send that contract to them. Ask questions about the process in your state and spend the money to get the contract in line with your states laws.
The best piece of advice I have received and follow, be consistent. Whatever marketing channel you choose, be consistent for at least 6 months. Set aside the amount of money now and keep mailing or keep calling or whatever it is you are choosing. Give it time to work as a lot of times it takes 5-9 postcards via direct mail to get an answer. Leads are key so make sure to follow up and be diligent with them.
Best of luck
- Valdosta, GA · Member since 2017 · 57 posts · 6 votes7y
@Matt Hatton Also looking for wholesalers in the south Ga area!
- Flipper/Rehabber · Winston Salem, NC · Member since 2018 · 33 posts · 24 votes7y
@James Wise
I feel your missing the concept though. Let’s define the 2.
A broker is a 3rd party who is brokering the transfer of a property between a buyer and a seller. The broker is neither the buyer or seller. So they are held to laws and fairness and can get into big trouble.
Now a wholesaler. They are the buyer not a 3rd party broker. This is like a for sale by owner that happens all the time. Which are not illegal anywhere as far as I know.
Now there are ways a wholesaler can get in trouble but it’s the same reasons as any buyer can from buying any home themselves. Wholesalers are not held to the standards as a 3rd party licensed broker.
The there is a wholesaler who holds a license. Now that opens a whole new can of worms that I won’t get into because we all can’t get over the simple broker and wholesaler differences here.
- Flipper/Rehabber · Winston Salem, NC · Member since 2018 · 33 posts · 24 votes7y
@Tom Gimer
It’s the new broker license Tom. It’s a buy one, get an attorney license free of charge. I’m going to get mine before they change the rule again. I’m going to screw some stuff up now with both. 😂
- Flipper/Rehabber · Winston Salem, NC · Member since 2018 · 33 posts · 24 votes7y
@Anthony Rosa
That’s just it. I don’t think many wholesalers tell anyone they are giving them top dollar for property. Most go in with its fast and quick with me and I may and may not be the buyer but here is what I can pay.That while pushy sales thing was the way to do it 30 years ago. Times are different now. Brokers, wholesalers and investors are a dime a dozen now. So if your abrasive with sales you’ll find people moving on to the next person.
I have my brokers license so I would also advise that I am a broker and I when I have them sign a contract I would also throw out that they have the right and should get an attorney to review any concerns with the contract they may have. I’ll go over it with them also but advise them to talk to an attorney and not take my word for it. 100% of time they say no go ahead, we trust you. I’m not going to do a deal pushing sellers. I’ll spend my time chasing the ones that are grateful. It’s all about disclosing. I’d rather be calling with bad news and saying hay remember when we talked about .... Instead of calling and saying are you sitting down, I hope we can work this out.
Disclose, disclose, disclose...
- Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes7y
Originally posted by @Derek Joyner:
@James Wise
I feel your missing the concept though. Let’s define the 2.
A broker is a 3rd party who is brokering the transfer of a property between a buyer and a seller. The broker is neither the buyer or seller. So they are held to laws and fairness and can get into big trouble.
Now a wholesaler. They are the buyer not a 3rd party broker. This is like a for sale by owner that happens all the time. Which are not illegal anywhere as far as I know.
Now there are ways a wholesaler can get in trouble but it’s the same reasons as any buyer can from buying any home themselves. Wholesalers are not held to the standards as a 3rd party licensed broker.
The there is a wholesaler who holds a license. Now that opens a whole new can of worms that I won’t get into because we all can’t get over the simple broker and wholesaler differences here.
No, I understand the concept. I think you are missing it here. What is being taught and what is widely practiced as main stream wholesaling the wholesaler is never the buyer. Seeing as they are never the buyer, only a middleman whom is earning compensation from the sale they are simply brokering real estate. Brokering real estate requires a license in the USA.
- Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes7y
Originally posted by @James Wise:
Originally posted by @Derek Joyner:
@James Wise
I feel your missing the concept though. Let’s define the 2.
A broker is a 3rd party who is brokering the transfer of a property between a buyer and a seller. The broker is neither the buyer or seller. So they are held to laws and fairness and can get into big trouble.
Now a wholesaler. They are the buyer not a 3rd party broker. This is like a for sale by owner that happens all the time. Which are not illegal anywhere as far as I know.
Now there are ways a wholesaler can get in trouble but it’s the same reasons as any buyer can from buying any home themselves. Wholesalers are not held to the standards as a 3rd party licensed broker.
The there is a wholesaler who holds a license. Now that opens a whole new can of worms that I won’t get into because we all can’t get over the simple broker and wholesaler differences here.
No, I understand the concept. I think you are missing it here. What is being taught and what is widely practiced as main stream wholesaling the wholesaler is never the buyer. Seeing as they are never the buyer, only a middleman whom is earning compensation from the sale they are simply brokering real estate. Brokering real estate requires a license in the USA.
James you will never win an argument against those that believe they are above the law and will do anything for a buck regardless of laws and regulations. I just had an unlicensed broker pitch a deal to me. I explained to them it is ILLEGAL IN FL to pay a non-licensee a fee or commission. They then suggested I could pay it to their LLC instead. I have reported them and hopefully will add another one to the list of cease and desist letter owners:)
- Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes7y
Originally posted by @John Thedford:
Originally posted by @James Wise:
Originally posted by @Derek Joyner:
@James Wise
I feel your missing the concept though. Let’s define the 2.
A broker is a 3rd party who is brokering the transfer of a property between a buyer and a seller. The broker is neither the buyer or seller. So they are held to laws and fairness and can get into big trouble.
Now a wholesaler. They are the buyer not a 3rd party broker. This is like a for sale by owner that happens all the time. Which are not illegal anywhere as far as I know.
Now there are ways a wholesaler can get in trouble but it’s the same reasons as any buyer can from buying any home themselves. Wholesalers are not held to the standards as a 3rd party licensed broker.
The there is a wholesaler who holds a license. Now that opens a whole new can of worms that I won’t get into because we all can’t get over the simple broker and wholesaler differences here.
No, I understand the concept. I think you are missing it here. What is being taught and what is widely practiced as main stream wholesaling the wholesaler is never the buyer. Seeing as they are never the buyer, only a middleman whom is earning compensation from the sale they are simply brokering real estate. Brokering real estate requires a license in the USA.
James you will never win an argument against those that believe they are above the law and will do anything for a buck regardless of laws and regulations. I just had an unlicensed broker pitch a deal to me. I explained to them it is ILLEGAL IN FL to pay a non-licensee a fee or commission. They then suggested I could pay it to their LLC instead. I have reported them and hopefully will add another one to the list of cease and desist letter owners:)
Don't forget to contact the actual owner & grab the listing on the house.
- Developer · NY/NJ/PA · Member since 2018 · 758 posts · 935 votes7y
Originally posted by @Derek Joyner:
@James Wise
I feel your missing the concept though. Let’s define the 2.
A broker is a 3rd party who is brokering the transfer of a property between a buyer and a seller. The broker is neither the buyer or seller. So they are held to laws and fairness and can get into big trouble.
Now a wholesaler. They are the buyer not a 3rd party broker. This is like a for sale by owner that happens all the time. Which are not illegal anywhere as far as I know.
Now there are ways a wholesaler can get in trouble but it’s the same reasons as any buyer can from buying any home themselves. Wholesalers are not held to the standards as a 3rd party licensed broker.
The there is a wholesaler who holds a license. Now that opens a whole new can of worms that I won’t get into because we all can’t get over the simple broker and wholesaler differences here.
I think you are the one missing the concept here.
A wholesaler, who never takes title, is never a buyer. They are just a broker using a different mechanism to broker a deal.
In your state, NC, if you wholesale contracts, that is deemed real estate brokering by the RE board. You are just asking to get fined out the *** if you do it unlicensed. Not sure why this thread is still going. It costs almost nothing to get licensed.
- 7yTom GimerBusiness MemberDMV · Member since 2017 · 3k+ posts · 3k+ votes
@Syed H. Sorry, but if I’m buying and selling on my own account, I certainly don’t intend to share my profits with a broker ... and I don’t want the annual dues, agency relationship, or the oversight.
I could dissect your post but that would only prolong this thread further, and you seem a bit upset about that!
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