Bloomsburg, PA · Member since 2020 · 44 posts · 11 votes
We were just curious as to two things about it that we can't seem to get a concrete answer on due to the "grey areas" in wholesaling.
1.) How does the process change if at all if you don't have a RE license? Is it still the same pattern of finding a seller, getting it under contract, finding a cash buyer, assigning a contract, and closing? Or is there anything that needs to be specific since you are not licensed?
2.) What are the wholesaling laws in PA? I can't find any of this online, I searched for quite a while and couldn't come up with anything solid.
@Jared Hettler I believe that currently, there is only one state that now requires a license to do wholesaling; if one executes more than one deal per year, that is Illinois. One can wholesale in various manners in the remaining states. It is crucial that one consult a real estate attorney to ensure an understanding of that state's laws.
I am not an attorney, but here are my thoughts: When wholesaling, one is not selling or listing a property; instead, one is selling one’s right to purchase a property under the negotiated terms of the contract and to which one has an equitable interest. One will come across many RE agents, Realtors, and Brokers that will say it’s illegal; it is not specifically, but one can conduct wholesaling in a manner that violates the law, so again it is essential to speak with an attorney.
Check out this BiggerPockets blog by Brandon Turner, which breaks it down very nicely:
That said, getting your Real Estate license, in my opinion, is an advantage, or having someone on your team that is licensed helps. It does introduce additional complexities, such as disclosures, whether one’s broker is comfortable with wholesaling, etc. Still, it will allow one to provide other avenues for the seller, should wholesaling be determined not to be a viable solution for the seller's problem. It's ultimately about helping them, which can be done in multiple ways based on the seller's objectives and motivations.
The process, depending on the state you are wholesaling in, may change the flow slightly. Certain states have different assignability rules, which require other methods such as double closing or, in certain instances, using an LLC. Local investors and wholesalers can share perspectives on that. Assignments are not an issue in the states where we wholesale.
I see, thank you for all the information, and I will definitely go read that blog by Brandon. Would any real estate attorney know these specific laws state by state or is there a specific type of RE lawyer I should see about them? Thanks for the info again, and best wishes.
Also, this might sound like a silly question, but do you happen to know which state's rules/laws on is required to abide by if wholesaling remotely from a different state? I would assume it would be the state in which the real estate is set in, but just wanted to be sure.
@Jared Hettler As far as RE attorneys are concerned, there are various specializations, but a residential real estate/closing attorney is a good bet. Many attorneys have their own title companies, so they are excellent resources. In some states, title companies are used; in others, closing attorneys, one will want to know this in advance of structuring a deal. Regarding which laws apply, it's the state/municipality one is closing in, and of the subject property (e.g., we have a special contract we use for D.C. and another for VA).