Wholesaling property questions ???

[Judith Ruiz-Marin]

Hello everyone , I'm from Oklahoma City I'm planning on getting into wholesaling. I was reading couple of BP post and notice that wholesaling is not legal everywhere. Where do I need to go to find out if it's legal in Oklahoma City ? I have read books and listening to a lot of podcast , I plan on starting my business soon and need to know if I need and LLC or any type of license before I have my business name out there? Thanks and God bless !

[Bill Gulley]

I think your question is about a Realtor or licensee doing a wholesale deal. While the answer of "get a license" solves the agency relationship formed, even unintentionally, and state requirements of showing and advertising a property, there are still other issues.

Wholesaling is basically a "net listing" CA is the only state I know of that allows a net listing with specific disclosures required. The NAR is opposed to the practice as an ethical matter and is illegal in most states.

A net listing is where an owner agrees to a certain price and the agent may take the difference between the owner's price and the actual sale price. This conflicts with the fiduciary responsibility of acting in the best interest of the owner. 

Another issue is under legal and ethical requirements of an agent to fully inform the client, it's rather hard to tell your client or the public that the property is worth $200,000, but you'll buy it at $150,000! So long as the agent fully informs the seller, so be it, but can you show the seller was fully informed, like in writing?

The duty of a listing agent is to obtain the highest market price for a seller, how can they do that if they are taking excess amounts of equity from a deal? Commissions are the usual and customary charge for services, how does an agent justify charging more for the same basic service? They can't simply wholesaling.

An agent's broker won't be real happy flipping contracts, commissions are due when title is transferred, not paper, unless special arrangements are agreed to, you're cheating the broker. The broker still has liability in what an agent does as well, wholesaling is circumventing listing requirements the broker has with the Board of Realtors (MLS) rules as well. So, due to ethical, legal and policy agreements a broker has they usually won't allow wholesaling by their agents.

The agent can avoid all these issues just as the wholesaler can, by taking title to the property and then selling it. That's not an issue in any state. An agent can buy a good deal, no law against that, they just have additional disclosures to make concerning them having a license. No big deal.

My new year's resolution for 2016 is cut down on the wholesale policing. 

I ride motorcycles, mostly alone but at times with clubs. There are good clubs and bad, lawless clubs. If some crazy passes me doing 100 mph, I don't confront the idiot when we all get to the cafe or bar up the road. He broke the law, so what, no harm done to me and I'm not going to start some fight over his breaking the speed limit! (I'm guilty at times myself, not usually at 100+ though!). 

Now, let's say the guy goes by throwing a beer bottle at me or another rider or driver......we're going to have words! 

Any intention I have from here on is not going to be about trying to convince a new wholesaler not to get into illegal and unethical dealings, it's about protecting the public from the guy throwing the beer bottle. My concern for the wholesaler that has their mind made up to do business that way is no longer my concern. People make bad choices in life everyday and they need to live with them and suffer the consequences, just as they do with any other poor decision.

In the past two days, two ladies came to BP asking how to get out of some issue with wholesaling their deal. Both had their minds made up that they were going to continue what they wanted to do. 

I've taught several people how to ride a motorcycle, the best time to teach them is when they want to start riding. So far they all enjoy riding without a incident as far as I know. 

The kid who taught himself to ride, pulling a 1/2 mile long wheelie down the highway, there is no reason for me to point out his immaturity and idiocy, the best thing for him to learn from will be crashing, hopefully he won't kill himself or others. 

Some people can't be told anything, regardless of age, only a fool doesn't recognize good advice. There are plenty of fools on the internet, not my fault. I'm sure that if some guru sold a fool proof method for robbing a bank, there would be those that would try it and be totally convinced they could pull it off, especially if they paid for the plan.

In 2016, you'll see me simply say "Another one bites the dust!" 

There is no cure for stupid, there is for ignorance, it's an education which is why I got involved with GREA and have posted on BP for years. 

Happy New Year !  :)