Possible Legal Issues Arising from Wholesaling Houses

[Brian Watkins]

Hello BP Mates! Through the information overload going on in my head something came to me... I don't know what legal issues I could face wholesaling houses, if ANY...which I'm sure there are some.

Did this cross anyone's mind who is getting starting in this business?

Not that it would deter me from jumping in anyway but I feel knowing what I'm getting into will give me an advantage. It should allow me to watch my "step" for lack of a better term.

Can anyone give some advice or can anyone point me to a link where I can read what legal issues wholesaler's face? THANK YOU in advance!

[Shaun Reilly]

Originally posted by @Bruce Kozak:

In light of all the people Wholesaling, I figure there must be a good/legal way explanation for my question, I just would like to hear it so it's clear:

I read somewhere that marketing a property for sale that one doesn't own, for which a commission (i.e. Assignment fee) is obtained, is illegal in many states, and that such transactions require the involvement of a licensed real estate agent.

Is this hogwash? If not, then how does a Wholesaler legally work-around this law?

Bruce K.

Prime PA Properties LLC

As described it would be illegal probably everywhere.

You do NOT collect a commission if you are wholesaling, not are you marketing a property for sale.

You basically are doing one of 2 things. You are selling your contractual rights (and obligations) to a property to a 3rd party via assignment, which is not a commission. The other typical avenue is you double close where you actually buy the property and immediately resell it, in this case there is not even a semantic slippery slope since nobody can argue you are acting as an unlicensed agent if you actually take ownership of the property.

If you tell someone that you will sell their property for a fee and don't have a license you are most likely breaking the law in any state.