wholesaling without license????

Question

I Just started this pre license course online and I think I may know the answer to this question but would just like to get some clarity on it from someone who is an agent who understands the law... It goes over the activities that require you to have a license. Some of the activities are procuring a seller, buyer, landlords or tenants

to carry on real estate business activities. Also negotiating or helping a consumer to buy, sell, rent or lease a property.

So here is my question. with all that being said, How can an individual wholesale a property? Aren't you doing any all those activities??

PS. I'm in Missouri if that helps any on this question

Thanks

Jared Swanson · Answer

Once a wholesaler has has the property under contract, he has an equitable interest. At closing the equitable interest becomes a legal interest. The wholesaler offering to sell his own interest in the property.

A licensed agent, on the other hand, is helping a homeowner sell. The agent never receives equitable or legal interest. The agent is a fiduciary of the seller.

Mike Palmer · Answer

I have a little bit different take. It seems that it would be more difficult to ETHICALLY be a licensed wholesaler. As a licensed agent, how would you ethically approach a seller and try to snatch the home from them for less than it is worth?

I know you are not there to 'represent' the seller in this case and it may not technically be a breach of fiduciary duty, but you are using your inside knowledge to make money by keeping them from listing. This seems to contradict the code you agree to abide by in becoming an agent. I also think that the licensed wholesaler would be more likely to not disclose that they are an agent, or not tell them the actual value of the house or whatever.

Seems to me that this creates more of a gray area and personally I would rather not be licensed if I was wholesaling. Does this seem out of whack?

Vince Mayer · Answer

Meh. If I own a house and want to sell it, I can, without a license. Does the seller of a house that wants to sell me a house need to be licensed? No. FSBO is not illegal. Neither is buying that owners house.

Tanner Trokey · Answer

Interesting, glad I am not the only one. The concept does contradict itself in a way. @Jay Hinrichs  Thanks for the responses

Jay Hinrichs · Answer

@Tanner Trokey

never ending controversy on this one.. clearly those that wholesale are selling RE without a LICENCE.. but then they couch it by saying they are selling equitable interests in contracts.

REAILITY if any wholesaler that is not licsened was turned into that states DRE they would have problems.. There was a whole thread on OHIO wholesaling and how OHIO is getting tough on this activity.

Suzanna H. · Answer

I am looking at this thread with great interest.

What are the differences in what an unlicensed investor does versus a licensed agent? A licensed agent is limited in how much per transaction they earn due to the %, desk fees, split with broker, no? How does this work?

I'm excited to get my foot in the door with real estate investing but want to know what I would actually be doing day-to-day if licensed and how the money comes.

Thank you,

Suzanna

suzannahartman@gmail.com

Tanner Trokey · Answer

@Mike Palmer

FYI I know you were not speaking directly to me I was just using myself and my opinions as examples to make a broad point

Tanner Trokey · Answer

@Mike Palmer

I Disagree, at least for me, the reason why am taking the necessary steps to obtain my license is to get the best understanding of my target market. By having the knowledge of what the "as is" condition price is and what others have sold for, I can then have the confidence of knowing I am offering a fair price to the seller based of actual numbers and information provided from facts. People may choose to act unethically but to me that will only get you so far. Like in the podcast 77 Where @Michael Quarles(can't link him) talks about how in the grocery store, he doesn't want to feel uncomfortable when grabbing an item off a shelf next to someone he bought a house from.(Not sure on the exact details of what he said, or called it)

William Hochstedler · Answer

Missouri Code:

339.010. 1. A "real estate broker" is any person, partnership, limited partnership, limited liability company, association, professional corporation, or corporation, foreign or domestic who, for another, and for a compensation or valuable consideration, does, or attempts to do, any or all of the following...

In Utah, we have a list of exceptions including being a principal on a transaction.  I'm not a lawyer, but I imagine this nuance would shift the burden between the two states.  In Utah I have to show that I am a principal, where in Missouri, you'd have to show that you are not doing this "for another".  Always harder to prove a negative.

I don't understand what the big stigma is against getting licensed.  Under $1000 in most states and can be done in a month.  What kind of wholesaling business do you have if you can't invest that?

Wm

Jay Hinrichs · Answer

@Ned Carey

Well the WA state AG thought it was down right criminal... There is a big PI firm in CA that does a ton of this work nationwide... I only know because my 80 yo mother got a call from them  HEY you have money you can collect just sign here..Well I knew which county they probably had overages in so it was not difficult for me to contact the tax collector and retrieve the funds for my mother for FREE.  its was a little over 10k and this company wanted half.  So yes I think tax collectors in general are not real helpful to overage folks and as stated WA wanted to put Joe Kaiser in Jail.

wholesaling without license????

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