Philly Passes Laws to Crack Down on Wholesalers

[Franky Aikens]

Wholesalers are a significant segment in real estate investing, especially in Philadelphia. The city has now passed into law new regulations to crack down on wholesalers. According to an article in the Philadelphia inquire, Philly is the first city in the nation to take measures against wholesalers. Given the nature of the wholesale transactions, it could be difficult to enforce these laws since wholesalers rarely acquire deeds to the properties they contract for resell making it somewhat of a shadow transaction. 

But it think the attempt by lawmakers to regulate the wholesaling could be significant. Could Philadelphia prompted other cities/states to follow suite to put a squeeze on wholesaling or stop it all together? Curious to know what you all think.

Article: https://www.inquirer.com/news/...

[Alan Blitz]

Found this on a community site https://clsphila.org/services/:

Many homeowners in Philadelphia receive repeated calls, letters, and visits from “We Buy Houses” residential property wholesalers offering cash to buy their homes or other property they own. Often, these wholesalers target people who are going through financial hardship and use high-pressure tactics to convince homeowners to sign agreements to sell. They target homeowners in neighborhoods with rising home values, especially in Black and Latinx communities.

These wholesalers often offer far less than the actual value of their property. As a result, long-time homeowners lose valuable wealth and family homes are lost.

Legislation in City Council would curb the worst abuses in this industry.

This legislation would:

1. Require residential property wholesalers to provide homeowners with a Bill of Rights at least three days before a sale.
2. Require residential property wholesalers to be licensed with the City and follow a code of ethics.
3. Give homeowners important new rights when residential property wholesalers do not follow the law.
4. Create a Do Not Solicit list that homeowners can join if they do not want to receive solicitations to sell their house.
5. Assesses a fine of up to $2,000 if a wholesaler tries to get homeowners on the Do Not Solicit list to sell their home.

Not a bad thing overall to regulate an industry and create a minimum standard of ethics.