Can I sell someone's home for them?

Question

So I came across a home today that I am interested in buying. The seller is more interested in a quick "traditional" purchase then he is in talking about other financing options. But the experience raised a question in my mind.

I am not a realtor and have no intention of getting my license. Can I agree on a purchase price with the seller that is below ARV, with a delayed closing and then look for a buyer and take the difference of the purchase prices?

Basically it sounds like I would be selling his house for him but saving him the seller's agent cost and then marking his house up. It just made we wonder if I could do that or if that was similar enough to what a realtor does that I would get in some kind of trouble for not being an agent?

Any thoughts are appreciated.

Thanks

KC

William Hochstedler · Answer

There's a good discussion of the BPer's take on the legality of wholesaling here:

http://www.biggerpockets.com/forums/93/topics/1278...

I'm not a lawyer, but Utah code states the following:

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61-2f-202. Exempt persons and transactions.

(1) (a) Except as provided in Subsection (1)(b), a license under this chapter is not required for:

(i) an individual who as owner or lessor performs an act described in Subsection 61-2f-102(18) with reference to real estate owned or leased by that individual;

_____

AND

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61-2f-102. Definitions

(18) "Principal broker" means an individual who is licensed as a principal broker under this chapter and who:

(a) (i) sells or lists for sale real estate, including real estate being sold as part of a foreclosure rescue, or a business opportunity with the expectation of receiving valuable consideration;

(ii) buys, exchanges, or auctions real estate, an option on real estate, a business opportunity, or an improvement on real estate with the expectation of receiving valuable consideration; or

(iii) advertises, offers, attempts, or otherwise holds the individual out to be engaged in the business described in Subsection (18)(a)(i) or (ii);

_____

The general interpretation seems to be that, as a principal on the contract, you have an interest in the property allowing you to market and sell that interest.

According to other posts, states like Ohio are starting to crack down on this practice because they view it as a work around for licensure.

Wholesaling is a mainstay topic of the REIA's and people are doing it all the time in Utah without consequence.

I feel that wholesaling is one complaint away from being banned in most states, but that hasn't happened yet.  For this reason, wholesalers should be very careful with transparency and disclosure so sellers fully understand what is going on.

Hope this helps.

Mark Gallagher · Answer

The concept you're thinking of can be done via wholesaling/assigning contracts. Look around here, and you'll find a wealth of knowledge on the subject.

In a nutshell, if the house is worth $100,000 you put it under contract for $90,000 with the stipulation that you can assign the contract. Then you find someone to buy it for anything above $90,000, assign them the contract, and earn the margin spread.

KC Hunt · Answer

Thanks everyone. That makes good sense. Get it under contract, tell the home owner what you are doing and then sell your interest in the property.

James Wise · Answer

You need a license to sell real estate you don't own and receive a fee for it.

Mary B. · Answer

You might want to check with Utah's real estate commission. Which will likely have strict rules against it including a nice fine to accompany any violation. My opinion: don't do it because you will want to do another and another and its not worth the risk.... Believe someone will rat you out, particularly if a salesperson / broker in your area gets wind of it.

Kudos,

Mary

Allen Maris · Answer

Hi KC,

I'm not licensed in Utah, but in CA where I am, I would want to  have equitable title to the property before doing anything like that.  What you're talking about is pretty much wholesaling.  There's lot of great info on the site about it.

I do know in CA, and probably a lot of other states, selling a property that you don't own or have title to, for compensation falls under the turf of the realtors.

Good luck.

Can I sell someone's home for them?

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