Can Someone Please Explain Why A "Wholesaler" Would NOT Get Licensed?

[Scott Trench]

Can someone explain this to me like I'm 5. 

Is there some reason why the continual crop of new "wholesalers" don't just get their licenses? 

Is there some advantage to not having a license for the wholesaler? 

While I am skeptical of the wholesaling profession's prospects for any but high net worth, large scale real estate operators, I could see the odd agent wholesaling a small handful of deals. But, the inverse - the wholesaler losing out on a bunch of deals that they could probably sell as the agent if they are truly great at finding people who need to sell - seems way more likely. 

What, if any, is the advantage to not getting licensed for a wholesaler? 

[Jonathan Bombaci]

@Scott Trench Challenge accepted! I have a 5-year-old, so here goes:

Wholesaling is like finding toys that other kids don’t want anymore, showing someone else where to get those toys, and then asking for a finder’s fee in gummy bears. Getting a license is like opening your own toy shop. If you don’t have a shop, you can still point people to toys, but you’re not supposed to act like you own the shop or start setting prices for toys you don’t actually have.

Here’s why some wholesalers avoid getting their toy shop license:

1. Dodging Toy Shop Rules
If you run a shop (have a license), you’ve got rules. You have to tell people if a toy is broken, missing pieces, or might explode when played with. Without a shop, you can just say, “Here’s where you can find the toy” and skip the warnings.

2. Skipping Toy Shop School
To open a shop, you need to learn the rules, take a class, pass a test, and even keep learning as new toy trends pop up. Some people don’t want to bother. They’d rather just trade toys on the sly and call it a day.

3. Keeping it Casual
If you only find toys once in a while, you might not want to open a full-on toy shop. You’re just trying to make a few bucks to buy your own toys without committing to being a full-time shopkeeper.

But here’s the thing: Wholesaling without a license is like running around the playground trying to sell toys out of your backpack. Sure, you can make a few quick trades, but the playground monitors (a.k.a. the law) might notice, and you’ll miss out on the bigger opportunities and loyal customers.

So, while skipping the license might seem easier, it’s not the best way to win at the toy game in the long run.

I have this talk with 10-15 people each month at our Free Meetups here in MA, NH, and ME. Everyone wants to be a wholesaler these days and trying to convince them to get a license and do it the right way is like trying to take candy from a 5-year-old. 

Hope this clears it up!