Is wholesaling legal in California?

[Samantha Soto]

My dad is a real estate attorney.  He and I are debating whether or not wholesaling is legal in CA.  He is arguing that it should not be done without a broker's license.  He says bringing buyers and sellers together is exactly what brokering is.  

Is he right?  From what I hear/see there seem to be so many people wholesaling without a brokers license.  It seems dumb that one would need a license to do something that's relatively simple.  

[Pratik P.]

@Samantha Soto

As a wholesaler in CA, let me give you my opinion on the topic. 

At a glance, wholesaling might seem to be the same thing as brokering especially for people who aren't familiar with creative investing. Like your dad put it, bringing a buyer and seller together is brokering and you absolutely need a license for that. 

But when you understand the two a bit better, you'll see where they differ. A broker/agent represents the seller and helps the seller get the highest sale price possible by marketing the property on the MLS. The higher the final sale price, higher their commission.

As a wholesaler, my niche is in off-market properties. I market like crazy to certain targeted lists to find motivated sellers. These are people who are wanting a quick cash, as-is sale. I meet them, estimate rehab costs, and negotiate them down from their asking price until it makes sense for a flipper + my profit. Once I get it under contract, I can do 2 things. 1. Sell/assign the contract to an end investor. 2. Double close. I don't tell people I have a 'house for sale'. I tell them that I'm under contract to buy a house and that the contract is for sale. 

In general, realtors don't do direct mail marketing, estimating rehab costs and negotiation with the seller. So maybe ask your dad if assigning/selling contracts is illegal in CA and see what he says.