Wholesaling and the Law

[Ryan Ahlgrim]

I’m a new investor who is hoping to do his first direct mail campaign starting in 2014 to wholesale a few properties. I just got out of a 90 minute consultation meeting with an attorney. My purpose for going was to make sure wholesaling could be done ethically and legally.

The attorney seemed a bit put out with what I was proposing to do and very critical of wholesaling in general. He insisted that wholesalers were breaking the law by acting as unlicensed realtors and should be prosecuted if they’re ever caught, no exceptions. I tried telling him that there seem to be several legit wholesalers publicly sharing their knowledge and experience online but he again insisted they’re probably lying.

I’d appreciate anyone’s thoughts and reaction to this. Is wholesaling legal? Are wholesalers acting as unlicensed realtors? Would the contracts being used in a wholesale deal hold up in court? And what legal steps would you advise a new investor to take?

Thanks.