Is Real estate wholesaling related to equity skimming?

Tacoma, Washington
Wholesaling
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Is Real estate wholesaling related to equity skimming?

Lala Mala
Member since 2022 · 11 posts · 5 votes

Somebody just told me in Washington state wholesaling can be considered equity skimming. Is that true? 

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  • Account Closed
    Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes
    3y
    Quote from @Lala Mala:

    Somebody just told me in Washington state wholesaling can be considered equity skimming. Is that true? 

    It isn't wholesaling that is the problem. It's the amount of profit made in the transaction. It's Washington State after all. If the Attorney General believes you took advantage of a "protected person" or were involved in a preforeclosure or made the wrong promises or made too much money, that is when equity skimming becomes a problem.

    I don't believe that the percentage of profit, is clearly spelled out. 

    Do business in Washington at your own risk.

    Yes, wholesaling can be done but you have to follow the "rules" which is kind of like nailing jello to the wall.

     Take a look at this Thread to get a clearer picture:

    https://www.biggerpockets.com/...

    1Reply
  • Lala Mala
    OP
    Member since 2022 · 11 posts · 5 votes
    3y
    Quote from @Account Closed:
    Quote from @Lala Mala:

    Somebody just told me in Washington state wholesaling can be considered equity skimming. Is that true? 

    It isn't wholesaling that is the problem. It's the amount of profit made in the transaction. It's Washington State after all. If the Attorney General believes you took advantage of a "protected person" or were involved in a preforeclosure or made the wrong promises or made too much money, that is when equity skimming becomes a problem.

    I don't believe that the percentage of profit, is clearly spelled out. 

    Do business in Washington at your own risk.

    Yes, wholesaling can be done but you have to follow the "rules" which is kind of like nailing jello to the wall.

     Take a look at this Thread to get a clearer picture:

    https://www.biggerpockets.com/...

    Thank you again! I’ve been looking into wholesaling for about 6 months now, I’ve not close on a deal yet but these are some great information to know before getting a deal. 
    1Reply
  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    3y

    @Lala Mala

    There are several states which are really starting to crack down on wholesaling from two angles

    1. Licensing - as it can be construed as brokering which requires a license in most states - especially the minute you go to market it.

    2. Predatory - approaching borrowers in distress who are in default of their mortgages.

    Make sure to understand state laws and if you wholesale the proper way to do it. State budgets continue to be strained because of lack of revenue from covid so they will look to find ways to make $.

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