Ohio Division of RE investigators cracking down on wholesalers

[Gary Bailey]

We've noticed a significant uptick in investigations, particularly in the Cincinnati area, by investigators for the Ohio Division of Real Estate. The division employs 12 total investigators and a number of supervisors. They are all very busy and very good at their jobs.

Our company has been investigated 2 times (and passed with flying colors) just within the last 8 months for alleged unlicensed activity.

The issue that continually comes up is advertising a property for sale that you or your company does not own. According to the investigator I have spoken to at length, his is fine as long as you are a licensed Ohio agent.

What about "equitable interest"?

The term that gets thrown around among wholesalers and armchair real estate attorneys is "equitable interest." I have read on this site and others that as long as you have an equitable interest (i.e. a contract or option to purchase the property) then you are acting as a principal in the transaction and therefore aren't subject to Ohio license laws.

Whether or not you agree, the opinion of the Ohio Division of Real Estate is quite simple: you cannot advertise a property that you do not own without a real estate license. When I asked the investigator if it was ok since we had a contract to purchase the property here is how the conversation went:

Me: "What if we have a contract to purchase the property and therefore have equitable interest?"

Investigator: "Do you own the property?"

Me: "We WILL own the property, as soon as we close."

Investigator: "You can't market a property that you don't own without a license."

Me: "What if we are marketing the contract or the assignment but not technically the house itself."

Investigator: "Do you own the house?"

Me: "No."

Investigator: "You can't market a property that you don't own without a license."

So there it is Ohio Wholesalers. In the opinion of the Ohio Division of Real Estate, if it walks like a duck and quacks like a duck, it's a duck. In their opinion "advertising" a house includes advertising the contract or an assignment.

Good luck out there!

Gary Bailey

[Patrick L.]

Originally posted by @Andy Robison:

How dare people think they can try and make a living without paying for permission first...

It's not so much paying the money it's learning all the rules and laws so you don't do anything too illegal in your venture without having a clue about it. Most new wholesalers have no idea about real estate laws. Having a license holds you accountable and requires more of a commitment than watching an infomercial on late night TV and then putting up bandit signs all over town claiming you're going to buy houses for cash FAST!