WHATS YOUR WHOLESALING PLAN WITH NEW LAWs

[Kylie A.]

There are many new laws being implemented across different states, and I’m curious about yall game plan moving forward. With states becoming stricter, how are yall still managing to wholesale? What strategies are you using to navigate these changes?"

[Don Konipol]

Quote from @Kylie A.:

There are many new laws being implemented across different states, and I’m curious about yall game plan moving forward. With states becoming stricter, how are yall still managing to wholesale? What strategies are you using to navigate these changes?"

While this is a good question, the answer is absolutely location specific.  The majority of states have NOT enacted any rules, regulations or legislation that has altered the “wholesaling” landscape.  The states that have fall into two broad categories 
1. Requiring a real estate broker/salesman's license to operate as a wholesaler 

and, or 

2. Disclosures, or other restrictions on transacting with homeowners.  

Requiring a real estate license can potentially be a “trap” for wholesaling, as real estate licensees may in in violation of their code of conduct by way of their wholesaling activities.  For example if the states licensing code holds the licensee to an agency relationship with their client, then the wholesaler tying up a homeowners property for a below market price may be in violation.  The dust has nowhere settled on wholesaling, but to be hones “wholesaling” is a misnomer.  What we are really describing is “contract flipping”.  Real wholesaling is buying something in bulk and or for a middleman’s price and then reselling at a retail price. The key is actually purchasing the goods or property in question, and not merely acting as a broker or agent.  So, the theory goes, if wholesaling is actually NOT. wholesaling but brokering or agency, shouldn’t the “wholesaler” be required to have a broker or agency license? 

Wholesaling really isn’t much of a problem with the larger, experienced and ethically run wholesalers.  Most I know fully disclose what they’re doing, the risks to the homeowner as well as the benefits, and will actually tell the homeowner id\f they think the homeowner has a better option.  In other words, they’re in it for the long run.  The problems are with the inexperienced under capitalized people studying wholesaling strategies as put forth by a variety of guru/mentors and the temptation these people feel when they smell a profit.