Realtors tell wholesalers to get a license?

[John B.]

Im seeing posts where agents tell wholesalers "they should get a license". If the wholesaler is working in more than just their home state (virtually), wouldn't that defeat the purpose since a license is only state specific? 

[Lauren Robins]

You're absolutely right that a real estate license is state-specific, and if a wholesaler is working across multiple states, the necessity of getting a license becomes a bit more complicated.

A real estate license is required to perform certain activities like representing a buyer or seller in a transaction, negotiating contracts, or receiving compensation tied to a transaction (commissions, for example). The rules surrounding wholesaling vary by state, and in some states, a wholesaler might not need a real estate license to assign contracts or find buyers for distressed properties. However, in others, they might need a license if they're performing activities that are considered to fall under real estate brokerage.

If a wholesaler is working in multiple states, the license would only be valid in the state in which it was obtained. This means that, if the wholesaler operates in different states, they may need to get licensed in each state where they conduct business, depending on the specific laws and regulations governing wholesaling in those states.

In a virtual wholesaling scenario where the wholesaler never meets buyers or sellers in person but is still facilitating transactions across state lines, the need for a license becomes more nuanced. Some states have reciprocity agreements, allowing a license from one state to be used in another, but this is not universal. Also, even when a wholesaler is not directly involved in a traditional real estate agent role, they still must ensure they are following the letter of the law in each state they are active in.

To answer the question about whether getting licensed would defeat the purpose: In some cases, it might seem counterproductive because obtaining multiple licenses can be time-consuming and costly. However, it ensures that the wholesaler is compliant with state laws, protecting them from legal risks. In some states, working without a license may expose a wholesaler to penalties, fines, or even lawsuits from buyers or sellers who feel they were misrepresented or harmed during the transaction.