Is wholesaling permitted in my state???

Question

I will keep this one short and sweet guys since I feel confused. Is wholesale illegal in Missouri  or are there any instances where it would be at all?

Dustin Dummer · Answer

@Bill Gulley I'm currently taking the 48-hours salesperson course. It states that any of the following require a real estate license:

• Sells-assists buyers, sellers, landlords or tenants with real estate activities
• Procures prospects - in some way finds buyers, sellers, landlords or tenants to carry on real estate business activities
• Offers to sell - example, "Let me list and sell your property"
• Lists for sale - actually obtains a listing or a management agreement to help a consumer with their real estate needs
• Negotiates - helps a consumer to buy, sell, rent or lease a property
• Exchanges- negotiates or offers or agrees to negotiate the exchange of real estate for a consumer

In addition:

• License Law Chapter 339 that requires a person be licensed to participate in the real estate profession. All business is conducted in the name of the broker and not the salesperson (salespeople must be licensed to a broker).

Under the above transactions it is all a very grey area as to whether wholesaling is considered "brokering" even if they close on the sale then re-assign. Especially if a person conduct multiple deals since a person would be considered to conducting business operations which include real estate transactions therefore falling under real estate law.

Therefore this raises the following questions from a legal standpoint:

• As you said, wholesaling without the "intent and ability to perform" isn't legal. Can you in fact legally wholesale without a real estate license according to the listed functions above which are all part of wholesaling if the actions of wholesaling are considered "brokering". I guess the question is "Is wholesaling considered brokering?"
• And even if you have real estate sales-person license do you then legally have to have the transaction go through a broker because you're conducting a real estate activity (broker action)?
• Then lastly, what is the true legal purpose of a re-assignment if #1 is true (a license is required)? What are examples of legitimate uses of re-assignment?

Bill Gulley · Answer

While this post is about a year old, yes this is still in play as a buyer obtaining a loan will find it difficult with an assigned contract, it's a red flag that the lender is financing land and a contract, a cash buyer can purchase.

A lender for your buyer may require to disclose your deal, with your seller. they may determine an allowed spread, like 10% or not fund at all.

Wholesaling as done the guru way with assignments is really an underground operation, set aside RE license laws, look to contract law, without the intent and ability to perform as stated in the contract you don' have a valid contract. Shining the light on your deal with a lender to view isn't a good way to go.  :)

Bill Gulley · Answer

All true, except there is no way to make something legal that is illegal. Wording in Mo. law is "facilitating a sale" that can be a wide swath of activities and will be defined by the RE Commission. You'll need to buy, take title, then sell for a clean transaction. There are transactional lenders to bridge the gap.

If you have workable circumstances, the seller can seller finance (sub-to if need be, not a consumer loan) to close your side, then pay off the note. The note and DOT will still need to be filed even if the term ends up being an hour. Remind the closer to obtain a deed of release for the second transaction. :)

Dustin Dummer · Answer

@Bill Gulley I know this posting is old but a very relevant topic. What contracts need to be usedIf the guru re-assignment is illegal then is there a particular contract that needs to be used to take title and then assign (utilize subject-to)

James Danchus · Answer

Oh, okay. I think I see what you are saying now. It took me a few days :)

James Danchus · Answer

@Bill Gulley, so are you saying you can't just do a regular re-assignment of the contract?

Account Closed · Answer

@Edward Mitchell I know of no issue with wholesaling in Missouri but I think it would be fair to say the new "norm" is most title companies want to see a stand alone transaction. This means if you are wanting to wholesale a property you would buy it and close, then turn around soon thereafter and sell it to your buyer. Each closing stands alone so to speak. In the past it was all done simultaneously.

Full disclosure is another suggestion when it comes to wholesaling.

Good luck!

Brian Gibbons · Answer

Bill Gulley Should have a great response :)

Nate Perry · Answer

Their is a way to accomplish the transaction in a legal way even if it was illegal.  Check with your local investor groups to learn the standard operating procedures.  Find out from your local investors who they close their creative agreements with and consult with those attorneys.  You will get the information you seek and expand your network all with 1 stone.

Key: If you visit them with donuts in person they may not charge you on the initial visit!

Is wholesaling permitted in my state???

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