Getting Busted in Ohio for Wholesaling and Praticing RE without a License

[Brian Gibbons]

Read Ch 4735

Get a lawyer

Get licensed and do wholesaling in OH

02 July 2014

http://www.com.ohio.gov/documents/Fall10REdiscipline.pdf

LYNETTE S. MALY, Twinsburg, Ohio, was found by the Commission to have violated Revised
Code 4735.02, unlicensed activity, and was accessed a civil penalty in the amount of $500.00,
when she held herself out as engaged in the business of real estate, while not licensed under
Revised Code Chapter 4735.

SHARI L. MORTER, Stow, Ohio, was found by the Commission to have violated Revised Code
4735.02, unlicensed activity, and was accessed a civil penalty in the amount of $500.00, when
she held herself out as engaged in the business of real estate, while not licensed under Revised
Code Chapter 4735.


MIKE ZUREN, Willoughby, Ohio, was found by the Commission to have violated Revised Code
4735.02, unlicensed activity, and was accessed a civil penalty in the amount of $1,000.00. The
Commission found that Mr. Zuren, when in expectation of collecting a fee, commission or other
valuable consideration, held itself out as engaged in the business of selling real estate in a
publication and offered or attempted to offer, listed or attempted to list 20 real estate properties
in the publication, without first being licensed under Revised Code Chapter 4735.

SHARI L. MORTER, Stow, Ohio, was found by the Commission to have violated Revised Code
4735.02, unlicensed activity, and was accessed a civil penalty in the amount of $500.00, when
she held herself out as engaged in the business of real estate, while not licensed under Revised
Code Chapter 4735.

GARY UNDERHILL, Wooster, Ohio, as the result of an investigation of the formal complaint,
was found by the Commission to have violated Revised Code 4735.02, unlicensed activity, and
was accessed a civil penalty in the amount of $2,500.00. The Commission found that Mr.
Underhill attempted to or assisted in the negotiation of the sale, exchange, purchase, rental or
leasing of real estate on 47 occasions without first being licensed under Revised Code Chapter
4735.


PAM BALINT, Ravenna, Ohio, was found by the Commission to have violated Revised Code 4735.02, unlicensed activity, and was assessed a civil penalty in the amount of $3,500.00. The Commission found that Ms. Balint acted as a real estate broker or real estate salesperson without being licensed under Chapter 4735. Ms. Balint’s conduct included accepting phone calls inquiring about the subject property and directing or assisting in the procuring of a prospective buyer to purchase the subject property. In addition, on five occasions Ms. Balint advertised or held herself out as engaged in the business of selling real estate. She placed signs with her phone number on it in the subject property’s yard. She ran an ad in a newspaper regarding real estate for sale with her phone number and name. She provided a flyer marketing the subject
property with her name and phone number on it. She marketed the property on the phone on two occasions.

EVIE KIDDER, Akron, Ohio, was found by the Commission to have violated Revised Code 4735.02, unlicensed activity, and was assessed a civil penalty in the amount of $21,000.00. The Commission found that she consistently took actions to list, negotiate the sale of, sell a property, and made several requests to collect a commission on the sale of a property. Ms. Kidder acted as a real estate broker or real estate salesperson without being licensed under Chapter 4735.

TONY HOFFMAN, Akron, Ohio, was found by the Commission to have violated Revised Code 4735.02, unlicensed activity, and was assessed a civil penalty in the amount of $21,000.00. The Commission found that he consistently took actions to list, negotiate the sale of, and sell a property and made several requests to collect a commission on the sale of a property. Mr. Hoffman acted as a real estate broker or real estate salesperson without being licensed under Chapter 4735.

DIANE SHELTROWN, Waynesville, Ohio, was found by the Commission to have violated R.C. 4735.02, unlicensed activity, but no penalty was imposed. Ms. Sheltrown, on 2 separate dates, directed and assisted in the procuring of prospects which was calculated to result in the sale of a property and she intended or expected to receive compensation or other valuable consideration for the conduct.

MUNNA AGARWAL, Euclid, Ohio, was found by the Commission to have violated ORC 4735.02, unlicensed activity, and was assessed a civil penalty in the amount of $1,000.00. The Commission found that Mr. Agarwal agreed to negotiate and negotiated a potential purchase of property, agreed to list and listed, agreed to offer and offered a property for sale, advertised and held himself out as engaged in the business of selling real estate, directed and assisted in the procuring of prospects and in the negotiation of a transaction which was calculated to result in the sale of a property and intended or expected to receive compensation or other valuable consideration for the above conduct, while not licensed under Chapter
4735.

ELYHUE E. DUFF, Akron, Ohio, was found by the Commission to have violated ORC 4735.02, unlicensed activity, and was assessed a civil penalty in the amount of $1,000.00. The Commission found that Mr. Duff assisted in the procuring of a prospect and negotiation of a transaction, which was calculated to result in the sale of a property, wrote a sales contract for the parties, and intended or expected to receive compensation or other valuable consideration for the above conduct, while not licensed under Chapter 4735.

[James Wise]

It is about constantly pumping out the correct information. Over the years I have been in many of these threads going back and fourth on the ethics and legalities of license law. Those in the know will cite laws and statutes. Those who are ignorant to the law or don't care about the law or have an incentive to ignore the law just cite other sources of incorrect information to back up their position. At this point there is WAY more incorrect information out there then correct information.

I agree with @Bill Gulley when he states that pay only information will not be seen by those who truly should see it. They will always revert to the free information which is readily available and backs up the incorrect opinion that what they are doing is correct and legal. However I do see Nick's point that he needs to be paid in order to put the time into producing said information.

I don't need to be paid to spread the word about this. I am paid by removing those who are muddying up the waters in my industry. I would encourage others who are in a similar position as myself to help spread the word so there can be some balance between the amount of correct information vs incorrect information. Both on this site and other media platforms.

@Jay Hinrichs

@Account Closed

[Bill Gulley]

@Jay Hinrichs

My messages and traffic don't really hold up the that dim perception, Jay. I (together with others here) have reached hundreds who were starting out down the hole sale path to the underground. I'm sure there has been an effect on others I'm not hearing from. It is too bad that the numbers aren't in the thousands, but Rome wasn't built in a day either.

I doubt the lady in OK will continue. The lady posting the day before about proof of funds seems to have the attitude you spoke of. Didn't care, just wants to take some money. 

I missed the post by @@Account Closed about his venture falling apart with the video, that would have been very good I suspect. I'll have to speak to him about that.

Jay, there are crooks in every industry, bad doctors, bad lawyers, bad engineers, bad teachers, bad cops, that's just part of life. It doesn't mean everyone trying to go into business is bad, most simply don't know and by golly when we first started we didn't know everything either, still don't !

In the past 2 years, the influx of newbies to BP has really pulled the level of professionalism down, the professional types are just out numbered 50 to one, doesn't mean the newbies are bad, just misinformed and they generate much more traffic on BP, as we know, BP is a business and all internet businesses depend on traffic. BP is a great platform for information, it's the reader's obligation to understand what and where the good information is on a public platform.

By now, there is enough good information available that the most simple minded who can read have what they need to make a judgment. That means to me that ignorance is no longer an excuse in most cases and those involved in unethical practices are doing so by choice, so it's guilt by association. So, when they show up and argue, it's "Another one bites the dust". LOL, most here don't even get that either, the D. U. S. T. in real estate!

There was a question up there about obtaining a license and then finding a broker who would hire a wholesaler. An agent can be a wholesaler, list it and sell it, all brokers will probably allow that. Whet he will most likely learn soon, is that with the knowledge of the basics of real estate, wholesaling isn't the easiest approach nor is it the most profitable use of his time. When he learns to add value to a deal, he won't be just a salesman!

In real estate, be keen in '16, learn the basics of the business! :) 

[Jay Hinrichs]

@Bill Gulley  No argument from me.   very polarized topic here on good Ole BP..

One thing you stated that is over looked as well is Intent ...

is it your intention to go into the business of marketing homes you don't own.  IE selling RE without a license.

I think back on my years and I can think of  2 deals I flipped without buying and they were both subdivision plats One I sold to Horton and one to Schollander ( he was an Olympic Gold medal swimmer) and is a top end builder developer in this market.

But I had my pennies together in case they did not close B/C I paid for all the soft cost to get the plats preliminarily approved with conditions.. ( the only way many will buy these) and that is usually 50 to 100k of risk capital.. I have also lost that amount of money on plats I could not resell and did not want to close on .  Seller benefited they end up with an approved plat.. that actually only happened to me once and its a long story, short version I lost 9 months of time and 85k.  LOL.   quite a bit different than wholesaler tying up properties with 100 dollar like In Texas but that's what they do there and its accepted practice.

[Jay Hinrichs]

@Bill Gulley  also big distinction on the plat I did not close on .. was that the seller knew it was not a for sure deal until it closed.. IE when I go into these I give them ownership of all my engineering I pay for.. so if I don't close they get the benefit of that which is substantial and its all disclosed and above board...

We don't use the  ( this sale is subject to my mysterious partners approval) and all those other what I consider to be morally repugnant weasel clause's people on BP tell others to use... its all one sided with no consideration for the seller

I wonder if these folks would like someone one doing that to their mother or father or themselves.

Whats happened in the Industry is the banks and Auction companies have figured out the wholesaler tactics.. so that you need some real EM usually.. And you must close in the name the offer was put in... Now I am sure some of these folks have set up nights trying to figure this stuff out.. and of course you could have back to backs in states that allow it.. but it has created more opportunity for guys like us that have the funds and can close in our names. We are seeing that in the on line auctions quite a bit. 

[Jay Hinrichs]

@Bill Gulley  So the fertile ground for the wholesaler these days is owners .. that's what is left those are the folks to target is the unsophisticated owner..

[Bill Gulley]

Gosh Jay, I'd think one mention would have been enough......

It is common practice for a developer to take an option and add value to a venture that is sold along with the option. The Land Act 1930 address subdividing plats and sales. This is not "wholesaling".

Really, if you didn't really know much about real estate, you  just had a step by step plan and a few pages of script to follow, who would you rather try to deal with as a seller, the unaware homeowner or me? LOL :)

[Alan Williams]

Wow so much information flying back and forth!

But from what I gather....wholesaling is fine if you close on the buy....then close on the sell and keep the difference.

Does that sum it up in a nutshell?

[Lee S.]

Originally posted by @Alan Williams:

Wow so much information flying back and forth!

But from what I gather....wholesaling is fine if you close on the buy....then close on the sell and keep the difference.

Does that sum it up in a nutshell?

 Yes, or be an Agent/Broker and assign.

[John Thedford]

@Alan Williams yes sir. That is what separates the honest operations from the fraudsters. Putting houses under contract with 30-60 day closings, then shopping for a buyer, then backing out with BS excuses such as "partner didn't approve or "didn't pass inspection" victimizes the seller. Buying and then reselling, whether you want to call is "wholesaling" or "flipping" is the honest way to do it. 

[Alan Williams]

Originally posted by @John Thedford:

@Alan Williams yes sir. That is what separates the honest operations from the fraudsters. Putting houses under contract with 30-60 day closings, then shopping for a buyer, then backing out with BS excuses such as "partner didn't approve or "didn't pass inspection" victimizes the seller. Buying and then reselling, whether you want to call is "wholesaling" or "flipping" is the honest way to do it. 

 Right.  I mean I don't think anyone would accept clauses like that.

It would be my intention to close or just forfeit the deposit if I can't find a buyer.  Or ask for an extension to get more time.  

[Lee S.]

I was referring to the legal issues not the ethical issues.

[John Thedford]

Originally posted by @Alan Williams:

Originally posted by @John Thedford:

@Alan Williams yes sir. That is what separates the honest operations from the fraudsters. Putting houses under contract with 30-60 day closings, then shopping for a buyer, then backing out with BS excuses such as "partner didn't approve or "didn't pass inspection" victimizes the seller. Buying and then reselling, whether you want to call is "wholesaling" or "flipping" is the honest way to do it. 

 Right.  I mean I don't think anyone would accept clauses like that.

It would be my intention to close or just forfeit the deposit if I can't find a buyer.  Or ask for an extension to get more time.  

 Actually, they do. Go read the wholesaling forums. There are lots of threads about what clauses to use to escape if they cannot find a buyer. Also see some posts where the OP states something like "help I dont have a buyers and my 60 days is almost up". One such poster is an agent in the Orlando area. When I questioned their post they got a little defensive. When you see posts like this and ask people if they intend to close they typically ignore your post. Their only other option is to admit their lack of honesty.

[James Wise]

Originally posted by @Alan Williams:

Wow so much information flying back and forth!

But from what I gather....wholesaling is fine if you close on the buy....then close on the sell and keep the difference.

Does that sum it up in a nutshell?

 Yes,  I am glad you read through the entire back and fourth and came to this conclusion. Not everyone is able to get through all the bad information out there.

Good luck in your business dealings.

[Alan Williams]

Originally posted by @James Wise:

Originally posted by @Alan Williams:

Wow so much information flying back and forth!

But from what I gather....wholesaling is fine if you close on the buy....then close on the sell and keep the difference.

Does that sum it up in a nutshell?

 Yes,  I am glad you read through the entire back and fourth and came to this conclusion. Not everyone is able to get through all the bad information out there.

Good luck in your business dealings.

 Additionally it seems that if you use a third party transactional funder vs using the buyer's funds....it adds more legitimacy to the dealing?

[James Wise]

Originally posted by @Alan Williams:

Originally posted by @James Wise:

Originally posted by @Alan Williams:

Wow so much information flying back and forth!

But from what I gather....wholesaling is fine if you close on the buy....then close on the sell and keep the difference.

Does that sum it up in a nutshell?

 Yes,  I am glad you read through the entire back and fourth and came to this conclusion. Not everyone is able to get through all the bad information out there.

Good luck in your business dealings.

 Additionally it seems that if you use a third party transactional funder vs using the buyer's funds....it adds more legitimacy to the dealing?

 Transnational funding would likely require you to have a buyer already lined up which would mean you had to market the property before you owned it which would be brokering real estate.

[Alan Williams]

Originally posted by @James Wise:

Originally posted by @Alan Williams:

Originally posted by @James Wise:

Originally posted by @Alan Williams:

Wow so much information flying back and forth!

But from what I gather....wholesaling is fine if you close on the buy....then close on the sell and keep the difference.

Does that sum it up in a nutshell?

 Yes,  I am glad you read through the entire back and fourth and came to this conclusion. Not everyone is able to get through all the bad information out there.

Good luck in your business dealings.

 Additionally it seems that if you use a third party transactional funder vs using the buyer's funds....it adds more legitimacy to the dealing?

 Transnational funding would likely require you to have a buyer already lined up which would mean you had to market the property before you owned it which would be brokering real estate.

 But wouldn't that be ok as long as you closed on the buy yourself?

[James Wise]

@Alan Williams

No. If you are marketing something you do not own that is brokering.

[Lee S.]

Originally posted by @Alan Williams:

Originally posted by @James Wise:

Originally posted by @Alan Williams:

Originally posted by @James Wise:

Originally posted by @Alan Williams:

Wow so much information flying back and forth!

But from what I gather....wholesaling is fine if you close on the buy....then close on the sell and keep the difference.

Does that sum it up in a nutshell?

 Yes,  I am glad you read through the entire back and fourth and came to this conclusion. Not everyone is able to get through all the bad information out there.

Good luck in your business dealings.

 Additionally it seems that if you use a third party transactional funder vs using the buyer's funds....it adds more legitimacy to the dealing?

 Transnational funding would likely require you to have a buyer already lined up which would mean you had to market the property before you owned it which would be brokering real estate.

 But wouldn't that be ok as long as you closed on the buy yourself?

 the first time James said this in the thread I agreed with him, but now I'm thinking you might be correct.  If you close on the property, you were not matching a buyer and a seller, you matched yourself with the original seller, then matched yourself with the end buyer.  I'm an agent so i'm not trying to justify this in any way, but IMO i think you would be ok doing transnational funding.  Definitely not legal advice, feel free to correct me.

[Lee S.]

Originally posted by @James Wise:

@Alan Williams

No. If you are marketing something you do not own that is brokering.

 ah, that's why I was agreeing with you!  Yes I think you're correct.  I forgot you would be marketing before you took ownership.

[Dev Horn]

When threads get this long, I think they become very inefficient & ineffective.  No way you can read all of it before you add your comment, and I think that results in a runaway conversation that is hard to follow, contribute to, or benefit from.  My 2 cents.

WORD OF CAUTION ~ Anyone in here talking about this topic that does not KNOW and OPERATE in Ohio is likely to be uninformed on the nuances of Ohio RE regulations.

[Alan Williams]

Originally posted by @Lee S.:

Originally posted by @James Wise:

@Alan Williams

No. If you are marketing something you do not own that is brokering.

 ah, that's why I was agreeing with you!  Yes I think you're correct.  I forgot you would be marketing before you took ownership.

 So I guess the million dollar question is:  What is the specific real estate definition of "marketing"?

[Jay Hinrichs]

@Alan Williams

In Ohio to answer your question it would be

1. wholesaler contracts for property  puts little EM down and long escrow and inspection period.  also makes it subject to some non existent partners approval.

2. puts property on their website and advertises it for sale like its their own property with pictures of the house bed bath etc etc.

3. sets appointments for would be buyers to walk through said house.

4. put property on craigs list for sale describing home bd ba and acting like you own it.

then either does an assignment or a double close.

If you contract for a home in Ohio.. you can according to many assign the contract . but you can only describe the contract not the property.. so in essence it hamstrings you in your marketing efforts. especially start up.. pretty hard to just put on a contract on craigs list were you would simply say  contract for sale... without describing the home or anything else.. this is where it gets tricky.

[Brent Coombs]

Originally posted by @Alan Williams:

Originally posted by @Lee S.:

Originally posted by @James Wise:

@Alan Williams

No. If you are marketing something you do not own that is brokering.

 ah, that's why I was agreeing with you!  Yes I think you're correct.  I forgot you would be marketing before you took ownership.

 So I guess the million dollar question is:  What is the specific real estate definition of "marketing"?

Your prosecutor will argue: Did you find a Buyer for the Contract without closing on the property yourself? Yes? Then, by definition, you marketed the Contract; therefore the property. Therefore: the prosecution wins!

[Brian Gibbons]

ok folks here is legal wholesaling:

1. Always act as a principal. That means you are the buyer, seller or the person with a written, executed assignment of the purchase and sales agreement.
2. If you own the house, you can market the house. If you don’t own the house, you cannot advertise or market the house. In Ohio it’s clear – real estate can only be advertised for sale with the knowledge and consent of the owner of the real estate by either the owner or a licensed agent. Check the specifics in your state. If you have a contract to buy a house, you can market that contract or assign or sell that contract. Understand that there is a difference between marketing and selling a contract versus marketing and selling a house.
3. Trying to get paid for referring someone else to buy a house from a wholesaler is illegal.
4. Advertising that you have a house for sale that you do not actually own is illegal. You can advertise the contract.
5. Making an offer on a house that is contingent upon your finding someone to buy it from you is illegal.
6. Contracts to buy real estate that are short and simple are preferred. Contracts to buy or sell real estate that contain a number of loopholes, contingencies, options, or other escape hatches are heavily frowned upon by Dept of RE Regulators.
7. A fundamental component of being a successful real estate wholesaler is understanding the laws governing the conduct of real estate agents and the laws that govern your conduct as an unlicensed individual.

Do your homework. Take an afternoon to sit down and read your state’s laws. After you read your state’s laws, engage an attorney licensed in the states in which you are doing business and have them review your transactional paperwork. Are you compliant? 

Just because you think it is easy to understand or good language doesn’t mean it passes compliance.

Wholesaling is very much alive and can be a viable investing strategy. But like anything in investing, you need to do your homework, know the laws in your state and know what you can and cannot do. This list should point you in the right direction.

Google "Jeff Watson attorney Ohio illegal wholsaling" for videos on the matter.

[Account Closed]

@Brian Gibbons

Have you been in my mind, good post. Most newbies will have a hard time comprehending everything you just wrote because that is not what is being taught by the Gurus.

And the aforementioned video happened for a reason, and not everything stated in the video follows Ohio real estate licensing law. Right @James Wise