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Updated over 9 years ago on . Most recent reply

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David Ward
  • Houston, TX
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Are wholesalers unlicensed brokers?

David Ward
  • Houston, TX
Posted

Seems like wholesalers are pretty much unlicensed brokers. Whats the difference? A broker is the middleman, is that not what a wholesaler is? 

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Hattie Dizmond
  • Investor
  • Dallas, TX
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Hattie Dizmond
  • Investor
  • Dallas, TX
Replied

@David Ward

With apologies to both Jay & James, both of whom I respect tremendously, I disagree in theory.

The unscrupulous wholesalers who are trying to wholesale MLS listed properties...yes, they are essentially acting as an unlicensed broker. They are NOT true wholesalers.

A real wholesaler is finding properties not listed on any MLS. They are negotiating sales prices. They are placing a sales contract on the property to lock in the negotiated price and then - in most cases - selling their right/option to buy the property at that price to someone else. They are not receiving a commission for the sale of the property. That would make them a broker. They are selling their contact. It's the same thing you do when you exchange stock options without purchasing the stock.

None of the things I described above constitutes what a broker or realtor does.

Wholesalers get a really bad wrap, because there are a lot of them who don't know what they are doing and/or don't do what they are doing ethically. I will say again, you can't wholesale an MLS listed property. By definition, that property is already listed for retail sale. If a wholesaler offers me a property that turns up with an active MLS listing, when I type the address in, it will be the last deal from them I ever bother looking at.

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