Wholesaler Regulations?

[Ryan Tyler]

I am currently looking for an investment opportunity in the SW Metro suburbs of Minneapolis. In my extensive searching I have run into several "wholesalers".

I find the concept interesting, and have learned that there are legitimate, and the not so legitimate. It is much like a realtor where one can be very professional, knowledgeable, and a pleasure to work with. Where another can be rude, uninformed, and impossible to work with.

What surprises me is the lack of regulations or requirements placed on these individuals. As a General Contractor I am required to carry my license with the state, insurance, continuing education, etc.. and I know realtors are required to do a lot of the same. It is my understanding that there are not regulations placed on these wholesalers.

Can literally anyone be a wholesaler? Is there any licensing, insurance, or education required? Can all of their efforts just be as an individual or is an LLC required? Who regulates them? What are some tell tale signs to spot the good ones from the scammers?

The reason I ask is that in my most recent experience I had a wholesaler pitch me on a home "at a steal" for 425k. After one simple google search of the address I found it was recently listed and did not sell for 349k. Shortly thereafter the wholesaler sent me some absurd supporting comps and included the realtors information. Upon speaking to the realtor he confirmed that the homeowner was looking for 349k. I just find it hard to believe that this approach could possibly work for anyone. With all of the technology and information out there, how could anyone possibly be so uninformed to overpay 75k for an unimpressive property.

Now with that being said I am sure there are wholesalers out there who find legitimate deals, where the property could be had for a price at or under market value for any number of reasons. I am just not sure where to find such a person, and could see it being a lot of weeding through the bad, with the hopes of finding a good one.

Any feedback would be appreciated, and thanks in advance for your replies.