Some Attorneys said wholesaling is illegal , why?

[William Laurent]

Hi, I'm William Laurent, a wholesaler in Miami, Florida. I need you help with something please, I was trying to review my contracts with an attorney here in Florida, and most of them told me that the process of sign and purchase and sells agreement with a seller in xxx$ amount and then assign the contract to another third party (investor) for a different xxx $$ amount is illegal and consider like a fraud. I was studying and preparing myself and have clear the wholesaling process and now different attorneys here told me that. I know that Wholesaling is a old and very common strategy in this business but why there is attorneys who said that is illegal? How can Explain to this attorneys that this strategy is complete legal when they are attorney and know the law? Thanks, I really appreciate all your comments attention and help with this issue. Have a great day. Regards.

[Adrienne Bryson]

Your wording is a little confusing so forgive me if I misunderstand, but it sounds like what you are talking about is illegal.  It sounds like you're talking about signing a contract with the seller to buy a house for let's say $200k, then going to the buyer and selling them the same house for $210k.  You can not do that because at this point you do not own the house.  You can't sell something you don't own.

Your legal options as a wholesaler are:

- Buy the house.  The seller sells you the house for $200k, when you close you legally own the house.  You can then resell the house to your end buyer for $210k.  You can set it up so that all this happens the same day; that's a double close.  You close with the seller in one room, then walk into another room with your buyer.  You have to buy the house with your own money.

- Sell the contract, not the house.  Sign a contract with your seller agreeing to buy their house for $200k.  Then assign that contract to your end buyer for $10k.  Your buyer pays $10k to purchase the contract from you; that's contract assignment.  They are not buying the house from you.  That buyer purchases the house directly from the seller for $200k, the same amount that's on the original contract.