Wholesaling, Legal or Illegal in Florida?

[Account Closed]

My wife and I are new to this whole REI thing and are learning as we go. We have started to look into wholesaling and have seen many success stories and advice on how to complete the process from start to finish. The problem is that I am starting to see quite a few articles and posts from people saying that wholesaling is "illegal if you're not a licensed broker". How is this possible when there are so many people that have been successful in wholesaling, create videos on YouTube, post on BP and write books about the subject and never say anything about the practice being "illegal"? If the purchase contract clearly states that I may assign the contract and the assignment contract states that I am assigning the contract, why would it be illegal? I am a police officer and definitely can NOT take a chance of doing something illegal. I have an appointment later in the week with my real estate attorney to get the final word, but I would like to hear some thoughts from the BP crowd. We are in Florida and I know laws differ from state to state.

[Luis Vilar]

Originally posted by @John Thedford:

Originally posted by @Jackie F.:

I am just now getting into RE and have worked for a wholesaler and never even thought that it could be illegal.. but after reading some of these threads, my concerns raise.. 

I understand where the legality comes in is marketing a product that you do not own without having a license and acting as a broker without doing a double closing as well.. However, How is it illegal if you have a contract that states this contract is assignable and the seller has the ability to market the property ..? Would this change the legality of it all?

Also, would having an agent market the properties for you help the legality as well?

Personally I plan to get my license, but I am honestly not wanting to wait to finish the course and get my license to get started, because the place I am in in my life right now..  

 Marketing a property you do not own, for compensation, is brokering regardless if you have a contract or not. Solutions:
1. purchase it..then market and resell
2. get licensed

 Hey John, thanks for the information. You mentioned something interesting that had me thinking. 
"Purchase it... then market and resell"

What about double closing? You technically buy the property with the buyers money, hold it for a good 5 mins and then pay the seller. 

[John Thedford]

Originally posted by @Luis Vilar:

Originally posted by @John Thedford:

Originally posted by @Jackie F.:

I am just now getting into RE and have worked for a wholesaler and never even thought that it could be illegal.. but after reading some of these threads, my concerns raise.. 

I understand where the legality comes in is marketing a product that you do not own without having a license and acting as a broker without doing a double closing as well.. However, How is it illegal if you have a contract that states this contract is assignable and the seller has the ability to market the property ..? Would this change the legality of it all?

Also, would having an agent market the properties for you help the legality as well?

Personally I plan to get my license, but I am honestly not wanting to wait to finish the course and get my license to get started, because the place I am in in my life right now..  

 Marketing a property you do not own, for compensation, is brokering regardless if you have a contract or not. Solutions:
1. purchase it..then market and resell
2. get licensed

 Hey John, thanks for the information. You mentioned something interesting that had me thinking. 
"Purchase it... then market and resell"

What about double closing? You technically buy the property with the buyers money, hold it for a good 5 mins and then pay the seller. 

 This is no longer legal and is a RESPA violation. 

[Sharon Brooks]

If You Go To Your County City Occupational Licenses Office  In Fl There You Can Get A Investors License And You Can Do What You Want To Do From This Area Of License.

[Wayne Brooks]

@Sharon Brooks An occupational license doesn't do anything to affect the FL licensing laws....no value whatsoever.

[Tom Gimer]

@Wayne Brooks Not Even If You Put It In Initial Caps?

[Cristian Aviles-Morales]

Originally posted by @Anthony D.:

Great amount of info here. I've been looking into it lately trying to learn the ins and outs of wholesaling, wondering if its illegal in FL too but it seems not . Its just a matter of how you conduct yourself and not leaving the Seller high & dry! I think if get into it seriously I would like to be in the position to buy what I couldn't assign and add to my portfolio but things don't always go as planned though.

 I realize this is a year late but have you started wholesaling out in Lakeland? How is it out there? I've been scoping the neighborhood scouts data and things SEEM appealing but I have a gut feeling that crime over there is b-a-d. 

[Wayne Brooks]

It’s funny how a couple of posters from a couple of years ago were saying wholesaling is all legal, collecting a “consulting fee” even.......now they’ve removed their names from their account as to hide their identity.....I wonder why?

[Adrian Smude]

in my opinion it’s not illegal if done legally. I strongly suggest listening to The Real Estate Investing Playbook podcast. Jeff Watson is one of the hosts and an attorney. He gives amazing info on the do’s and don’ts. Keep yourself legal!  :-)

[Anthony D.]

@Cristian Aviles-Morales Its been a year indeed but I have not started wholesaling yet but still on my list.  Instead, I became a realtor to truly learn from that side of the fence and I've learned a lot so far after doing a few deals while holding down a full time job.  Not sure where you get that notion of Lakeland crime is b-a-d ....... all major cities has its share of B.A.D areas and lakeland is no different, but lakeland in my opinion is wonderful and growing strong.  I really need to get this wholesaling thing off the ground Though, but I'm just too busy

[Cristian Aviles-Morales]

Originally posted by @Anthony D.:

@Cristian Aviles-Morales Its been a year indeed but I have not started wholesaling yet but still on my list.  Instead, I became a realtor to truly learn from that side of the fence and I've learned a lot so far after doing a few deals while holding down a full time job.  Not sure where you get that notion of Lakeland crime is b-a-d ....... all major cities has its share of B.A.D areas and lakeland is no different, but lakeland in my opinion is wonderful and growing strong.  I really need to get this wholesaling thing off the ground Though, but I'm just too busy

 Oh no kidding! Congrats on getting your license. I am also aiming to become a sales associate though only as a part time gig to be exposed more to the world of RE. 

That's good to hear about Lakeland! Will definitely take another look at possible deals from there.

[Charles Borrelli]

Florida is definitely starting to go after wholesalers and they are following up on reports. Wholesaling without a Real estate sales license is a crime. It is transaction brokering.  Most  wholesalers use double close in order to imply an actual purchase but the RE commission doesn't really buy it anymore. Assigning a contract without a license is just plain foolish. If you don't believe this simply call the RE commission and they will tell you the same thing. When you are licensed and perform this function it has to be very clearly disclosed and all parties need to agree. 

[Charles Borrelli]

Originally posted by @Ken Badziak:

I've got lots of friends successfully wholesaling here; none of them are in jail! No cops have come knocking on MY doors as well!

There are some states where wholesaling is "illegal", such as Ohio, but Florida is not one of them.

As far as places like Ohio are concerned, the way I understand it, they don't want you to "assign" the contract. However, there's nothing stopping someone from double closing, where they actually buy the property, even if only for 5 minutes, then turn around and sell it to an investor.

But here in Florida you're cool.

You might get harassed for bandit signs, but that's about it.

The problem with the double closing is you have to market the property before you own it. That is transaction brokering and if they catch you, you'll be prosecuted for it. FL was not doing much when the author wrote it but it is not the case anymore. Call the RE commission if you doubt this

[Mustafa Caldiran]

Hello Ken, can you share purchase and sale aggrement for Florida with me. Thank you

Originally posted by @Ken Badziak:

I've got lots of friends successfully wholesaling here; none of them are in jail! No cops have come knocking on MY doors as well!

There are some states where wholesaling is "illegal", such as Ohio, but Florida is not one of them.

As far as places like Ohio are concerned, the way I understand it, they don't want you to "assign" the contract. However, there's nothing stopping someone from double closing, where they actually buy the property, even if only for 5 minutes, then turn around and sell it to an investor.

But here in Florida you're cool.

You might get harassed for bandit signs, but that's about it.