Wholesaling in Pennsylvania and double closing

[Matthew Silvestri]

Hi there! i was just trying to find out if wholesaling properties in Pennsylvania is legal. I seem to find answers on both sides of the spectrum whenever i search around on the forum and google. Also, does anyone double close contracts anymore? I heard that is highly frowned upon now. If you can't tell, I am very new to this. I started down the rabbit hole of real estate investing a few months ago when i decided to buy my first house, and now I am more curious by the day. Any information is greatly appreciated!! 

[Marc Daffner]

The biggest problem is that the PA Department of Revenue will do anything to get every bit of $ they can. There are actually several appellate decisions holding that if a contract is assigned you have to pay two sets of transfer taxes - one as if the property was sold to the wholesaler and another from the wholesaler to the end buyer - even if it only involves a single closing.

Also, PA has been following suit with several other states in bringing criminal prosecutions against wholesalers for acting as an unlicensed real estate broker.

The work around to this is to sign an option, not a sales agreement, with the seller. You then record the option with the Recorder of Deeds, and your end buyer pays a "release fee" at closing for you to unencumber the property.  It's a good idea to offer the seller a few extra bucks at closing to get them to agree to this type of structure as well.

And that, my friend, is how to legally wholesale a property in Pennsylvania.