The legalities of Wholesaling

[Account Closed]

I want to start by saying: WHOLESALING IS NOT ILLEGAL. 

Wholesaling is buying a property at a discount and selling it to an investor or anyone who isn't the end user. 

I'll address a few common questions and misconceptions: 

1. What makes a contract valid and the "cash buyer" claim; 

A binding real estate contract is only valid if you have the intent and ability to close. All this means is you need to line up a transactional lender, private investors or even JV with an investor (acting on your on behalf as it relates to the joint venture). If this sounds too hard for you maybe Wholesaling isn't for you..

Marketing to sellers saying you're a "Cash Buyer" when you have no access to capital is considered fraudulent... Because it is. 

If you have a transactional lender on your team, which you should, you can simply put a financing contingency in your contract, instead of misleading sellers. Some may think this will kill the deal for them, after all as a Wholesaler your value proposition to sellers is a quick cash close, I'm here to tell if you position yourself as a professional, build rapport and go into the transaction looking to truly help the seller they're not going to care. Always discuss the problem and solution before the mechanics of the deal.

2. Marketing a property you do not have title to; 

Some (most) states have a rule called "Equitable Conversion", what this means is that when you and the seller enter into a binding contract you have the legal right to market the property any way you want BEFORE you close. So many people preach real estate law and don't know the actual rules, before you listen to anyone, even me, have that person produce documents or web articles of some kind to validate what they have told you (PM me if interested). Aligning yourself with some sort of money partner allows you to legally exercise this right, because you'll be closing before you resell (intent and ability). 

4. Assignments; 

I believe assignments were put into contracts to protect all parties involved in a real estate transaction. It allows the buyer to transfer his or her rights to another party incase they encounter difficulties that cause them to not be able to close and fulfill their contractual obligations, it's actually genius if you ask me. 

There's nothing wrong with an assignment, things happen in real life. The problem occurs when people only intend to assign but advertise and consult with the seller as if they intend and have the ability to close, re-read that. 

5. Brokering without a license;

If you're acting on your own behalf in a transaction you are not brokering without a license. Acting on your own behalf means you're not negotiating for anyone but yourself and that you have equitable interest in the property, become a principal in the transaction by use of a valid contract and never play middle man

I hope I helped, if I missed anything feel free to comment or PM me. 

Positivity only, I will not tolerate any form of disrespect on my post.