Originally posted by @Will Barnard:
Not sure which state you are in but many states make it illegal lock up a contract, publicly market it, find a buyer, sell it and collect a fee for that. It is considered brokering without a license and many states hold strict penalties for it like fines, jail and restitution.
Assigning a contract is NOT the only method to wholesaling, just the most popular and in many cases, the most illegal means to do it.
As Barry suggested above, get your buyers first, it is very easy to get them, the hard part is actually contracting a good deal. If you have buyers lined up from the start, then you know their criteria and therefore know what to shop for. Plus it gives you many more legal means to wholesale it.
Will, thank you very much for your reply. Let me preface everything I'm about to say with I am only a few months into my REI journey and I am honestly trying to learn the ins and outs, and the best method that is not only legal, but also ethical (and profitable).
When you say contract assignment is "the most illegal means to do it" are you suggesting that all wholesaling is illegal and that this is just the MOST illegal? I can't quite understand how real estate lawyer websites offer "contract assignment" in the state of VA as one of their services they provide if it is illegal. I've read that it's illegal to find a buyer before any deal is made with a seller because you're essentially doing the same thing, you're marketing (or "brokering") a property you don't own.
Additionally, contract assignment has been a legal action for hundreds of years, how does Someone sign their name on a contract (which obviously ties up the seller), then realize they don’t want to go through with exercising that contract, then find someone to put in their place on the contract to assign it to them, and do it legally? Is the difference just the fee that is collected, despite both the seller and end buyer being ok with you receiving the fee and being briefed on all the details?
Just looking to clear the air and avoid jail time for something that is practiced thousands of times a day and advertised on every land/house flipping education program.
