All Forum Posts by: Troy Gandee

@Vinny Patel You can read it however you want, but every single closing attorney I've spoken to in the Charleston market will no longer be closing assignments or double closings, so it is effectively done. The intention of the REC was to stop the practice of wholesaling as we know it.

@Account Closed They're adopting the definition from the new bill. Basically, any use of public marketing to secure the end buyer is what the law defines as "wholesaling". The attorneys wouldn't really be able to prove whether or not these deals came to fruition through public marketing or not, so they're just going to avoid them. The "public marketing" of these will probably be triggered the minute someone mentions an off-market property for assignment, whether that's online, email, phone call, etc. At least, that's how NAR treats it with the Clear Cooperation rules they put in place a couple of years ago. The second the property is mentioned in any capacity, it has been publicly marketed.

We had a Zoom call this week with a couple of the heavy hitting closing attorneys in SC. They both said they will not be closing "wholesale deals" any longer. I've reached out to 2 others who say they also will not close them and have heard through the grapevine of a few more who will not be closing them. I've only heard rumor of 1 attorney in Charleston that will still handle those deals and I'm very doubtful they will do it for long. 

@Edward Eustace Contact Weeks & Irvine or Florence Law Firm and ask them to assist with the documents. Those are the 2 firms I use regularly. The standard contract that all attorneys in the state recognize is called the SCAR 301 Agreement to Purchase. I believe you can Google that, but you may as well just have the attorneys assist with the drafting. Either of them can do a remote or mail closing for you. It's much easier to close remote as the seller than the buyer.

@Adam Bartomeo Last summer, the SC Real Estate Commission released a bulletin saying they consider wholesaling (assigning contracts, double closing, etc)  no different than brokering. Because of that, they said in the release that in order to wholesale, you would have to be licensed, supervised by a BIC and have a signed listing agreement with the owner of record. Basically they were making these into more traditional transactions with a commission attached.

To further complicate it, the NAR clear cooperation policy meant you couldn't share those off market any more without incurring a $500 fine, so they would basically end just going to market anyways in that case. Our MLS board is associated with NAR, so we can't really skirt clear cooperation here. You could refuse to join CTAR, but then you literally won't have MLS access.

@Patrick Roberts I agree with your understanding of this. The majority of our state representatives are attorneys. They're not stupid. They know how to write these bills. 

The implication is they want to effectively terminate wholesaling as a business practice. 

A lot of wholesalers are trying to pick apart the description of "wholesaling" and making assumptions on the "marketing" aspect of the new bill. There's a line that says the assignment of contract bit is not illegal, but that's meant as a contractual tool. Not as a business practice.

Essentially what this boils down to is a ban on the practice of "wholesaling" as a business. They're trying to funnel investors into taking the title or employing an agent. I know a lot of folks think agents are silly, but the reason they're doing this to protect the public. In their view, to be a licensed agent, you must learn the laws, pass tests, comply with a supervising broker and pass a background test. You don't have to do any of those things to wholesale a property.

You can still actively market the sale of any property you own yourself without an agent. This legislation is meant to stop unlicensed individuals from being compensated by any means associated with buying and selling real estate for others. In their view, that's no different than acting as a real estate salesperson without licensure.

You can assign contracts all you want, but you can't market them to prospective buyers or receive any compensation from doing so. And double closings will not work because you're still typically marketing the property for sale prior to taking ownership.

Just line up bridge debt and take title to the property. We've been doing this for 4 years in preparation for this. I've also been warning wholesalers about this for about 2 years. The REC released a bulletin warning this was eventual last summer.

@Mehul Thakkar Charleston used to be a great market for BRRRR. It's become increasingly more difficult with values outgrowing rents. And it's such a sellers market here that it's difficult to get a deep enough discount to clear much equity.

I believe Columbia is still a pretty good metro area for BRRRRs. I would suggest seeking out a good agent there.

@David M. South Carolina is also an attorney state, but the attorneys here are minimally involved in the actual transaction. Their primary role is to complete the transaction. They prepare closing documentation, handle escrow funds and adequately record the sale. Some times, attorneys will act as referees if there's a disagreement, but they usually want to stay out of those conflicts and leave it to mediation or a court to decide if it's a serious issue. 

The agents are responsible for all the negotiations and coordinating all the terms of the contract. I've seen plenty of people hire a RE attorney just to help them draft offers, but the attorney usually won't even deliver the thing to the listing agent.  

I can totally understand why the public feels negatively towards agents. Many agents I have to deal with don't seem to know anything about actual RE law. They can also be unprofessional, appear greedy and be terrible communicators. I think the problem is that these big companies have trained up legions of desperate agents to think there is actually a standard commission rate and have failed to teach them that real estate exists outside of their myopic little bullpens. I can't tell you how frequently I have to explain things to agents from big companies. They don't train these agents to be educated on the scope of real estate. They think their company's policies are actual law. Now us little guys who rarely see a full 3% commission are having to adjust. 

@Bryan Hall welcome to BP and Charleston. Come by REI Central some time if you want to meet other investors in person. We have ~100 people in the room every month.