People understand this and feel comfortable.Another thing that I explain to unlicensed people that I'm dealing with is that in Michigan, you must be licensed to do more than five real estate deals per year or to spend more than 15 hours per week in real estate activities.

You are likely in violation if you are lending or brokering on residential properties 1-4 units and you are unlicensed.

If you don't have a signed contract then you're not really wholesaling you're unlicensed brokering which is a no no.

In some states you are not allowed to pay an unlicensed party ANY kind of referral fee etc.Residential transactions are covered under RESPA (real estate procedures and settlement act).Everything must be on the HUD-1 in that case.What you really need to do is consult an attorney in the area you will be referring leads to figure out a legal way to get compensation for the lead.This can be set up various ways depending on the area.No legal advice.

That said, one might ascertain, by taking a a quick look at Maryland's "Wall of Shame", that the most egregious offenders aren't on this list for doing poor work or for simply being unlicensed: (http://www.dllr.state.md.us/license/mhic/mhicwallofshame.shtml).  

I know that I as a licensed agent am only legally allowed to pay a referral fee to another licensed agent, and not to anyone unlicensed.

I am an unlicensed hard money lender (legal in my jurisdiction - no broker license needed for non-owner occupied) and have a substantial sum of notes that I have lent upon.Problem: Need to raise more money to continue lending w/ current clients, but probably can't sell the note via assignment of note & deed of trust because I'm not a broker.

The term "wholesaler" has been taken over by many unlicensed brokers using contracts to circumvent licensing law.

Many zoning requirements prohibit unlicensed motor vehicles.

Well I actually disagree to a point on there is not strategy that is or is not allowed if licensed.There might be deals that are structured legally but not seen as ethically and if you belong to NAR that could be a problem.Also real estate commissions usually hold licensees to a higher standard as we have been trained on contracts and also must use full disclosure.An unlicensed investor can claim ignorance on a bunch of things related to buying and selling properties.Alan you say you want to flip but do not speak of any experience.If you want to hang a license and have zero experience that is a headache for a per transaction broker and a bunch of liability.I have just reduced down the number of agents I have because they take away from me doing deals and are a huge headache.There needs to be a better reason to be an agent than to only just save on commission.