Any transaction can be the basis for illegal or unethical behavior.  

Quote from @Jonathan Rieder: It was specifically stated in the add that there was an ADU, which I assumed needs to be truthful and that an illegal ADU would not be considered an ADU, am I incorrect on this?

You wouldn't know if it is truly illegal or not without asking the city, which you would not do obviously.

I'd imagine your Sub2 deal facilitated mortgage fraud.Brokering real estate without a license is illegal.

This practice, when done without disclosure, is not just unethical—it is considered illegal in many lending regulations.What frustrated me most was the lack of transparency.

It may have been an illegal assignment depending on circumstances.

There are a few illegal ways but that is the wrong way to get into this business.I have heard all the arguments about how the mortgage company doesn't care who writes the check as long as they receive it.

The agent will not be paying you/seller/buyer because the agent does not bring money to the seller/buyer in any fashion in a transaction (typical transactions), unless this agent is a partner to that person buying the property, or they are a principal to the property.Let me know if that makes sense. 

Also, a good number of people see wholesaling as acting as an unlicensed agent getting net commissions (which are illegal for agents) so some see it as illegitimate entirely. 

Then they have to sign a W-9 before we'll pay them.So, we've never had to deal with illegals, etc.