Wholesale Real Estate – Is it Legal?
Rumors in recent years created false information that wholesale real estate investment is illegal. However, with the right knowledge and understanding of the law, you can conduct real estate wholesaling legally. In fact, legal wholesale real estate produces wealth and deepens your real estate investing portfolio.
Don’t listen to the rumors. Instead, educate yourself on the best real estate investing strategies with training and coaching from Laura Alamery and learn how wholesaling real estate is legal.
What is Wholesale Real Estate?
Wholesale real estate investing differs from other types of investments because the investor doesn’t take possession of the property or control of the title. The investor acts as the principal buyer on the agreement but then works to find a different buyer to take over the contract. The real estate investor makes money on the deal by taking a fee for securing the new buyer.
Each state has unique wholesaling laws to provide guidance and protection for all parties involved in the deal. The laws work to set parameters for wholesale real estate that must be followed for the arrangement to remain legal.
Do You Need a Real Estate License for Wholesaling?
Most states do not require investors to have a real estate license to pursue wholesaling. A real estate license simply means you’ve completed the required training and guidelines to acquire a license as a professional real estate agent.
There are advantages to your investment business when you become a licensed real estate agent.
- Access to the MLS (Multiple Listing Service) – You don’t have to rely on another agent to see the data and tools on the MLS.
- Credibility – You’re viewed as a professional with a deeper understanding of the laws and real estate industry.
- Commission – You’re entitled to commission for real estate transactions where you are the listed agent.
- Networking – You have access to attend meetings held only for licensed agents.
As a licensed real estate agent, you have many benefits afforded you through the licensing process and professional title. Yet, investors that don’t have a real estate license aren’t held to the same standards. This means you have more freedom when managing deals. The risks of audits and lawsuits go down. You must decide for yourself whether the benefits of a real estate license outweigh the risks.
Know the Wholesale Real Estate Laws in Your State
The unique laws for each state create the most complicated part of real estate wholesaling legal guidelines. Remember that when you wholesale real estate, you don’t currently own the property but you hold the contractual right to purchase the property.
To understand the laws specific to your state, contact the real estate commission for that state. Since the laws vary from state to state, even if you’ve participated in wholesaling deals in the past, it is still smart to know the law for any new state where you conduct business.
Do not rely solely on the knowledge and advice of attorneys or real estate agents. Their personal opinions and interests may cloud their judgment or advice. Ultimately, you are responsible for any breaches of the law. Therefore, get the information straight from the source, which is the real estate commission.
Basic Steps for Real Estate Wholesaling Legal Compliance
The following information is not legal advice. These are steps we use for wholesale real estate deals based on our experience and knowledge. However, laws change and vary. You are responsible for ensuring you manage all real estate transactions based on the current legal requirements for your specific location.
- Act as the Principal Buyer – When you act as the principal buyer you represent the interest of the seller. The person taking over the contract has a right to know you are the principal buyer with only rights to purchase the property, not as the property owner.
- Use Correct Documentation – Ensure you only use the correct documentation and clauses to avoid errors.
- Follow the State Law – Again, it’s up to you to ensure you follow the specific laws for the state.
- Communicate You Don’t Hold the Title – Don’t misrepresent the fact that you are an “owner per contract,” not an “Owner on title.” Transparency is the key to long-term success with wholesaling.
Solid Strategy for Real Estate Investing
Wholesale real estate investing is a smart and fast way to make money. We want you to know the best strategies to execute wholesale real estate deals
to avoid mistakes and find long-term success. Sign up for Laura Alamery’s Wholesaling Course to learn how to invest using this profitable, low-cost real estate strategy.
Along with extensive video training, you’ll receive downloadable contracts, forms and scripts.
Contact Laura Alamery today to start on your road to real estate investing success. Learn from proven experience how to
make money quickly while building a solid real estate portfolio.