States Where Wholesaling Is Legal

To return to a pre­vious point, the­re is the pro­blem of “mar­ke­ting” a pro­per­ty that you do not cur­r­ent­ly own. Your adver­ti­sing must be legal, but how can you make sure it‘s legal? With so many laws and regu­la­ti­ons regar­ding who­le­sa­le real esta­te, you have to ask yourself if you need a licen­se for this. The good news is that you don‘t necessa­ri­ly need a licen­se to do who­le­sa­le real esta­te. You can also start with who­le­sa­le real esta­te without having to be licen­sed as a real esta­te agent. All you need is to be the buy­er or sel­ler in the tran­sac­tion. Once you have con­trac­ted owners­hip and iden­ti­fied the end inves­tor, you can now pro­ceed to clo­se the tran­sac­tion. Usual­ly, if the pro­cess is done right, you can earn any­whe­re from $1,000 to $100,000+ if you clo­se a who­le­sa­le deal. Now that you know that who­le­sa­ling is not ille­gal if you do it right, you also need to under­stand how to keep homes pro­per­ly high. If you‘re new to the busi­ness or are alrea­dy the­re, the­re are still best prac­ti­ces that can help you suc­ceed and pro­tect you from trou­ble. Who­le­sa­le real esta­te in Flo­ri­da is a gre­at way to get a foot­hold in the world of real esta­te inves­ting. While it requi­res pati­ence, focus, and a lot of net­wor­king, who­le­sa­le real esta­te requi­res litt­le upfront finan­cial invest­ment on your part.

As a who­le­sa­ler, you essen­ti­al­ly act as an inter­me­di­a­ry, matching a sel­ler with an end inves­tor. Over­all, there‘s not­hing ille­gal about sel­ling a con­tract (which I‘ll talk about later). Also, you don‘t act as an unli­cen­sed agent (which tur­ned out to be qui­te divi­si­ve). Ins­tead, you enter into a bila­te­ral con­tract with the sel­ler that (clear as day) reve­als your inten­ti­on to buy a rea­son­ab­le inte­rest in the house and not in the house its­elf. In addi­ti­on, who­le­sa­lers must pro­vi­de pro­of of a “let­ter of cur­ren­cy” pro­ving intent to purcha­se. Over­all, the­re are some things that make who­le­sa­ling ille­gal. In par­ti­cu­lar, inves­tors can­not bring the buy­er to the tran­sac­tion first, pro­ceed without a trans­pa­rent con­tract, or pro­ve no intent. The deba­te over whe­ther who­le­sa­ling is ille­gal revol­ves around the term brokerage.

Howe­ver, if you want to be sure that you ope­ra­te your who­le­sa­le busi­ness as legal­ly as pos­si­ble, get your licen­se or clo­se the pro­per­ty, take tit­le and sell the pro­per­ty yourself. The truth about who­le­sa­le is this: it defi­ni­te­ly flirts with the line bet­ween legal and ille­gal. In fact, the only U.S. sta­tes whe­re you cur­r­ent­ly need a licen­se to sell real esta­te are Illi­nois and Okla­ho­ma. Howe­ver, to be trans­pa­rent about a who­le­sa­le busi­ness in Flo­ri­da, you need to indi­ca­te whe­ther or not you are a licen­sed real esta­te agent. This is the most com­mon, but also the most pre­ca­rious method of who­le­sa­le. Real esta­te who­le­sa­ling is the pro­cess of secu­ring a pro­per­ty below mar­ket value and awar­ding the con­tract to an inte­res­ted buy­er. Who­le­sa­lers make money in the form of per­cen­ta­ges or who­le­sa­le fees asso­cia­ted with assigning the contract.

Without ever owning the pro­per­ty, a who­le­sa­ler effec­tively acts as an inter­me­di­a­ry in a tran­sac­tion. The key to suc­cess is an exten­si­ve net­work of reli­able sel­lers and high­ly inte­res­ted buy­ers. Who­le­sa­le laws are spe­ci­fi­cal­ly desi­gned to pre­vent mali­cious indi­vi­du­als from explo­i­t­ing the sys­tem or even other buy­ers and sel­lers. For all intents and pur­po­ses, they are a safe­ty net for our own good. Howe­ver, far too many inves­tors are unfa­mi­li­ar with the cur­rent who­le­sa­le rules for real esta­te and still ques­ti­on whe­ther who­le­sa­le real esta­te is legal. “As a who­le­sa­ler, you are the pri­ma­ry purcha­ser of the tran­sac­tion and you sell your con­tract to ano­t­her buy­er; It‘s as simp­le as that. Accord­ing to Deid­re Wool­lard of Mil­lio­na­c­res, due dili­gence takes you far into the world of real esta­te who­le­sa­le. As long as you abi­de by the laws set out in your par­ti­cu­lar sta­te and duty of care, “trans­pa­ren­cy, dis­clo­sures and well-struc­tu­red con­tracts are your friends if you‘re con­si­de­ring being a who­le­sa­ler,” says Wool­lard. Fur­ther com­pli­ca­ting the situa­ti­on is the pro­blem of “mar­ke­ting” a pro­per­ty you don‘t cur­r­ent­ly own.

Most sta­tes inclu­de “mar­ke­ting of a pro­per­ty” as an inter­me­di­a­ry. For examp­le, sup­po­se Jim, the who­le­sa­ler, buys a pro­per­ty from Debo­rah, and Jim then sells the pro­per­ty to Tom for money. If Jim didn‘t know Tom, but was run­ning the ad for the house on, say, Crai­gs­list, is he mar­ke­ting the pro­per­ty? Cer­tain­ly, yes. Who­le­sa­le real esta­te can beco­me con­fu­sing, which begs the ques­ti­on: Do you need a licen­se to sell who­le­sa­le real esta­te? The ans­wer is simp­le: no. It is not necessa­ry to be a licen­sed who­le­sa­le real esta­te agent; You must be the pri­ma­ry buy­er or sel­ler in the par­ti­cu­lar tran­sac­tion. Howe­ver, if you are a licen­sed real esta­te agent, you should dis­c­lo­se as much as pos­si­ble. Most sta­tes requi­re licen­sed agents to dis­c­lo­se their posi­ti­on as a licen­sed real esta­te pro­fes­sio­nal when ent­e­ring into a con­tract with a buy­er or sel­ler. Who­le­sa­le real esta­te is legal as long as you fol­low the laws enac­ted by your sta­te to pro­tect all par­ties invol­ved. That said, you should never do anything that can harm you as an inves­tor, real esta­te sel­ler, or end buy­er. As men­tio­ned ear­lier, you can­not legal­ly mar­ket a pro­per­ty in Flo­ri­da unless you are the sel­ler or con­trac­tor. Howe­ver, a who­le­sa­ler can mar­ket their con­tract and then char­ge their mis­si­on fees in addi­ti­on. If we turn our atten­ti­on to the Sunshi­ne Sta­te, Flo­ri­da is a gre­at place to start real esta­te wholesale.

Invest­ment acti­vi­ty in the sta­te is boo­m­ing, which means that the demand for who­le­sa­le real esta­te is extre­me­ly high. This is fue­led by Florida‘s gro­wing eco­no­my and labor mar­ket, favor­able tax poli­ci­es, and metro­po­li­tan are­as like Miami-Dade, which have long been attrac­ti­ve invest­ment desti­na­ti­ons. That being said, the­re are many nuan­ces to the lega­li­ty of who­le­sa­le. If you do this without a licen­se, it‘s a good idea that you have con­si­derable know­ledge of real esta­te. Simp­le­Showing can help you get star­ted and suc­ceed in who­le­sa­le real esta­te. Con­ta­ct us today and let one of our experts help you through the pro­cess. Who­le­sa­le with a real esta­te licen­se is legal, but you must dis­c­lo­se your posi­ti­on as a real esta­te pro­fes­sio­nal. Who­le­sa­le real esta­te is one of the best stra­te­gies that can help new inves­tors beco­me fami­li­ar with the real esta­te indus­try. Learn how to get star­ted in who­le­sa­le with our new online real esta­te cour­se, cura­ted by vete­ran inves­tor Than Mer­rill, even with litt­le or no capi­tal. The simp­le ans­wer to this ques­ti­on is that who­le­sa­le real esta­te is not ille­gal. But when you start sel­ling real esta­te who­le­sa­le, you need to under­stand the legal impli­ca­ti­ons that come with it.

You need to know what is right and what could put you in the wrong hands of the law. Each sta­te has its own rules and regu­la­ti­ons regar­ding ethi­cal real esta­te prac­ti­ces. Also know if you need a real esta­te licen­se in your sta­te to adver­ti­se the pro­per­ty. And keep in mind that in most sta­tes, you‘re not allo­wed to show pho­tos or give cer­tain infor­ma­ti­on about a who­le­sa­le pro­per­ty. Have a back­up plan: While you may be inte­res­ted in who­le­sa­le homes, I recom­mend a back­up plan. Most import­ant­ly, you are buy­ing a who­le­sa­le busi­ness with the inten­ti­on of reha­bi­li­ta­ting it in case the buy­er does not pass. To be clear, the inten­ti­on inclu­des both men­tal pre­pa­ra­ti­on and the finan­cial abi­li­ty to gra­dua­te. The­re are still ways to find good buy­ers without the buy­er list. Many gre­at who­le­sa­lers star­ted without one and are still as good as ever. Once you alrea­dy have who­le­sa­le real esta­te con­tracts in your hands, you can mar­ket the pro­per­ty to poten­ti­al buy­ers. On the other hand, a dou­ble agree­ment means that the who­le­sa­ler effec­tively beco­mes the right­ful owner of the pro­per­ty. You then sell the pro­per­ty soon after without doing any work on the property.

This means that they essen­ti­al­ly make two tran­sac­tions at once – hence the dou­ble deal. The­re are also some important gui­de­li­nes you need to fol­low in Flo­ri­da. For examp­le, the laws of the Sta­te of Flo­ri­da sta­te that you can­not mar­ket a pro­per­ty unless you are the sel­ler or con­tract agent.