I have been studying wholesaling for a long time, and finally have some potential deals in the pipeline. I contacted an atty who specializes in real estate to get my contracts done. He informed me that if you put a home under contract and assign that contract I am acting as a broker, and need a license. He said you can’t sell it for someone else, then you are acting as an agent. I am in Illinois. I asked him what about all these investors nationwide who are wholesaling every day for a living? His response was everyone in the left lane on the expressway might be going 85mph, but that doesn’t make it right. You could still get pulled over. Any opinions out there?? I don’t have a realtor license, and don’t want one, neither do I want to be in any violation of the law.
Thanks for everyone’s help out there. :help
Lets get this out of the way first: this is not legal advice, check with a local REAL ESTATE Attorney for accurate info on your area.
with that said, the key term in wholesaling is EQUITABLE INTEREST. When you are under contract for a property, you have an interest in that property, and by wholesaling you are selling the ‘rights to purchase’ that equitable interest. Therefore, you are not acting as a broker between the seller and your buyer – instead, you are selling your rights to the interest in the property, and therefore are simply selling an asset.
This is the way it is in my neck of the woods… as I said before, check with a real estate attorney near you to confirm.
You misunderstood your attorney or your attorney is confused. You do not need a license to simply assign a contract.
Thank you both. That is what I thought. The lawyer was saying that I don’t have an interest in the property, so I can’t sell it. He also said if I am bringing buyers in for the seller, and receiving money, I am acting as an agent, thus should have a license. However, I think that assigning a contract is just like selling a note (not the RE), it just so happens that the real estate is attached.
But–what I am having trouble with now is:
Have a short sale pending. The bank wants a contract from a pre-qualified buyer for a FMV price. So I need to find the buyer to put under contract, since I am not the end buyer. But if I do that, how do I get paid? Can there be a line item on the HUD statement for me fee?
Thanks for all the support and great info!!! :cool
First, get another attorney- one who has a clue.
As far as the SS, the purchase contract is between you and the homeowner. The bank will not deal with you if you are not the buyer (or a licensed RE agent acting for the buyer). Get pre-qualified, perhaps through a hard money lender. Find your buyer, and double close- the seller sells to you, the bank gets paid off, you sell to the end buyer, you get paid.