Is Wholesaling Real Estate Illegal? "We Buy Houses"

By
Real Estate Broker/Owner with 1st Prime Realty CA BRE LIC 01456248

Is Wholesaling Real Estate Illegal? In California you can Not Practice Real Estate, Unless you are an Investor dealing with your Property.

You may have seen the Bandit Signs on the side of the Road, or some where that says "We Buy House for Cash." Some maybe serious Investors, but some are Wholesalers. I was recently contacted from a For-Sale-By-Owner who wanted to use my Company to Sell their Home.  They thought the Investor was ready to move forward in Buying their Home. The Red Flag came when the Wholesaler tried to Assign the Contract to a Serious Investor.  Here is how Wholesaling Works:

Homeowner wants to Sell their Home, calls the number on the Sign "We Buy Houses for Cash." The Wholesaler meets with Homeowner and get them under Contract at a significant Discount of their Home. Example, Home Valued at $600,000 under Contract at $475,000. The Wholesaler Sells their Equity Position to a Serious Investor for $500,000 making a Commission of $25,000. The Investor can Flip this Property.  The Homeowner loses $125,000.

What if the Homeowner used the Service of a Professional Real Estate Agent at 6% Listing(Broker Fees are not set by law and vary from Broker to Broker). The Agent was able to get Multiple Offers, and Accepted an offer of $625,000. In the End of the Transaction the Seller comes out on Top using the Service of a Real Estate Broker.

If they are a Serious Investor make them deposit 10% of the Purchase price in Escrow, contingent upon Inspections. If they hesitate move on.

 --->Branding

1st Prime Realty is a Full Service Real Estate Company. Our Broker Fees are 4%. We look forward in helping you get your Home Sold for the Best Market Price.

Call Today.

 

1st Prime Realty

619-581-4255

CA D.R.E. LIC#01456248

 

Posted by

Don Alexander REALTOR/Broker

1st Prime Realty

619-581-4255

D.R.E Lic.#01456248

Comments (3)

Will Hamm
Hamm Homes - Aurora, CO
"Where There's a Will, There's a Way!"

Great blog,  I always wonder how low they go to buy homes for cash and how many people fall for the lose.

Jun 27, 2018 08:21 AM
June Piper-Brandon
Houwzer Inc - Baltimore, MD
Piecing Dreams One Home at a Time

Dealing with a wholesaler is almost never in the best interest of the homeowner.  I also think it's a thin gray line between legal and illegal.  I know several agents that are involved in wholesaling and I wonder how their brokers deal with that, in that scenario the broker loses out. 

Jun 27, 2018 08:28 AM
Don Alexander
1st Prime Realty - San Diego, CA

How about Liens, Termite Damage, Roofing, Plumbing, Electrical, closing cost etc

.?

Jun 27, 2018 10:02 AM

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