Is Wholesaling Real Estate Legal?

Two states use registration instead of a license. Oregon requires wholesalers who aren't licensed to register with the Real Estate Agency, and one deal is enough to need it. Connecticut requires registration with the Department of Consumer Protection, renewed every two years.

Cities can add a layer. Philadelphia requires its own wholesaler license and keeps a Do Not Solicit list. Columbus, Ohio, has a wholesaler registry. Check the city and county where the property sits, not just the state.

This is the rule almost every wholesaling law shares. Tell the seller in writing that you plan to assign the contract or resell, and that you may earn a fee doing it. Tell your buyer that you hold a contract, not the deed.

Each state sets what the disclosure says, who gets it, when and how it looks. Missouri wants a separate 12-point bold disclosure at least 14 days before the contract. Alabama and Tennessee want notice 3 business days before you assign. Ohio wants a separate bold page, and Oregon wants it in your ads too.

Then explain it out loud, before the seller signs: what an assignment is, that another investor may be the one who closes, and that you may earn a fee. A seller who understands the deal is less likely to back out, and a signed disclosure protects you both.

Several laws give the other side time to cancel after signing. Put the deadline on your calendar, and don't send the deal to buyers as a sure thing until it passes.

In other states, a missed disclosure opens the door. In Iowa and Oregon, the seller can cancel and keep your earnest money. In Wisconsin, the seller can rescind before closing.

How you advertise is often where the license question starts. Never advertise a house as if you own it. In Oklahoma, Kentucky and Nebraska, publicly marketing your contract takes a license. In South Carolina, marketing the property itself before you take title does. Oregon wants your disclosure in every ad.

Your first contact with a seller has rules too. Georgia requires a solicitation notice on unsolicited written offers from unlicensed senders. Indiana requires the line "This solicitation is not from a licensed real estate professional." New York City requires a market-value disclosure on unsolicited offers for 1 to 3 family homes.

Some wholesalers think buying and reselling on the same day takes them out of the wholesaling law. Not always. Oklahoma and Louisiana define wholesaling to include certain double closings, so the disclosure and cancellation rules can still apply.

A double close also costs more: two closings, transfer taxes that can apply to both deeds, and funding fees. Use it when it's the right structure for the deal, not as a way around a disclosure. Lesson 1 compares the two.

Some laws control the money and the timing. Louisiana requires a deposit of at least 1% of the price, held in escrow. Connecticut limits how long you can take to close unless the seller agrees in writing.

Wherever you are, your earnest money goes to a neutral title company or escrow agent, never to the seller and never into your own account.

These laws keep changing. Bills are pending in New Jersey (A4278), North Carolina (H797), Michigan (HB 5366) and Pennsylvania (HB 600), and none of them is law yet. North Carolina's bill is often reported as passed. It hasn't been. Check the bill status yourself before you rely on any blog post, including this one.

Before you use a contract or disclosure for the first time, pay a local real estate attorney to review it. It costs far less than a deal that gets cancelled or a fine. Then keep signed copies of every disclosure, contract and assignment.