Is Wholesaling Legal in Your State?

Is Wholesaling Legal in Your State

I get this question a lot. I believe the question comes from confusing wholesaling with assignments, 2 very different types of transactions.

Wholesaling is a normal selling transaction and, therefore, should be perfectly legal in all states. Simply contact your local real estate attorney to confirm.

To wholesale, you purchased a property. Once you purchase, you can do anything you want with it and, because you own it, you do not need a license of any type. You can for-sale-by-owner or use an agent to sell any property you own.

When you sell a property wholesale, you simply mark it up a small amount from your purchase price and wholesale properties typically sell in a “relatively” short time frame. Note: the phrase “small amount” is relative to what you paid and the property ARV (after repaired value). It’s certainly possible to make six figures off a wholesale deal.

Assignments, on the other hand, are not legal in all states but they are an entirely different type of transaction.

With an assignment, you never own the property. You simply get the property under contract and assign the contract. To repeat: you are assigning the contract, not the property.

This is why assignments are not legal in every state. Not all states allow contracts to be assigned. Here in North Carolina, every contract is assignable. In some states, you must specifically write into the contract that it is assignable. In some states, NO contracts are assignable no matter what you write in.

To summarize:

Wholesaling – often described as the quickest, easiest, lowest risk way to make money in real estate. When wholesaling, you buy properties cheap, sell cheap, and sell fast with little or no money out of your own pocket.

Assignment – finding a deal, putting it under contract, then selling that contract to someone else. With an assignment, you are never actually on the property – you never go on title.

Have you done wholesaling and/or assignments? Which do you prefer and why?

This post has 2 Comments | Would you like to leave a comment?

2 Comments

  1. Hi Donna: Check with your local real estate attorney. They can also help with contracts and handle your closings.

    The problem you can run into with lists online is that they may be outdated. Legislation changes constantly.

    Thanks for asking!

  2. Is there an up to date list of states with different rules re assignment of real estate contracts?

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