Is real estate wholesaling illegal? I have heard this question asked dozens of time by new real estate investors from across the United States and my answer is always absolutely not! Many people mistakenly put wholesaling in the same category with the property flipping scams that are now heavily publicized by the media. Illegal property flipping and real estate wholesaling have nothing in common.
Illegal property flipping is a result of buyers paying over inflated amounts for a piece of real estate. Then they either getting a large amount of cash back at closing or they are working hand in hand with the sellers who then pays them off in exchange for buying the piece of property at an over inflated price. The buyer is essentially sacrificing his or her credit in exchange for cash. This over inflation is a result of the market value of a home being far less than what a crooked appraiser can pull sold listings for.
Real estate wholesaling on the other hand is a completely legal activity. Most wholesaling transaction involve either selling a contract to another investor, or buying the home and immediately selling it to another investor at a discount. Unlike illegal property flipping with real estate wholesaling nobody is getting hurt. Wholesaling presents the perfect win-win scenario for all parties that are involved with the transaction. The buyer is happy because they are getting a great deal on a piece of real estate and the wholesaler is happy because they are making a $5,000-$10,000 fee for their services.
Eric Medemar is a real estate consultant from Grand Rapids, MI. Be sure to check out his FREE real estate investing guide as well as his Highly acclaimed real estate investing course where he will show you his easy to understand methods for investing in real estate without cash or credit.
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