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What You Need To Know About Wholesaling Without A Real Estate License

BatchService
Written by BatchService 
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There are conversations everywhere, and some very heated about the legalities of wholesaling without a real estate license. The definition of a broker is at the heart of these discussions. Sadly, each state appears to differ just a bit when defining this word as it applies to real estate transactions. Today, we are presenting the pros and cons of wholesaling with a license to shed light on what real estate investors really need to know.

Pros

  • You are not doing something illegal if you are wholesaling without a license. If you are unable to get a license and are wholesaling, it is safe to say that you are taking a risk. But that choice is up to you.
  • When you have a real estate license, you must follow the department of real estate standards. That process includes filing a criminal background check. This is a safeguard to help keep dishonest people out of the real estate industry. In many circles, wholesalers have a somewhat bad reputation and requiring background checks, it helps to eliminate some of the troublesome people in the industry.
  • Having a license can boost your credibility when working with a seller. That person knows that there are specific regulations and guidelines that you must follow. But that is not the case with a person who is not licensed. You can undoubtedly use having a license to your benefit when competing with a non-licensed person.
  • Agents tend to work with other licensed agents. They respect each other and try to keep the deals in the hands of other licensed agents. So you will get some deals and referrals just because you are licensed.

Cons

  • The cost involved in classes, the test, and membership fees makes it tough for many people to get a real estate license. Having the cash for all of these expenses causes many realtors to start their business and a new career with some steep bills to pay before they even begin making any money.
  • As with anything that requires a background check, there are questions about how long your past should be able to haunt you. If you made a mistake as a teenager, some 30 years ago, should that mistake still stand in your way of securing a real estate license?
  • At some point, you are going to need to hire a licensed broker, and that will cost you some cash. If you had a license yourself, that money would be going into your pocket, not a broker’s.
  • As a no-licensed wholesaler, you can have a “quick and dirty” contract rather than the lengthy document that is required for agents. And the drawback of that long contract is that a seller can get nervous. And when that happens, the deal is often put on hold until a lawyer can review the contract. This annoying event opens the door for a wholesaler without a license to swoop in and offer up a one-page agreement written in simple English. Sellers often read it and jump at the chance to sign it to close the deal quickly.

The pros and cons could go on forever. But the simple fact is that if you are making a career move to real estate, then a license is a smart choice. You are investing in your new career by building a strong foundation. And as a new real estate investor, you will be glad to have the added credibility of being a legitimately licensed agent.


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