Wholesaling is often touted as the easiest way to start a real estate career, by investing your time without any money down. If this sounds too good to be true, the Texas legislature has passed significant language governing the advertisement of equitable interests and how people can collect commissions from real estate sales. This method requires careful due diligence to ensure compliance with applicable real estate commission and brokerage laws. Speak with an experienced lawyer who will provide the necessary forms and advertising guidelines.
A wholesaler is someone who contracts with a seller to buy a property for a fixed price and while still under contract with the seller, assigns the contract to another buyer who will brings funds to close and take title. A wholesaler is a middleman who hopes to identify a property worth more to an end buyer than what the seller is willing to sell for now. The wholesaler can make profit one of two ways, 1) either by charging a fixed or percentage assignment fee in exchange for assigning his interest to the end buyer or 2) the wholesaler can capture the full difference between the contract price and the sale price to the end-buyer ("double-close"). A wholesaler’s actions can constitute actions that require a real estate license if certain procedures are not strictly followed. A new Senate Bill from 2017 seeks to clarify certain actions by a wholesaler that do not require a real estate license.
Tex. Prop. Code § 5.086 (West 2017).
Penalties for Noncompliance
Section 1101.758 Texas Occupations Code
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