I often receive calls from wholesalers asking if Ohio Broker Direct would list their wholesale real estate deals in the Multiple Listing Service (MLS), and in the interest of full disclosure, I have received quite a bit of verbal abuse from several wholesalers when I declined. Numerous investors have been lured into the real estate wholesaling market by savvy entrepreneurs offering get rich seminars to those who have little money and a desire to invest in real estate. Many of these Real Estate Wholesalers are unaware they are not exempt from the requirement of having a broker’s license as delineated in Ohio Revised Code Section 4735.01, in which fines can add up to $1,000 a day. In this article, we’ll go over the concept of wholesaling real estate in Ohio and what that might mean for you.
What is Wholesaling Real Estate in Ohio?
Wholesaling is the process in which the investor executes a contract to purchase real estate and then seeks to sell their interest in the contract by assigning it to another party. The Wholesaler is not actually selling real estate, they are selling their interest in the contract they have with the property owner, with the intent of generating a profit on the sale of the contract. Some Real Estate Wholesalers brag about how they have had property owners sign equitable conversion contracts and then placed a lien against the Sellers property so they can force the sale of the property. This is especially troubling as the majority of states maintain the buyer bears the risk of loss because the doctrine of equitable conversion has given the buyer equitable title, while in a minority of states the seller bears the risk of loss until legal title passes to the buyer.
Wholesaling Ethics
There have been numerous complaints inferring Real Estate Wholesalers are stealing equity from people who are being deprived of representation. However ultimately, it is the responsibility of the property owner to do their own homework prior to entering into an agreement with an Ohio Real Estate Wholesaler. Such homework should include consulting with a licensed real estate professional, real estate appraiser, real estate attorney, tax accountant and more. One should never rely on the potential Buyer or an Ohio Real Estate Wholesaler’s opinion on the value of the home or other property. Wholesalers place properties in contract at a price generally well below current market value, assign their interest in the contract to another Buyer, all parties close on the transaction and the Wholesaler often walks away with the bulk of the money, sometimes more than the actual property owner/title holder of the property.
Compliance and Advocacy in the Ohio Market
Ohio Realtors, as well as numerous licensed real estate professional members and non-members, advocates and consumers are demanding change. Legislation S.B. 192 has been introduced in the Ohio Senate and is currently in committee. This legislation would require written disclosure to be provided to property owners before they enter a contract with an Ohio Real Estate Wholesaler. Some states and cities have enacted Real Estate Wholesaling disclosure laws to protect their consumers. Here are three excellent articles referencing these laws for your consideration for Arizona, Illinois, and Pittsburgh, Pennsylvania.
I encourage all licensed real estate professionals and anyone considering or actively engaging in Wholesaling Real Estate in Ohio to view this video created by the Ohio Division of Real Estate as it clearly explains the potential ramifications of failing to comply with Ohio law.
As we navigate the complexities of wholesaling real estate in Ohio, it’s imperative to stay informed and compliant with the latest laws and ethical standards. Whether you’re a seasoned investor or new to the world of real estate, Ohio Broker Direct is your trusted guide offering a wealth of knowledge and resources, many of which can be found in our informative blog. And if you’re seeking personalized advice or have specific queries, don’t hesitate to reach out to us on our contact page. At Ohio Broker Direct, we’re committed to empowering you with the insights and support you need to navigate the real estate market with confidence and integrity.
