By Michael J. McGirr | Phocus Law
In the dynamic world of real estate investment, there’s always a new strategy around the corner promising lucrative returns. One strategy that has gained traction, especially among those looking to dip their toes without plunging deep into the investment pool, is wholesaling. But here in the Grand Canyon State, what’s the legal stance on this strategy? Let’s unpack it.
What is Wholesaling?
For those who might be newer to the term, wholesaling involves securing a property under contract and then selling that contract to another investor, without ever taking ownership of the property itself. Think of it as a middleman approach to real estate investment.
The Legality in Arizona
Is wholesaling real estate legal in Arizona? The answer is both yes and no. Here’s what you need to be aware of:
- Licensing Concerns: So long as you are not representing a buyer or seller in your wholesaling activities, you are not required to obtain a real estate license in Arizona to engage in wholesaling.
- Full Disclosure: Transparency is the name of the game. When wholesaling, it’s paramount to disclose to all involved parties that you’re selling your interest in the contract, rather than the property itself. For a more complete rundown of what disclosure is required, visit the Department of Real Estate website, or reach out to Phocus Law.
- Liability to Close: Realize that in wholesaling, if you are not able to identify a purchaser, and you exceed the timeframe allowed for cancellation of your purchase contract with the seller, you will be on the hook. Thus, it’s important to make sure that the purchase contract you utilize in your wholesaling deals allows you a clean exit, and maybe even an extended time limit, to ensure you don’t get stuck purchasing a property that you do not actually wish to have.
To keep your real estate journey smooth and free from unnecessary hiccups, it’s always a good move to consult with experts well-acquainted with Arizona’s real estate laws, like the good folks at AZREIA. And if you’re ever in doubt, just remember: a quick chat with a legal expert can save you from sinking into the shifting sands of regulatory troubles. The Phocus Law team is here to assist with all your investment needs. If we can be of service, please don’t hesitate to reach out by email at Mick@PhocusCompanies.com or by phone at (602) 457-2191.