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Kim Nwachukwu, Real Estate Pro in Irving, TX

TX Scenario: Wholesale flipper contracts w/seller to look for buyer, usually another flipper. Finds buyer, prepares docs, etc. Unlicensed agency?

Asked by Kim Nwachukwu, Irving, TX Sun Jun 5, 2011

Flipper 1 is not a licensee. Their business model is to contract with someone that needs to sell their property and is usually in some kind of distress situation, to sell their property. Flipper 1 gets paid some amount off the table to make this happen. They prepare the contracts and give advise to the seller when they find a buyer, who is usually another flipper that has another buyer, sometimes a flipper, sometimes not. Flipper 1 assists the seller with the transaction details, title company contacts, etc. Am I missing something, or is this really unlicensed agency?

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Kim,

It's hard to accuse a non-licensee of a TRELA violation without more details. The basic provision of the law is that taking action in anticipation of receiving compensation for a sale of property without an ownership interest or employment by the owner is prohibited without a license, but does consulting fit into that category? Ask the TAR hotline people.

Writing contracts is not a TRELA violation but rather practicing law without a license.

If the non-licensed person is preparing contracts using promulgated forms, then likely TREC would find this as prohibited.
I doubt giving contact information is a violation of anything.
A third party (not a principal) negotiating on behalf the actual owner or the actual buyer with the prospect of receiving compensation is most probably a violation of TRELA. Without an interest in the property, the flipper becomes a third party or broker. Unlicensed brokerage is prohibited.
The gray area is when a person holding an option or other contract and negotiates assignment or resale based on his contract with another party. Assignments of this type might fall outside of TRELA and TREC purview.
0 votes Thank Flag Link Mon Jun 20, 2011
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