Is Wholesaling Real Estate Legal In Kentucky? A 2024 Guide For Investors

Are you asking yourself, "Is wholesaling real estate legal in Kentucky?" If so, you're on the brink of uncovering a potentially transformative opportunity in the real estate market. As a result, this article will explore the legality of wholesaling in the Bluegrass State, ensuring you have all the information needed to navigate this exciting investment landscape, starting with the following:

• What Is Real Estate Wholesaling?
• What Do You Need To Know About Wholesaling Houses In Kentucky?
• Is Wholesaling Real Estate Legal In Kentucky?
• What Are The Wholesaling Laws In Kentucky?
• Do You Need A License To Wholesale Real Estate In Kentucky?
• Can You Wholesale In Louisville KY?
• Final Thoughts

Wholesaling real estate can be a gateway to a dynamic career in the housing market, even for those without a hefty initial investment. If you're ready to set off on a journey that could redefine your understanding of what it means to invest in real estate, then you're in the right place. Get ready to be inspired and informed as we explore the ins and outs of wholesaling in Kentucky, opening the door to endless possibilities in the world of real estate.

*Before we begin our guide on whether wholesaling real estate is legal in Kentucky, we invite you to view our video on How To Wholesale Real Estate Step by Step (IN 21 DAYS OR LESS)!

Host and CEO of Real Estate Skills, Alex Martinez, provides a comprehensive, step-by-step guide for beginners to start wholesaling real estate!

What Is Real Estate Wholesaling?

Real estate wholesaling is a strategy where an investor, known as a wholesaler, contracts a property with a seller and then sells the contract to an end buyer, making a profit without ever owning the property. This approach leverages quick turnarounds and minimal risk, ideal for those looking to break into the real estate market.

There are three primary wholesaling strategies: assigning contracts, double closing, and wholetailing. Assigning contracts is the most straightforward method, where the wholesaler transfers their rights to purchase the property to another buyer for a fee. Double closing involves the wholesaler actually closing on the property themselves before selling it to the end buyer, keeping the initial buying price private. Wholetailing is a blend of wholesaling and retailing, where the wholesaler buys a property, does minimal repairs, and sells it on the open market, potentially fetching a higher price due to the improved condition of the property. Each strategy has its unique advantages and can be a valuable part of an investor’s toolkit, allowing for flexibility to adapt to different market conditions.

Real estate wholesaling offers benefits such as low initial capital, quick returns, and valuable market experience. With the current economic dynamics and a growing market, now is an excellent time to learn how to wholesale in Kentucky, providing an accessible entry point into real estate investment and the opportunity for substantial financial rewards.

What Do You Need To Know About Wholesaling Houses In Kentucky?

If you're thinking about diving into real estate wholesaling in Kentucky, there are a few things you'll want to get a handle on first. Start by brushing up on the local laws specific to wholesaling here—it's key to know the rules of the game. You'll also want to understand the different strategies you can use: assigning contracts, double closing, and wholetailing. Each has its strengths, depending on the market conditions and what you're trying to achieve.

Speaking of the market, let's talk about why now is a great time to start wholesaling in Kentucky. According to RedFin, the median sales price is currently $253,600, and although home sales have dipped by 9.5% compared to last year, this means there's less competition for you. Plus, homes are taking a bit longer to sell, staying on the market for an average of 43 days, and there's just a two-month supply of homes available. These signs point to potential sellers being more open to negotiations—exactly what you want as a wholesaler.

Kentucky Real Estate Associations And Governing Bodies

Are you curious about the legal side of things or need more detailed information? Local Realtor organizations are a treasure trove of knowledge. They can help answer any lingering questions, like "Is wholesaling real estate legal in Kentucky?" and ensure you’re well-prepared to make smart moves in the market.

Kentucky Realtors (KYR) is one of the largest trade associations in the state. It represents more than 12,000 members involved in all parts of the real estate trade, including agents, brokers, developers, builders, property and office managers, and similar-related occupations.

All KYR members also belong to one or more of the local Realtor associations in Kentucky.

Some of these larger local associations include:

• Greater Louisville Association of Realtors (GLAR)
• Eastern Kentucky Association of Realtors (EKAR)
• Central Kentucky Association of Realtors (CKAR)
• Northern Kentucky Association of Realtors (NKAR)
• Realtor Association of Southern Kentucky (RASK)
• Lexington-Bluegrass Association of Realtors (LBAR)

The Kentucky Real Estate Commission (KREC) is part of the state's Public Protection Cabinet (PPC). The PPC and insurers ensure the safety of residents by regulating and ensuring the safe and fair operation of some of the state's most important institutions. The KREC regulates and oversees the licensing activities of Kentucky real estate associates and brokers.

The Kentucky Real Estate Authority (KREA) is another PPC agency that protects the public through licensed real estate professionals, including appraisers, auctioneers, home inspectors, and real estate sales associates and brokers.

Another related PPC agency to note is the Kentucky Real Estate Appraisers Board. While wholesalers probably won't have much, if any, direct contact with this body, there is some value in knowing that it is one of the state's regulatory agencies. It specifically focuses on protecting the public through regulation, examination, and licensure of real estate appraisers and registering appraisal management companies.

Read Also: How To Wholesale Real Estate In Kentucky: Step-By-Step

Is Wholesaling Real Estate Legal In Kentucky?

Yes, wholesaling real estate is legal in Kentucky. The legality hinges on wholesalers acting as intermediaries, simply marketing their rights to purchase a property rather than selling the property itself. This distinction is crucial because selling actual real estate would require a real estate license. Wholesalers in Kentucky must ensure they do not engage in activities reserved for licensed professionals, such as presenting themselves as the property owner, conducting property showings, or advising on the value and condition of a property.

As long as they adhere to these guidelines, wholesalers can legally sign a purchase agreement with a seller and then assign or sell this contract to an end buyer for a profit. This process allows them to operate within the real estate market without needing a license, focusing on securing contracts and facilitating transactions between buyers and sellers.

What Are The Wholesaling Laws In Kentucky?

A wholesaling business in Kentucky can be a rewarding and successful career, but you must follow the law; otherwise, you could face significant penalties.

Relatively speaking, there are not many wholesaling laws to be concerned with, but if this is not a particular area of strength for you, it may make sense to retain the services of an experienced real estate attorney.

While this legal advice may require some upfront costs, getting help with due diligence, purchase agreements, and other types of wholesale real estate contracts could save you a lot of money and heartache in the long run.

One of the most important things you must understand is that if you're an unlicensed wholesaler, you can only market the rights to a contract of a piece of real estate that you control by agreement with an owner. You cannot market the property directly itself.

You can only market a property if you are a licensed real estate agent or broker. This requirement is specifically defined in Statute 324.020.

If you engage in real estate brokerage without a license, according to Statute 324.990:

Any person engaging in real estate brokerage without a license shall be guilty of a Class A misdemeanor for a first offense and a Class D felony for any subsequent offenses. A person who engages in real estate brokerage without a license due to failure to renew a previously valid Kentucky license shall not be subject to this penalty if the person is entitled to and does avail himself of the remedial provisions of KRS 324.090(3).

(2) In addition to the penalties set out in this chapter, a Circuit Court may impose an additional penalty on any person who violates any provision of this chapter by fining them not less than one hundred dollars ($100) nor more than one thousand dollars ($1,000) or imprisoning them for a term not to exceed six (6) months or both. Upon conviction, in addition to the aforesaid fine, there shall be added to the fine the amount of any real estate brokerage commission paid or received as a result of the violation or violations in question. Each transaction shall be regarded as a separate offense and shall be punished as such.

Another key provision is Statute 324.117, which addresses advertising properties for sale.

The Kentucky Real Estate Commission (KREC) has also identified several vital legislative statutes that may be worth exploring. These include:

• 011 Definitions for 201 KAR Chapter 11
• 105 Advertising
• 121 Standards of Professional Conduct
• 170 Education provider requirements
• 190 Consumer and administrative complaints; discipline; administrative hearings
• 210 Licensing, education, and testing requirements
• 220 Errors and omissions insurance requirements

*For in-depth training on real estate investing, Real Estate Skills offers extensive courses to get you ready to make your first investment. Attend our FREE training and gain insider knowledge, expert strategies, and essential skills to make the most of every real estate opportunity that comes your way!

Do You Need A License To Wholesale Real Estate In Kentucky?

You don't need a license to wholesale real estate in Kentucky, but many people engaged in the practice decide to get licenses for various reasons.

Keep in mind that if you get a real estate license, you'll be operating under a somewhat different set of rules and regulations to remain compliant with state laws.

When you submit your application, you'll need to include a certificate of completion of the pre-license course, a copy of your high school diploma or a college transcript, proof of E & O insurance, and a license history if you've been an agent in other jurisdictions.

You must submit your completed application to the KREC within 60 days of passing both portions of your licensing exam. If you don't, then your exam results will be voided.

Also, national criminal history checks are valid only for 90 days. You must pass the exam and submit your application before the background check expires.

The initial sales associate license application fee is $130, which is paid when you submit your license application. Licenses are valid for two years, at which time they must be renewed.

Kentucky also has licensing reciprocity agreements with Florida, Ohio, Tennessee, and West Virginia. You'll need to review the reciprocity agreements to see if you qualify for licensing in Kentucky.

Another thing to consider is that Kentucky real estate licensees must also stay current with continuing and post-licensing education. All sales associates licensed after January 1, 2016, are required to complete 48 hours of post-license education (PLE) within the first two years of obtaining an active license.

In addition, all actively licensed agents must attend six hours of continuing education (CE) courses sponsored or approved by the KREC. Also, Kentucky requires a state-specific continuing education course (the Kentucky Core Course) to be completed by all active licensees as part of their continuing education every four years.

You can view the full licensing, education, and testing requirements by viewing Kentucky Real Estate Commission Statute 201 KAR 11:210.

Can You Wholesale In Louisville KY?

You can wholesale real estate in Louisville, and given the region's demographics and economic vitality, you should also be able to do quite well.

Remember that real estate laws apply throughout the state, and there are no local statutes on the books that appear to be related only to Louisville.

With a population in the greater metro area of about 600,000 people and 344,000 various types of housing units, this market is big enough to sustain quite a bit of wholesaling activity regardless of which strategy you decide to use.

If you're interested in wholesaling real estate in Louisville and are new to the industry or the city itself, you may want to do some online research. You can also think about connecting with what appears to be a vibrant and collegial group of people who already do wholesale deals in the area.

Read Also: The Pros & Cons Of Wholesaling Real Estate: An Investor's Guide

Final Thoughts

So, is wholesaling real estate legal in Kentucky? Absolutely! As long as you play by the rules and ensure you're not stepping into the shoes of a licensed agent, you can definitely engage in wholesaling here. Remember, it’s all about securing the contract and connecting buyers and sellers, not acting as a real estate agent. Now that you know wholesaling is on the up-and-up in Kentucky, why not jump on this opportunity? Enroll in Real Estate Skills' free training and start capitalizing on today’s market. It’s a great time to turn knowledge into action and profits!

*Disclosure: Real Estate Skills is not a law firm, and the information contained here does not constitute legal advice. You should consult with an attorney before making any legal conclusions. The information presented here is educational in nature. All investments involve risks, and the past performance of an investment, industry, sector, and/or market does not guarantee future returns or results. Investors are responsible for any investment decision they make. Such decisions should be based on an evaluation of their financial situation, investment objectives, risk tolerance, and liquidity needs