How To Wholesale Real Estate In South Carolina: Step-By-Step (2024)

Wholesaling is a powerful real estate investing strategy that has gained popularity nationwide, and South Carolina is no exception. Understanding how to wholesale real estate in South Carolina is crucial for new investors looking to dive into this lucrative market. Those who can legally and ethically navigate the state's real estate market will have a significant edge over the competition.

This is particularly important with the latest amendment to the South Carolina Code of Laws by House Bill 4754, which changes how wholesaling will transpire moving forward. Knowing and adhering to these legal changes can set you apart as a knowledgeable and compliant investor.

To help you get started, we've developed this comprehensive guide to show you how to wholesale real estate South Carolina homeowners want to sell confidently and ethically. By following this guide, you'll be well-equipped to capitalize on the opportunities in the South Carolina market while staying on the right side of the law:

• What Is Wholesaling Real Estate?
• How To Wholesale Real Estate In South Carolina (9 Steps)
• Is Wholesaling Real Estate Legal In South Carolina?
• How Much Do Real Estate Wholesalers Make In South Carolina?
• Do You Need A License To Wholesale Real Estate In South Carolina?
• Is Wholesaling In South Carolina Easy?
• Final Thoughts On Wholesaling In South Carolina

When you are ready to take the information you've learned in this wholesaling guide and apply it to all the opportunities in today's South Carolina real estate market, enroll in Real Estate Skills' free training program. Our expert-led training will provide you with the skills, knowledge, and confidence you need to succeed in the competitive world of real estate wholesaling.

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*Before we begin our guide on wholesaling in South Carolina, 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!

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What Is Wholesaling Real Estate?

Wholesaling, with all its recent press and hype, is not a new strategy for real estate investors. Wholesale real estate refers to a short-term strategy or investment technique in which an individual or business entity enters into a contract to purchase a home. It is important to note that traditional wholesalers aren't buying the homes they work with; they are acquiring the right to buy them. They essentially enter into a contract with the homeowner, saying they have the sole right to buy the home.

However, instead of following through with the purchase, the wholesaler (using an assignment of contract) can assign their equitable interest in the home (and their right to buy it) to another buyer. This transfer is made possible thanks to the Doctrine of Equitable Conversion, a legal concept triggered when the contract is fully executed.

The transfer gives the new buyer the right to buy the home the wholesaler had under contract, always at a higher price. In fact, the difference between the price the wholesaler agreed to pay and what the new buyer is paying represents the fee the wholesalers stand to make for their services.

This particular wholesale method is legal in South Carolina for those investing in vacant land and commercial real estate. However, on May 29, 2024, House Bill 4754 (H4754) was enacted, introducing Article 9 to Chapter 57, Title 40 of the South Carolina Code of Laws.

This legislative update brings significant changes to the regulations governing real estate professionals in the state. Among the key amendments is Section 40-57-350, which explicitly prohibits real estate brokerage firms and their subagents from engaging in, representing others in, or assisting others with wholesaling activities. This new regulation aims to tighten control over wholesaling practices, ensuring compliance with updated state laws and protecting public interests in real estate transactions.

With the amendments explicitly stating "a real estate brokerage firm and its subagents are prohibited from engaging in, representing others in, or assisting others in the practice of wholesaling," many investors ask the same question: Is wholesaling real estate legal in South Carolina? The answer is yes, but those intent on wholesaling residential real estate must exercise a new approach, which we break down later.

Read Also: How To Start Wholesaling Real Estate For Beginners In 7 Steps

How To Wholesale Real Estate In South Carolina (9 Steps)

While there are numerous ways to go about wholesaling non-residential real estate, here’s our nine-step process to wholesale real estate South Carolina homeowners want to sell:

1. Partner With A Wholesale Mentor In South Carolina
2. Learn South Carolina Real Estate Wholesaling Laws & Contracts
3. Understand The South Carolina Real Estate Market
4. Build A Cash Buyers List
5. Find Motivated Sellers & Distressed Properties
6. Put Distressed Properties Under Contract
7. Assign The Contract To The Cash Buyer
8. Close Deal And Collect Assignment Fee
9. Double Close Or Wholetail When Necessary

Partner With A Wholesale Mentor In South Carolina

The first step to wholesaling real estate in South Carolina is enlisting the help of a mentor or teacher. A mentor guides and influences those who are new to real estate wholesaling. Wholesale real estate mentors offer valuable investment insights and lessons. A mentor is a smart way to help you avoid or minimize making the same mistakes the mentor made.

Most experienced real estate investors know, in hindsight, that choosing to be mentored at the beginning of their career is a wise career decision. The problem is that first-time wholesalers do not know what they do not know. In other words, new wholesalers do not have the experience or understanding to know how important a mentor can be when starting out.

When learning how to wholesale real estate in South Carolina, a wholesale mentor can provide new investors with the confidence and guidance to navigate South Carolina's real estate laws successfully and ethically, ensuring compliance and maximizing investment opportunities.

Learn South Carolina Real Estate Wholesaling Laws & Contracts

Understanding the rules that govern real estate activities, licensees, and related professions is the key to operating within South Carolina’s legal limits. Lawmakers in the state define real estate, for the purposes of licensing to be (§ 40-57-30 Definitions):

The South Carolina Real Estate Commission (SCREC) is the state agency responsible for regulating the following:

• Real Estate Brokers & Each Brokerage
• Salespersons
• Property Managers
• The Registration of Timeshare Projects
• Out-of-state land that is actively marketed to South Carolina consumers and residents.

Pursuant to South Carolina Code Ann. § 40-57-30(3), these are the various licensee classifications for South Carolina real estate licensees:

A "Broker" is defined as:

A South Carolina Broker may be considered a Broker-in-Charge:

Salespeople are known as “Associated Licensees” in South Carolina law:

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*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!

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Recent Legal Developments Regard Real Estate Wholesaling In South Carolina

Real estate wholesaling advertising in South Carolina has been under the oversight agency’s microscope.

At recent SCREC meetings, there have been numerous discussions regarding the growing real estate wholesaling trend – the marketing of equitable interest through contract assignments by a buyer who has signed an executed purchase agreement. A wholesaler is awarded equitable interest through the Doctrine of Equitable Conversion – a legal concept triggered when a seller and buyer execute a real estate contract. While equitable ownership belongs to the buyer, the legal ownership remains with the seller (or homeowner) until the title passes at a closing.

The South Carolina Real Estate Commission issued an interpretation of the state code as follows “…advertising of real property belonging to another with the expectation of compensation falls under the statutory definition of ‘broker’ as noted in S.C. Code Ann. § 40-57-30(3).“

South Carolina Real Estate Wholesalers Should Avoid Publicly Advertising The Subject Property

The South Carolina Real Estate Commission details in a recent official notice that any unlicensed individual publicly advertising real property equitable interest with an expectation of being compensated may find themselves on the receiving end of a SCREC-requested Cease and Desist Order.

This order can potentially prevent wholesalers from practicing as unlicensed real estate persons. To comply with South Carolina law, only the following may legally publicly advertise a property for sale:

• The legal owner of the subject property.
• A licensed representative who has a signed Listing Agreement with the person who holds a legal interest in the subject property.

Wholesalers can manage a real estate transaction without violating South Carolina law simply by avoiding any public advertisement. When managed appropriately, real estate wholesalers can work legally in South Carolina.

Is South Carolina An Attorney Close State?

South Carolina law considers the management or administration of a real estate closing as the practice of law. As such, closing in this state must be managed and supervised by a licensed South Carolina lawyer.

South Carolina Real Estate License Reciprocity

South Carolina licensees may be able to obtain a real estate license in other states if their experience and education meet the South Carolina Real Estate Commission’s requirements.

Residents who hold sales licenses from other jurisdictions and are South Carolina residents for a minimum of six months will have to take 30 hours of education (which is half of the required education), and brokers are required to complete 60 hours.

Note, however, that the South Carolina Real Estate Commission offers full license reciprocity for Georgia residents who have obtained and hold a valid, active Georgia real estate license.

House Bill 4754

On May 29, 2024, House Bill 4754 (H4754) was signed into law, introducing significant amendments to the South Carolina Code of Laws, specifically impacting real estate professionals. This bill adds Article 9 to Chapter 57, Title 40, updating the regulatory framework governing real estate practices in the state. One of the key amendments includes Section 40-57-350, which explicitly prohibits real estate brokerage firms and their subagents from engaging in, representing others in, or assisting others in the practice of wholesaling.

This new regulation aims to provide more structured oversight and ensure ethical practices within the real estate industry, addressing concerns related to wholesale real estate South Carolina activities. By clarifying and tightening these regulations, House Bill 4754 seeks to protect both buyers and sellers, promoting a more transparent and fair real estate market in South Carolina.

Understand The South Carolina Real Estate Market

The next crucial step in learning how to wholesale real estate in South Carolina involves gaining a deep understanding of the local real estate market. To be successful, investors must familiarize themselves with key metrics and indicators that can guide their decisions and strategies.

Firstly, property prices are fundamental. Knowing the median home prices in various neighborhoods helps investors identify areas with potential for profitable deals. Resources like Zillow and local MLS listings can provide up-to-date data on property values.

Secondly, keep an eye on market trends. This includes tracking whether the market is in a period of growth, stability, or decline. Understanding market cycles can help in timing purchases and sales effectively. Reports from the South Carolina Association of Realtors and other real estate market analyses can be valuable sources of this information.

Days on Market (DOM) is another critical indicator. This metric shows how long properties typically stay on the market before being sold. A lower DOM indicates a hot market, which could mean higher competition but also quicker sales. Conversely, a higher DOM may indicate a buyer’s market, offering more opportunities to negotiate better deals.

Inventory levels are also important. Knowing the number of available properties can help investors understand the supply-demand dynamics. A low inventory suggests a seller’s market, whereas a high inventory indicates a buyer’s market.

Additionally, understanding rental yields and vacancy rates can be beneficial, especially if the plan is to wholesale properties to buy-and-hold investors. High rental yields and low vacancy rates typically make for attractive investment areas.

Local economic indicators such as employment rates, population growth, and new business developments can also provide insights into market health and future growth potential. Strong economic indicators often lead to a more robust real estate market.

Lastly, keeping abreast of legislative changes is vital. The recent House Bill 4754, for example, introduced new regulations impacting wholesaling practices in South Carolina. Staying informed about such changes ensures compliance and helps in adapting strategies accordingly.

By understanding these metrics and indicators, investors can make informed decisions, maximize their returns, and successfully navigate the South Carolina wholesale real estate market.

Build A Cash Buyers List

One of the most important aspects of wholesaling houses or real estate is having a viable list of cash buyers. In the real estate wholesale business, the buyer is usually a professional who specializes in flipping houses and plans to renovate and update the subject property. A wholesaler’s buyer’s goal is to sell or rent the updated and repaired property to a retail customer, not another real estate professional.

Consider these strategies when starting (and maintaining) your cash buyers list:

• Social media options like Craigslist or Facebook
• Strategically located Bandit Signs
• REIA meetings and/or podcasts
• Real estate meetups
• Check with property managers or local real estate lawyers.

Building a cash buyers list is essential for wholesaling real estate in South Carolina, but maintaining it and nurturing the relationships it creates is crucial for scaling your business. Regularly update your list, keep in touch with your buyers, and understand their evolving needs and preferences. Strong relationships with cash buyers ensure a steady flow of transactions and foster trust, making it easier to close deals quickly and efficiently. This ongoing effort to maintain and strengthen connections with your buyers will set the foundation for long-term success and growth in your wholesaling business.

Read Also: How To Find Off-Market Properties In South Carolina: The 3 Best Sources

Find Motivated Sellers & Distressed Properties

Real estate wholesalers must look for motivated sellers and distressed properties. These tend to be selling lower than their true market value. Motivated sellers who are willing to let their property go for less than its market value (which can be an owner-occupied unit or rental property) are generally highly motivated by one many potential reasons –

• Financial pressures are brought on by many different causes, like medical emergencies.
• An inherited property that is in disrepair and in need of updating and TLC.
• Other personal reasons that are unrelated to finances or the property’s condition, to name a few.

Wholesalers should look for both on and off-market properties. For example, consider researching expired listings (from MLS) to get a feel for what is selling and the strength of the overall marketplace.

Online websites like Redfin, Zillow, and Realtor, along with paid software like PropStream and Privy, have tremendous amounts of information available to any investor who is willing to do the work and research.

And remember to consider using more traditional (and less digital) methods. Many wholesalers have made a career using properties found on REO (Real Estate Owned) lists or a lending institution’s foreclosure list.

Read Also: Finding Motivated Seller Leads: Free & Paid Tactics

Put Distressed Properties Under Contract

The next step is to put the property under contract. The bare basics of the wholesale real estate business are that it is a short-term investment strategy. Like all investments, metrics should be employed to determine the quality of a potential investment. This analysis should be done BEFORE executing a legally enforceable real estate contract.

Real estate investors, like wholesalers and flippers, often apply two systems of measurement to determine the investment quality of a property:

• Pay No More Than 70% of the ARV (70% Rule): The ARV refers to the After Repair Value, which is an estimate of the market value after it undergoes planned updates. The ARV is an important component in determining the valuation of a potential investment.
• The Maximum Allowable Offer (MAO): The maximum allowable offer is what a wholesaler can expect from a typical cash buyer. The MAO reflects costs and repair expenses required to renovate a property to a turnkey status. If there are repairs required, the MAO will always be less than the projected After Repair Value.

The following example should help clarify how to apply these real estate metrics:

A wholesaler is presented with a five-unit rental property that could be bought for $200,000. The wholesaler recognizes that the sales price is below market value. A cursory review estimates that the cost to renovate the property would be about $50,000.

The wholesaler anticipates this property’s After Repair Value to be $400,000.

Given the above transactional facts, how would a South Carolina investor analyze this particular transaction?

First, the real estate wholesaler must determine the property’s Maximum Allowable Offer – or the highest price a wholesale buyer would be willing to pay. This is calculated below.

Begin by calculating 70% of the After Repair Value.

$400,000 * .7 = $280,000

Next, calculate the Maximum Allowable Offer. This is done by subtracting the expected expenses of $50,000 from $280,000. The Maximum Allowable Offer for the above-noted transaction would be $230,000. [$280,000 - $50,000].

As a result, a real estate wholesaler with this South Carolina transaction could expect to earn upwards of $30,000. [$230,000 (MAO) - $200,000 (the wholesaler’s original purchase price)]

Read Also: Estimating Rehab Costs: A 5-Step Guide For Real Estate Investors

Assign The Contract To The Cash Buyer

A real estate wholesaler in South Carolina has the option of assigning the contract to a new cash buyer before the first contract even reaches the closing table. Most South Carolina wholesalers prefer to assign their equitable rights to their alternate buyers before the first closing because it is the most cost-effective closing strategy.

As a word of caution, recent SCREC meetings resulted in the commission issuing a written interpretation that does not allow wholesalers to publicly advertise the subject property if they issue an assignment of contract in which they profit.

However, the above-noted interpretation has no bearing on a wholesale houses where the public advertisement has not been used to complete any of these wholesale real estate deals and transactions.

Read Also: Wholesale Real Estate Contracts: Download FREE PDF Templates

Close Deal And Collect Assignment Fee

Closing a wholesale real estate deal in South Carolina involves a series of crucial steps to ensure a smooth transaction and collection of your assignment fee. Once you've secured a buyer for your contract, it's time to finalize the deal. Start by working closely with a reliable title company or real estate attorney to manage the closing process. They will handle the necessary paperwork, conduct a title search, and ensure there are no liens or issues with the property.

Next, you must arrange a closing date that suits all parties involved. On this date, the buyer will bring the funds needed to purchase the property. As the wholesaler, you will facilitate the transfer of the contract from you to the end buyer. The title company or attorney will oversee this process to ensure all legal requirements are met.

Once the buyer funds the transaction, the title company will disburse the funds according to the closing statement. This includes paying off any existing liens, covering closing costs, and issuing your assignment fee. The assignment fee is the difference between the contract price you agreed on with the seller and the price the buyer is willing to pay.

Double Close Or Wholetail When Necessary

There are times during South Carolina wholesale deals when you may decide to perform a Double Closing as your exit strategy. In this wholesale houses method, the wholesaler closes the first deal (where they are the buyer) and actually becomes the property’s legal owner—if only temporarily.

The second closing is when the wholesaler becomes the seller, and their alternate buyer takes the title as the legal owner of the property. The difference in the two sales prices would be considered the wholesaler’s gross profit.

For some real estate investors, the Double Close exit strategy is often preferred because a wholesaler, when selling as a legal owner, meets the defined license exemption. In addition, this method allows the wholesaler to avoid disclosing their profit upfront to either the original seller or the new buyer.

But note that the Double Closing exit strategy typically requires the wholesaler to have the capital required to fund the first property and pay two sets of closing costs (including title insurance, state stamp tax, etc.), even if they take title only temporarily. For those who need to borrow this capital, there are hard money lenders and transactional funding providers with programs to meet this need.

Wholetailing is also another wholesaling method which is a combination of a fix and flip and a standard wholesale deal.

Wholetailing is often a desirable exit strategy because you can access a larger pool of buyers who generally use financing and are less sensitive to pricing than cash buyers. When using this strategy, you’ll take ownership of the property, do some light repairs, and then re-list the property shortly thereafter on the market.

Is Wholesaling Real Estate Legal In South Carolina?

Wholesaling real estate in South Carolina is legal as long as investors comply with the state’s specific regulations governing real estate transactions. South Carolina's wholesale real estate laws are continuously evolving, enabling the South Carolina Real Estate Commission to oversee the real estate sector and safeguard public interests. A recent example of these changes is the enactment of House Bill 4754.

Signed into law on May 29, 2024, House Bill 4754 introduces Article 9 to Chapter 57, Title 40 of the South Carolina Code of Laws, which updates the regulatory framework for real estate professionals. The amendments, particularly Section 40-57-350, explicitly state that “a real estate brokerage firm and its subagents are prohibited from engaging in, representing others in, or assisting others in the practice of wholesaling.”

This has led to some confusion among real estate investors regarding the legality of wholesaling. To clarify, wholesaling real estate in South Carolina remains legal despite the new law. However, the approach to wholesaling has changed due to the revised definition of wholesaling in the South Carolina Code of Laws.

According to Section 40-57-30, “Wholesaling” involves having a contractual interest in purchasing residential real estate and marketing it for sale before taking legal ownership. Advertising or marketing real estate owned by another for compensation now requires a broker's license. Importantly, assigning or offering to assign a contractual right to purchase residential real estate is not prohibited under this definition.

Therefore, while marketing a contract or property requires licensure, assigning contracts remains legal. Moreover, the new law only restricts the wholesaling of residential real estate, defined as property used primarily for personal, family, or household purposes and improved by one to four dwelling units. This means traditional contract assignment is still viable for wholesaling vacant land or commercial properties with more than four units in South Carolina.

How Can I Legally Wholesale Residential Real Estate In South Carolina?

Instead of trying to assign contracts, you can team up with buyers who are actively looking for properties before you even start searching. This isn’t just a casual agreement; it’s a formal partnership where you’re hired to find homes for the buyer. Think of it as providing a specialized service instead of selling property rights. This makes the whole process smoother and keeps you compliant with South Carolina’s real estate laws.

Your role will be to use your market knowledge to find the best deals for your partner. You’re not marketing the property itself; you’re promoting your service of finding these deals. The buyer then pays you a fee, which can be a flat rate or a percentage of the property’s price. This benefits both parties and ensures you’re following the new regulations.

Another method is using a bond for title or installment contract. This way, you gain equitable interest in a property with a minimal initial investment, staying within legal boundaries. You make an initial installment, get equitable interest, and then market the property to potential buyers. When you find a buyer, you can do a double closing and profit from the difference.

While this method works, it can get complicated with existing mortgages or title issues. That’s why we suggest partnering with buyers to find properties for them, avoiding these potential pitfalls and ensuring smoother transactions.

The new laws are designed to protect buyers and sellers from shady practices, and we fully support this. Protecting both sides is crucial. Our updated strategies help investors stay compliant while protecting homeowners, ensuring everyone operates ethically and effectively in South Carolina’s real estate market.

Do You Need A License To Wholesale Real Estate In South Carolina?

No. Real estate wholesalers can operate legally in South Carolina if they remain within the state’s defined legal limits.

However, given the recent developments and focus on wholesaling by the SCREC, South Carolina wholesalers should stay current with relevant laws and regulations and avoid even the appearance of impropriety by:

• Acting with integrity.
• Managing the seller’s and cash buyer’s expectations.
• Being transparent for each party to the transaction.

Is Wholesaling In South Carolina Easy?

Wholesale real estate in South Carolina is a relatively easy exit strategy compared to other strategies, such as flipping and owning rental properties. Wholesaling provides real estate investors with a viable entrance ramp into what is often an untouchable marketplace by requiring minimal capital. Most importantly, wholesale real estate is a short-term strategy that reduces risk by shortening the time you hold the investment.

While some hot-shot entrepreneurial types may want to go it alone, many real estate wholesalers seek guidance from more experienced South Carolina investment professionals. These seasoned wholesaling veterans can help new wholesalers avoid avoidable rookie mistakes. Professional investors offer affordable and easy access to mentorship and wholesale courses that are available online.

The best-in-class program for wholesaling real estate nationwide is the Pro Wholesaler VIP Program by Real Estate Skills. It’s designed for the modern entrepreneur who is looking to implement the most effective real estate strategies working today, along with joining a community of hundreds of active wholesalers and mentors.

Final Thoughts On Wholesaling In South Carolina

Understanding how to wholesale real estate in South Carolina requires careful adherence to the new regulations introduced by House Bill 4754. By forming legal partnerships with buyers or using installment contracts, you can navigate these changes effectively and ethically. Staying compliant with these laws ensures a smoother and more successful wholesaling process. Always prioritize ethical practices and keep up with any legislative updates to maintain a thriving real estate business in South Carolina.

Ready to translate the skills you've learned in this article into real-world success? Enroll in Real Estate Skills' free training program today! Our expert training will equip you with the knowledge and confidence to capitalize on the vast opportunities in the South Carolina real estate market. Don’t miss out—sign up now and take the first step towards your real estate investing success!

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*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.