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is wholesaling real estate legal in Iowa

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

legal real estate investing strategies wholesale real estate wholesaling real estate May 03, 2024

Curious minds in the real estate industry often ponder the legality of wholesaling in various states. Today, our focus shifts to Iowa as we explore the burning question: Is wholesaling real estate legal in Iowa? But before we dive into the legal nitty-gritty, let's take a moment to acknowledge the significance of investing in real estate wholesaling.

Investing in real estate wholesaling is like having a backstage pass to the lucrative world of property transactions. It's a strategic approach where investors act as intermediaries, connecting motivated sellers with eager buyers. This method requires minimal capital and offers the potential for substantial profits without the hassles of property ownership or extensive renovations.

Understanding the legal landscape is paramount for any investor looking to enter the Hawkeye State's real estate market. So, let's explore Iowa's legal framework, providing you with a comprehensive 2024 guide to navigate the realm of real estate wholesaling with confidence, starting with the following:


*Before we begin our guide on whether wholesaling real estate is legal in Iowa, 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 real estate investing technique in which real estate investors begin by entering into a legally enforceable contract of sale to buy real property (rental property, investment property, or otherwise). The rights awarded by the executed contract (through the Doctrine of Equitable Conversion) are then sold to another buyer (often called an end buyer or a cash buyer).

The Doctrine of Equitable Conversion legally determines how a property’s ‘equitable title’ is modified when a contract is fully executed. When executed, the buyer receives equitable interest in the property. In contrast, the seller’s interests now convert to personal property, with a primary function to act as security until closing.

When a purchase agreement is fully executed, the property’s ownership hits a gray legal area. At this time, the ownership of the property is shared among the seller and the buyer in accordance with the rules dictated by the Principe of Equitable Conversion/Interest.

Two events on the transaction’s timeline define the time in which the property’s ownership/equity is spread among two owners:

  • The First Event: The agreement for an owner-occupied or rental property is fully executed, generally requiring an earnest money deposit.
  • The Second Event: The closing when the delivery of the deed & marketable title is transferred to the buyer from the seller.

During the time defined by these two events, the seller maintains possession (and use) of the subject property, for which a buyer has a contractual right to receive it later, according to the terms of the purchase agreement.

As such, during this time, the real property’s ownership is said to be divvied as follows – the legal ownership belongs to the seller (acting as a security interest), while the equitable ownership belongs to the buyer named in the contract.

The ultimate objective for real estate wholesalers and flippers in Iowa is quite similar - find a property for sale (among the many real estate deals) priced beneath the property market value. The reduced sales price likely results from financially challenged owners with strong motivations to sell. When a property has been located, the next step for a real estate wholesaler is to find another buyer (often known as end buyers or cash buyers) interested in purchasing the wholesaler’s right to purchase the subject property – which is accomplished by the use of the legal instrument known as the assignment of contract.

Real estate wholesaling offers a manageable and viable way to enter the real estate investment market without needing a massive capital influx. Real estate wholesaling is also a great way to build a network of potential and consistent cash flow streams, end buyer or cash buyers list, colleagues, and lenders or companies offering special financing.


*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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What Do You Need To Know About Wholesaling Houses In Iowa?

When exploring the wholesaling houses market in Iowa, it’s essential to arm yourself with a thorough understanding of the relevant practices and regulations. Key to this is understanding Iowa's real estate laws to ensure all your dealings are above board. Additionally, it’s crucial to have a strong grasp of the local market dynamics, such as pricing trends and buyer behavior, to identify profitable opportunities effectively.

A fundamental question that arises is, "Is wholesaling real estate legal in Iowa?" Yes, wholesaling is legal in Iowa. However, it is important for wholesalers to operate within the legal framework, particularly ensuring they do not engage in activities that would require a real estate license unless they possess one. Knowing the legal boundaries and adhering to them allows wholesalers to conduct their business without inadvertently engaging in licensed activities. This legal grounding, combined with strategic market insights and effective exit strategies, prepares you to navigate the Iowa real estate market successfully.

One of the best places to gather information to answer the question, "Is wholesaling real estate legal in Iowa?" is the state's real estate trade organization. The following represents the larger real estate trade and professional organizations in Iowa. Each of these real estate associations noted below is a member of the National Association of Realtors (NAR):

  • The Iowa Association of Realtors (IAR): IAR is the state’s leading vocal advocate and resource for real estate professionals and property owners throughout Hawkeye. In addition to academic and legal defense help, the IAR provides its nearly 8,000 members with valuable discounts and member savings.
  • The Des Moines Area Association of Realtors (DMAAR): /strong>The DMAAR was developed to empower real estate professionals to serve the communities in and around the greater Des Moines area. Its membership exceeds 2,500, including licensees and other affiliate/ancillary support members in the appraisal trade.
  • The Cedar Rapids Area Association of Realtors (CRAA): The CRAA was established in 1917 to better serve the greater Cedar Rapids real estate communities. With more than 1,100 members, the CRAA actively supports licensees, property owners, and their rights.
  • The Northwest (NW) Iowa Regional Board of Realtors (NWIA): The Northwest Iowa Regional Board of REALTORS has been the vocal advocate for thirteen counties in Iowa’s northwest region. The NWIA has more than 500 members of real estate professionals who receive support, resources, and professional development opportunities across various relevant real estate topics.
  • The Iowa City Area Association of Realtors (ICAAR): Chartered in 1941, the Iowa City Area Association of REALTORS serves the real estate community and property owners within the greater Iowa City area and its surrounding communities. The ICAAR has more than 450 professional and affiliate members, offering educational, networking, advocacy, and community outreach programs and resources.

The Iowa Real Estate Commission (IREC) is the state agency authorized (by IAC Chapter 193E) to manage real estate in Iowa – from licensees, brokerages, and legal matters. Its purpose is to protect the public through the examination, licensing, and regulation of real estate brokers, salespersons, and firms pursuant to Iowa Code Chapter 543B, real estate brokers, and salespersons; to administer Iowa Code Chapter 543C, Sales of subdivided land outside of Iowa; and to administer Iowa Code Chapter 557A, Time-Shares.

Iowa’s relevant real estate laws are found in these chapters:

The Iowa Professional Licensing Bureau issues real estate salesperson and broker licenses in accordance with the defined real estate licensing criteria. Each Iowa real estate agent must comply with Iowa law.

Iowa’s Professional Licensing Bureau – License Reciprocity

Iowa Administrative Code 193E § 5.3

According to Iowa’s Professional Licensing Bureau (PLB), an applicant for an Iowa real estate license may be allowed to sit for the portion of the real estate exam related to Iowa law/real estate ONLY, depending on the jurisdiction that issued their current real estate license. Note that Iowa’s reciprocity does not apply to those situations where the individual has moved to Iowa. IAC Rule 5.3 applies to applicants who are a real estate licensee (salesperson or broker) in jurisdiction that do not have reciprocity agreements with Iowa.

The process is straightforward; applicants must submit a written request (among other essential items, like a criminal history) and evidence of current licensing to the state agency. However, to meet Rule 5.3’s mandated criteria, the licensee’s current real estate license must not have expired (or been inactive) for 6+ months immediately preceding the date on which a candidate passes the Iowa portion of the real estate exam. Additional information regarding these processes is available online.

Also, those holding real estate licenses from New York, California, Florida, Wisconsin, and West Virginia will be required to take the national and state portions of Iowa’s real estate examination because these states do not use the Arello Examination Accreditation Program.

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

wholesale real estate contract pdf

Yes, wholesaling real estate in Iowa is legal if a real estate wholesaler navigates the real estate wholesale deal and stays within Iowa’s legal boundaries, as this avoids the potential to violate Iowa real estate and license law.

Real estate wholesaling, although new to many younger property investors, is a tried-and-true investment approach. However, its recent popularity has reached new heights, which has also caused industry members and licensees to voice their concerns regarding wholesaling as an investment option. Opponents argue that the actions of a wholesale transaction mimic those that require a real estate license in Iowa.

However, these arguments are based upon a fundamental fallacy. The argument lacks merit because it assumes real estate wholesalers are selling the property when, in fact, wholesalers are selling their right to purchase the property, awarded by the Principle of Equitable conversion.

Real estate wholesaling is legal in Iowa. Wholesalers act as a middleman, a well-defined role found across sectors in any free and open market or economy. However, wholesalers must remain well-versed in Iowa’s regulations to ensure their business decisions are within Iowa’s legal limits.

Most real estate contracts are assignable (by default) unless the purchase contract states otherwise within the contract’s language. An assignment of contract is the legal instrument Iowa wholesalers use to transfer a wholesaler’s right to purchase real property defined in the written contract.

An Iowa real estate wholesaler can only sell one thing legally – the rights/obligations defined by the fully executed contract to purchase.

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

What Are The Wholesaling Laws In Iowa?

Iowa's real estate law does not mention the concept of 'wholesaling' real estate. Various meanings are often attributed to the concept, depending upon the individual describing the act of real estate wholesaling.

To wholesale properties in Iowa, one’s actions must not rise to the level that requires a real estate license as delineated in Iowa state law. According to Iowa Code (IC) Chapter 543B.1 – A person shall not, directly or indirectly, with the intention or upon the promise of receiving any valuable consideration, offer, attempt, agree to perform any single act as a real estate broker whether as a part of a transaction or as an entire transaction or represent oneself as a real estate broker, broker associate or salesperson, without first obtaining a license and otherwise complying with the requirements of this chapter.

Additionally, Iowa Code 543B.3 states that actions that define an Iowa real estate broker include selling, exchanging, purchasing, renting, or leasing real estate.

Those actions which define a real estate transaction are described in IC 543B.6, which states that a person who, for another, in consideration of compensation, by fee, commission, salary, or otherwise, or with the intention or in the expectation or upon the promise of receiving or collecting a fee, does, offers or attempts or agrees to do, engages in or offers or attempts or agrees to engage in, either directly or indirectly, any single act or transaction contained in the definition of real estate broker.

Furthermore, for this Iowa Chapter of law, real estate is defined as real property wherever situated, and it includes any and all leaseholds or any other interest or estate in land and business opportunities that involve any interest in real property.

To wholesale real estate in Iowa, an investor/wholesaler must proactively avoid acting in a manner that would require a real estate license as delineated in the selected legal provisions noted above.

Iowa Real Estate Licensing Exclusions

However, if you plan wholesaling real estate in Iowa, it is equally important to understand those instances when a real estate license is not required by Iowa law. The first four exclusions, as noted in IC 543B.7 Exclusions 1 to 4, are any person or prospective purchaser who does not make repeated and successive transactions of a like character; any person acting as attorney in fact under duly executed and acknowledged power of attorney from the owner; a licensed attorney, a person acting as a receiver, trustee in bankruptcy, administrator, executor, guardian or while acting court order or under authority of a deed of trust, trust agreement, or will.

Note, Item #1 above advises explicitly that owners of real property are exempt from licensing requirements ONLY if their actions are not seen as a pattern of “repeated and successive transactions of a like character.

Given the specifics of the written law, real estate wholesalers should tread carefully to avoid overstepping Iowa’s real estate boundaries.

IC 543B.7 (Item #5) continues with specifics regarding the actions and choices of auctioneers selling real estate in Iowa. Iowa law also provides additional exclusions with regard to real estate licenses such as an isolated real estate rental transaction by an owner's representative on behalf of the owner, the sale of time share, or a person acting as a resident manager.

The Double Close

The most direct way to steer clear of legal issues when wholesaling is to do a double closing. A double closing, as its name implies, includes two separate closings –

  • The first closing is to transfer ownership as defined by the terms in the first contract, in which the wholesaler is the buyer.
  • The second closing involves transferring ownership from the owner (who is the wholesaler) to another buyer—actions that fall well within license law.

Read Also: Wholesaling Lease Options - The (Ultimate) Guide

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

No, wholesalers in Iowa are not required to hold a real estate license if their actions do not violate Iowa’s real estate and license laws.

However, the following suggestions will help a real estate wholesaler avoid legal issues by:

  • Remaining transparent throughout the transaction. This is best achieved by ensuring the purchase agreement is clear and straightforward.
  • Proactively managing the expectations of all parties to the contract.
  • Acting with integrity.
  • Not marketing/selling the real property, market/sell your right to purchase real property as defined by the executed contract.
  • Consulting a lawyer or attorney to ensure you are protected to the fullest extent of the law.

Iowa does NOT require that a real estate transaction be managed/handled by a legal professional, making it an escrow state rather than an attorney-close state.

In Iowa, real estate activity and license laws can be found in these statutes –

  • Iowa Code Chapter 543B – Real Estate Brokers & Salesperson
  • Iowa Code Chapter 558A – Real Estate Disclosures
  • Iowa Code Chapter 543C – Sales of Subdivided Land Outside Iowa
  • Iowa Code Chapter 557A – Iowa’s Time-Shares Act

Wholesaling real estate in Iowa

Final Thoughts

Addressing the key question, "Is wholesaling real estate legal in Iowa?"—yes, it is indeed legal. However, it is crucial for unlicensed wholesalers to strictly avoid any activities that would require a real estate license, such as actively helping homeowners buy, sell, or market their property. Instead, the role of a wholesaler in Iowa is to legally acquire the rights to purchase a home and then transfer these rights to an end buyer for a fee, all within the confines of the law.

Now that you are aware that wholesaling is a legally sanctioned activity in Iowa, why not leverage this opportunity to enhance your investment strategy? Consider enrolling in Real Estate Skills' free training. This training can provide you with the necessary tools and knowledge to navigate the wholesaling landscape in Iowa effectively and capitalize on the current market opportunities.


*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


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