is wholesaling real estate legal in nevada

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

co-wholesaling legal real estate investing strategies reverse wholesaling wholesale real estate Apr 24, 2024

Wholesaling real estate in Nevada offers a promising opportunity for many aspiring entrepreneurs. Yet, potential wholesalers often hesitate, burdened by doubts regarding the legality of such activities within the state. Such caution is justified as the intricacies of real estate law are complex, particularly when it involves significant investments like property.

To dispel these doubts and bring clarity, this article delves into the question: "Is wholesaling real estate legal in Nevada?" By the conclusion of this discussion, readers will possess the necessary knowledge to make well-informed decisions regarding their real estate investment strategies in Nevada. Throughout this article, we will cover all you need to know about the legal aspects of wholesaling properties in Nevada, including:

*Before we begin our guide on whether wholesaling real estate is legal in Nevada, 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 Do You Need To Know About Wholesaling In Nevada?

Wholesaling properties in Nevada demands a comprehensive understanding of state-specific real estate regulations, including those governing contract assignments and double closings. Aspiring wholesalers must establish a robust network of real estate agents, investors, and potential buyers to effectively navigate the market. Additionally, deploying successful marketing tactics to identify distressed properties is essential for sourcing viable deals.

Nevada does not require a real estate license specifically for wholesaling. However, it is imperative that wholesalers in Nevada structure their transactions in a manner that does not mimic a practicing real estate brokerage without a license. Retaining knowledge of Nevada's legal intricacies and market dynamics is vital for anyone considering entering the wholesaling arena.

As we explore the landscape of real estate wholesaling in Nevada, it’s also crucial to recognize the role of key Real Estate Trade Organizations in the state, which can significantly influence your wholesaling strategy and success.

The Nevada Association of Realtors (NVAR) provides services to more than 18,000 licensed professionals throughout the state. It is a great place to spend some time familiarizing yourself with real estate conditions. Consequently, the NVAR is a great source for anyone asking the all-important question, "Is wholesaling real estate legal in Nevada?"

There are also a couple of local Realtor groups. Depending on where you want to wholesale real estate, these groups are good sources of information:

Visit the Nevada Real Estate Division (NRED) website for more information. This state agency protects the public by regulating real estate professionals through licensure, registration, education, and enforcement.

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

Yes, wholesaling real estate is legal in Nevada, but it requires careful navigation of local laws to remain compliant. Wholesalers primarily engage in the assignment of contract strategy, the state's most prevalent form of wholesaling. This method does not permit wholesalers to perform activities that typically require a real estate license, such as assisting homeowners in buying, selling, or marketing their properties.

Instead, wholesalers focus on acquiring the rights to purchase a property. They then earn a fee by transferring these rights to another buyer. This transfer is facilitated by the doctrine of equitable conversion, which allows the wholesaler to assign their contractual purchase rights. It is crucial for wholesalers to maintain complete transparency with all parties involved and to conduct their business ethically to foster trust and maintain legality.

In addition to the contract assignment, Nevada has other legal wholesaling strategies. One such method is double closing, where the wholesaler closes on the property and resells it to the end buyer in a back-to-back transaction. Another approach is "wholetaling," which blends wholesaling and retailing. In wholetaling, the wholesaler may purchase a property, perform minimal improvements, and then sell it at a near-retail price, typically to a buyer who plans to occupy the home.

While distinct in their steps and execution, each of these strategies remains within the legal framework of Nevada’s real estate regulations, provided it is carried out in accordance with legal and ethical standards.

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

What Are The Wholesaling Laws In Nevada?

Wholesaling real estate in Nevada is influenced by several specific laws and regulations that guide how transactions can be legally structured without requiring a real estate license. Here are some key legal considerations:

  • Chapter 645 Of The Nevada Revised Statutes
  • Anti-Fraud Statutes
  • Nevada Real Estate Licensing Laws
  • Disclosure Requirements
  • Equitable Interest & Equitable Conversion
  • Contract Law

Chapter 645 Of The Nevada Revised Statutes

Chapter 645 of the Nevada Revised Statutes governs all aspects of conduct, behaviors, and laws for Real Estate Brokers and Salespersons. If you engage in real estate wholesaling, you should familiarize yourself with the portions of this chapter that apply to your situation; this includes the section on Prohibited Acts and Penalties: Enforcement. In part, Section 645.990 reads:

A person who:

(a) Obtains or attempts to obtain a license pursuant to this chapter by means of intentional misrepresentation, deceit, or fraud; or

(b) Sells or attempts to sell in this State any interest in real property by means of intentional misrepresentation, deceit, or fraud, is guilty of a category D felony, and shall be punished as provided in NRS 193.130. In addition to any other penalty, the court shall order the person to pay restitution.

Anti-Fraud Statutes

Nevada has strong laws against deceptive trade practices. Wholesalers must avoid misrepresenting their intentions or the condition of the property. To comply with these statutes, all advertisements and communications should be straightforward and honest. You must be transparent and truthful in your dealings and disclosures. Fraud occurs when a seller or a wholesaler intentionally distorts a property’s true value; this can lead to criminal charges, including fines and prison.

Some schemes may involve straw purchasers, mortgage brokers, agents, or appraisers in illicit activities. Notaries who agree to forge documents may also be liable.

Fraud can take many forms, including:

  • Mail fraud is a federal crime that involves using the mail to send or receive documents related to an unlawful house-flipping transaction.
  • Wire fraud occurs when someone uses wire communications to send or receive information about an illegal property transaction; this is a Federal level crime.
  • Bank fraud occurs when someone intentionally defrauds a financial institution, such as when a bank is deceived regarding a property’s actual value; this is a Federal level crime.
  • Mortgage fraud also involves lying to a mortgage company about a property’s value, which is a state-level crime.

Nevada Real Estate Licensing Laws

Only licensed real estate agents can sell a property they don’t have an interest in and collect a commission.

According to the Nevada Revised Statutes (NRS), anyone engaging in the buying, selling, leasing, or managing of real estate for others must have a real estate license. Wholesalers need to be careful that they are selling the contract or their interest in the contract, not acting as a real estate agent for another party, to avoid needing a license.

According to NRS 645.235, the Nevada Real Estate Commission, which is overseen by the Nevada Real Estate Division (NRED), can impose an administrative fine against any person who knowingly: 

(a) Engages or offers to engage in any activity for which a license, permit, certificate or registration or any type of authorization is required pursuant to this chapter, or any regulation adopted pursuant thereto, if the person does not hold the required license, permit, certificate or registration or has not been given the required authorization; or

(b) Assists or offers to assist another person to commit a violation described in paragraph (a).

You might collect a fee if you engage in real estate transactions and assign a contract. This amount must be disclosed to all parties as part of the transaction process. When using a double closing or a buy-and-sell method, the wholesaler is not required to disclose how much profit they make when they flip a property to a final buyer.

The Nevada Real Estate Division (NRED) is also a good place to do extensive due diligence and familiarize yourself with the legal requirements related to real estate licensing and related laws, such as disclosures and compliance. Consequently, it's a great source for those asking, "Is wholesaling real estate legal in Nevada?"

If you have a real estate license, you must disclose that when you are a party to a real estate transaction.

Disclosure Requirements

Transparency is crucial in real estate transactions in Nevada. Wholesalers must ensure that all parties are fully aware of and agree to the terms and the wholesaler's role; this includes disclosing that they are not the ultimate buyer and are selling their right to purchase the property.

Equitable Interest & Equitable Conversion

Under these legal doctrines, once a contract is executed, the buyer (or wholesaler) holds an equitable interest in the property. This is what the wholesaler is actually selling—a piece of their rights under the contract—not the physical property itself.

Contract Law

As with any contract in Nevada, those used in wholesaling must meet general contract law requirements such as mutual assent, lawful object, and consideration. The terms must be clear enough so that all parties understand their rights and obligations.

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

In Nevada, wholesaling properties does not require a real estate license. However, it is crucial to understand the distinctions between conducting real estate transactions as a licensed agent versus as an unlicensed wholesaler.

As an unlicensed wholesaler, your activities are limited to marketing your equitable interest in a contract rather than the property itself; this means you can advertise the rights to assign the contract you hold, but you cannot market the actual property. In contrast, only licensed real estate agents or the property owners themselves are permitted to advertise the property for sale. This distinction is a common oversight among novice wholesalers.

Additionally, without a license, your compensation comes from collecting an assignment fee or profits generated from your involvement in the deal. On the other hand, licensed real estate agents have the opportunity to earn commissions from property transactions they facilitate, which can include both assignment fees and sales commissions.

Those employing strategies like double closing or buy-and-sell methods involve negotiating and concluding two independent transactions. This allows for greater negotiation leverage and potential profits without the requirement to disclose your earnings, thus ensuring greater financial privacy.

Whether to pursue a real estate license in Nevada depends on your professional goals and strategies in the real estate market. For those interested in exploring this route, further information can be obtained from the Nevada Real Estate Division, which outlines all requirements and guidelines for licensure.

Read Also: How To Become A Real Estate Agent In Nevada (5 Steps)

Wholesaling real estate in Nevada

Is Co-Wholesaling Real Estate Legal In Nevada?

Yes, co-wholesaling real estate is legal in Nevada. This practice involves forming partnerships with other individuals with similar real estate interests and goals. Co-wholesaling can be particularly beneficial for those new to wholesaling, as it allows them to leverage the expertise and resources of more experienced partners.

In a typical co-wholesaling arrangement, one partner may focus on identifying potential deals, such as properties that are approaching foreclosure. At the same time, the other may manage the financial aspects of the transactions. Partners may also bring specialized knowledge in areas like real estate law, escrow services, contract drafting, property rehabilitation, or managing REO properties, enhancing the partnership’s overall effectiveness.

To ensure the success and legality of such partnerships, it's crucial to choose a transparent, ethical, and trustworthy co-wholesaler. Establishing a formal co-wholesaling or joint venture agreement is highly recommended. Such agreements should be drafted with the assistance of a real estate attorney to clearly define each party’s responsibilities and protect all involved parties' interests. It’s important not to overlook the value of legal advice when setting up these agreements to avoid potential legal complications.

Is Reverse Wholesaling Real Estate Legal In Nevada?

Yes, reverse wholesaling is legal in Nevada. The main difference between reverse wholesaling and traditional wholesaling is the order of the steps you take in each method. With reverse wholesaling, you line up end buyers first and then find off-market properties in Nevada to put under an assignment contract or execute a double close or buy-and-sell strategy.

Reverse wholesaling gives wholesalers a more reliable exit strategy and is more favorable for forming long-term relationships with cash buyers who can assist with real estate investment cash flow. It’s not uncommon for a wholesaler and a buyer to execute several deals over time. Also, building long-term relationships with private money lenders and hard-money lenders streamlines processes, leading to more deals in a shorter timeframe.

As long as wholesalers comply with Nevada real estate laws, reverse wholesaling activities have no specific restrictions.

*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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Nevada Wholesale Contract

There are two primary documents you will use as a Nevada wholesaler. They are:

  1. Nevada Purchase Agreement and Earnest Money Receipt
  2. Assignment of Contract for the Purchase of Real Estate

A standardized purchase agreement will run several pages and require quite a bit of time to complete. If a Realtor is not involved in the transaction, either party can hire an attorney to complete a real estate contract or draft an alternative sales contract.

The purchase contract solidifies your agreement and secures your right to purchase or sell a property to another party. In general, contracts are assignable by default unless expressly prohibited within the language of the agreement.

An assignment contract transfers the rights and obligations of the buyer (“the assignor”) under a purchase agreement to another party (the assignee). Generally, the assignee is a cash buyer who ends up closing on the property and compensates the assignor for procuring the deal.

For more clarification, reference the 2013 Nevada Revised Statutes (NRS 104.2210).

wholesale real estate contract pdf

Is Wholesaling Real Estate Legal In Las Vegas?

Wholesaling real estate is legal in Las Vegas. In fact, Las Vegas is a dynamic market that is full of opportunities for flippers and wholesalers. Laws apply throughout the state, setting a uniform framework for how real estate transactions must be conducted, including those involving wholesalers.

If you decide to start a wholesaling business in Las Vegas, remember to do your homework to fully understand these laws and conduct a deep dive into market conditions, trends, pricing, and other factors that influence the Las Vegas market.

Final Thoughts

Is wholesaling real estate legal in Nevada? Yes, it is legal to wholesale properties in Nevada, as long as investors adhere strictly to state laws. Understanding these regulations opens the door to the real estate wholesaling market. Regardless of when you start, acquiring the right knowledge is key, ensuring that it’s never too late to begin your journey in real estate wholesaling in Nevada. Thankfully, there are a number of Nevada real estate schools online to choose from, including our very own Ultimate Investor Program.

*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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