Is Wholesaling Real Estate Legal In North Carolina?

Real estate wholesaling has recently received much media attention as an investment vehicle because the nature of the investment strategy has made it one of the most popular investment strategies in the current appreciating real estate market. Ironically, wholesaling real estate is nothing new, with the principles of wholesaling present in every sector of a capitalistic economy.

The real estate wholesaling business resembles the fix and flip strategy. The primary difference is that a wholesaler generally does not rehab or update the property as their objective is to close as quickly as possible. A reduced purchase price (generally below market value) is desired, with financially challenged sellers often looking to move quickly. It is noted that the type of property is not relevant as wholesaling can be done with rental property, an owner-occupied property, or investment property.

A wholesale deal in North Carolina offers real estate investors distinct benefits, as follows -

• Real estate wholesaling offers newer investors the opportunity to hone their investment skills & develop strategies while learning the business from the inside out. Real estate wholesalers should aim to build a buyers list of potential buyers, other types of end buyers, plus a network of lenders and other industry-related professionals.
• Wholesale properties, compared to other real estate investments, have minimal requirements in terms of capital. But note, a wholesaler typically provides an earnest money deposit as an act of good faith (a small percentage of the purchase price) – held in escrow until the closing.
• Wholesaling houses offers real estate investors a few exit strategies techniques, including an assignment of contract or the double closing strategy.

Much of the real estate wholesaling uproar emanates from the real estate community, with vocal opponents asserting that wholesalers are violating license law by selling real estate without a license as required by North Carolina law. 

Property investors, acting as real estate wholesalers, simply seek to buy low and sell high. Wholesalers who have entered into an executed purchase contract that is legally enforceable are awarded the fundamental rights under the Principle of Equitable Conversion. 

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This legal principle redefines the ownership of interest in the property when an executed contract for the sale of the subject property has yet to close. Between the time the contract is executed by the buyer and seller – and the closing – the Principle of Equitable Conversion states that –

• The buyer has a beneficial interest without holding legal title.
• The seller’s legal title is used as collateral to ensure the sale closes according to the contract’s terms.

The rights to the purchase agreement in North Carolina can be transferred to a new buyer, another end buyer, using the legal instrument known as an assignment of contract. The difference between each purchase price is considered the real estate wholesaler’s assignment fee.

Real estate wholesale opportunities can be found traditionally as well as in the digital landscape. If you are new, consider attending foreclosure auctions or researching recent divorce decrees. Another source to find properties primed for wholesaling is Redfin, Zillow, Craigslist, or the liquidation of an estate, bankruptcy, to name a few.

• What Do You Need To Know About Wholesaling Houses In North Carolina?
• Is Wholesaling Real Estate Legal In North Carolina?
• What Are The Wholesaling Laws In North Carolina?
• Do You Need A License To Wholesale Real Estate In North Carolina?
• Wholesale Real Estate Contract North Carolina
• Final Thoughts

What Do You Need To Know About Wholesaling Houses In North Carolina?

North Carolina, also known as the Tar Heel State, was the 12^th state (and one of the 13 original colonies) admitted to the union – in 1789. The state’s total area covers nearly 54,000 square miles, of which approximately 10% is water.

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North Carolina’s terrain is diverse, with higher elevations in the west, descending to the east to meet the Atlantic Ocean. Mt Mitchell in the Appalachian Mountains, with an elevation of 6,684 feet above sea level, is not only North Carolina’s highest elevation; it is the highest point east of the Mississippi River in North America.

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North Carolina is recognized among the ten most populous states in the nation, with more than 10,700,000 residents as of 2021 –

The top ten largest cities in North Carolina are as follows –

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The state capital is Raleigh, the second-largest city – only the city of Charlotte is larger.

These are the larger trade and professional organizations in the state dedicated to the real estate profession. Each of these associations is a member of the National Association of REALTORS (NAR) –

• The North Carolina Association of REALTORS (NCAR)

Established in the 1930s, the NCAR now serves more than 53,000 professional real estate members; supported by 45 local real estate boards within North Carolina. The state of North Carolina, to divide the boundaries of the state’s real estate boards, is divided into ten regions, as follows -

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• The Canopy REALTORS Association (CRA - Charlotte)

The Canopy REALTORS Association is the rebranded name of the original Charlotte Regional REALTORS association. The change occurred in August 2019. The Canopy REALTORS offers a variety of services to its members and the greater Charlotte community, including a housing foundation and a real estate institute. The CRA’s mission is to advocate for homeownership opportunities.

• The Raleigh Regional Association of REALTORS (RRAR)

The RRAR is recognized as one of North Carolina’s largest associations in the Tar Heel state, serving more than 9,000 members of the real estate community of Raleigh and surrounding neighborhoods. The Raleigh Regional Association of REALTORS was established nearly a century ago to help community residents reach the American dream of homeownership.

• The Land of the Sky Association of REALTORS (LOTSAR)

Located in Asheville, the LOTSAR is a non-profit organization established in 1917 and managed by members. The Land of the Sky Association of REALTORS is a professional organization that now serves nearly 2,000 professional members, resulting from the Brevard and the Asheville Board of REALTORS merger.

• The Greensboro Regional REALTORS Association (GRRA)

Founded in 1920, the GRRA recently celebrated its centennial anniversary, serving the Greensboro community and surrounding areas for the past 100 years. The Greensboro Regional REALTORS Association represents more than 500 professional members in the markets of Greater Greensboro, Rockingham, and Randolph counties.

The North Carolina Real Estate Commission (NCREC)

The North Carolina Real Estate Commission, located in Raleigh, is tasked with the responsibility of ensuring the public is protected from licensees who have violated license law. As an independent government agency in North Carolina, the NCREC administers and enforces the license law for the state’s real estate activities. There are more than 100,000 real estate agents and brokers licensed in the Tar Heel State.

However, the Real Estate Commission is not authorized to provide legal advice other than answering inquiries regarding the state’s license law.

Since 2006, the NCREC began issuing real estate broker licenses exclusively. The North Carolina Real Estate Commission granted licenses as real estate salespeople and real estate brokers before that.

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According to North Carolina §93A Real Estate License Law, Section 2 (a) definitions, a real estate broker is defined as follows –

Brokers in North Carolina are issued a license as a ‘broker-in-charge (BIC)’ or a ‘provision broker.’ These are defined below –

All real estate licenses expire in North Carolina on June 30, following the date of issuance unless they are renewed by June 30.

It is noted that the following situations do NOT require a real estate license in North Carolina –

North Carolina Real Estate License Reciprocity

North Carolina’s real estate laws do not include a formal reciprocity arrangement with any other state – even with South Carolina. But a licensed agent from another state may be able to speed up the licensing process by getting approval for an education waiver. 

An applicant for a North Carolina real estate license who currently holds a valid real estate license from another state – that is equivalent to the requirements mandated by the North Carolina’s provisional broker license, may seek a waiver of specific licensing conditions if they have had an active license for at least 3 years prior to applying.

This note on qualifications can be found in the NC Real Estate Handbook Page 7-

In addition, the state offers this guidance with reference to nonresident licenses [93A-10] –

Success Story: See How Annette Completed Her First Wholesale Deal With The Pro Wholesaler VIP Program In North Carolina!

Is Wholesaling Real Estate Legal In North Carolina?

Yes, it is legal to wholesale real estate in the state of North Carolina if the wholesaler negotiates the process without violating the legal confines of North Carolina law.

To legally wholesale real estate in North Carolina, you must complete your task – of selling/assigning your rights to purchase a piece of real estate to another buyer without violating North Carolina license law. 

What Are The Wholesaling Laws In North Carolina?

Currently, there are no specific laws in North Carolina that prohibit real estate wholesaling in the state.

However, North Carolina Real Estate License Law can be found in Chapter 93A of North Carolina’s General Statutes of North Carolina. This title of North Carolina law covers these areas of the law –

• Article 1 - Licensing Of Brokers And Brokerages 
• Article 2 - Real Estate Recovery Fund
• Article 3 - Education Providers
• Article 4 - Times-Shares
• Article 5 - Real Estate Appraisers
• Article 6 - Broker Price Opinions (BPOS) And Comparative Market Analyses

Violations to North Carolina license law are as follows –

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North Carolina is an Attorney Close State

Like many states, North Carolina is recognized as an attorney close state. As such, a licensed North Carolina real estate lawyer must perform the closing.

This mandate from North Carolina’s state government offers real estate wholesalers the opportunity to consider the potential legality concerns of certain decisions prior to acting on the decision as they complete their first real estate deals and real estate transactions. If you must pay for a real estate attorney, take advantage of their legal expertise and market know-how.

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

No – a real estate wholesaler in North Carolina does not need a real estate license to wholesale real estate their objectives – if their choices & actions do not rise to a level that requires a real estate licensee in North Carolina.

Note that a real estate wholesaler must be the transaction's principal buyer, as this is the only thing a wholesaler can sell. They CANNOT market the property as that would require a North Carolina real estate license. 

It can be helpful to become knowledgeable about North Carolina’s real estate and licensing laws. Still, no formal assessment is required to wholesale real estate in North Carolina if the wholesaler remains within the legal limits of state law. 

Wholesale Real Estate Contract North Carolina

A contract of sale is a legal document that sets forth the enforceable terms of the contract of sale. A real estate contract legally defines the rights of the seller and the buyer.  A contract of sale is a complex document that requires specific information that includes -

• The property’s legal description and mailing address.
• Notice of the earnest money given in good faith when the buyer signs the purchase agreement.
• An itemized list of the seller’s personal items that may be included as a part of the sale.
• The agreed-upon financing terms.
• Relevant contingency dates with regard to a home inspection and financing, among others.

Download Free Wholesale Real Estate Contracts Here (PDF)

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The Assignment of Contract

An assignment of contract is the legal instrument that allows a buyer to transfer their equitable interest in the subject property. The wholesaler – assigning the contract is known as the Assignor, and the end buyer (who is often is a cash buyer) is known as the Assignee.

Exit Strategies For North Carolina Real Estate Wholesalers

Wholesalers who do their due diligence have several viable exit strategies. They include -

• A Buy & Sell Exit Strategy
• A Buy & Assign Exit Strategy
• A Double Close– a closing strategy in which a wholesaler purchases and sells the same property on the same day. But remember, a double close exit strategy is likely to be more costly because the wholesaler will be paying double closing costs.

Final Thoughts

Real estate investing offers no guarantees, and no single aspect can generate success. Savvy real estate wholesalers and investors understand that new opportunities evolve as market conditions change through the natural real estate cycle. This is one of the reasons investors are often entrepreneurs – they can think fast on their feet and operate with integrity.

With the advent of the modern digital landscape, the practice of real estate has exploded across many markets in the country. 

Real estate wholesaling can be a viable and profitable investment strategy if the wholesaler stays within the state’s legal boundaries and seeks proper guidance and training.

*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