Wholesalers will soon need a Real Estate Broker's License in Illinois
THE ARTICLE BELOW HAS BEEN UPDATED HERE!
Wholesaling has been a very viable and successful investment vehicle for many real estate investors. In part because no real estate license was needed in Illinois in order to get into wholesaling. Typically, one would attend a workshop, watch a few YouTube videos, get some contracts and start on your journey to riches. It won’t be that easy any more, at least here in Illinois.
SB 1872 or Real Estate License Act of 2000
The Illinois Real Estate License Act of 2000 (RELA or the Act) was due to “sunset” at the end of 2019, which is not uncommon as it allows professional organization such as the Illinois REALTORS® to study, consider and recommend changes for a rewrite of RELA.
Through the efforts of both Illinois REALTORS® and IDFPR, this agreed-to bill flew through both chambers on its way to unanimous passage. The bill now awaits the Governor’s signature, due some time in mid- to late-August.
The 5 categories of changes were: 1) Paperless Practice & Technology, 2) Licensing & Management, 3) Teams & Advertising, 4) Consumer Protection & Business Practices, 5) Miscellaneous
To see the complete summary of five general changes in the RELA bill Read the full article from Illinois Realtors here.
Wholesalers - Licensing may be in your Future
The change in the bill affecting Wholesales can be found in Section 1-10 of the Consumer Protection & Business Practices section. It defines wholesaling as:
“wholesaling” involves the practice of entering contracts to purchase property, then quickly assigning that contract to another buyer for a profit. When done as a business practice, “wholesaling” will now come under RELA’s enforcement provisions and the wholesaler will need a real estate broker’s license, as well as be subject to consumer protection provisions such as disclosure of self-interest and prohibition against dual agency.
Well, that’s definitely the definition of wholesaling that many people practice here in Illinois without a license. While this bill has not yet been signed by the Governor, it is currently sitting on his desk for signature and may take place immediately.
The Impact
Most notably the requirement of a real estate broker’s license will affect those who can’t meet the qualifications to get the license from earning money in real estate investing by wholesaling. Briefly, the requirements are:
You must be at least 21 years old (or 18 with additional requirements)
You must have a high school diploma or equivalent
Complete 90 hours of real estate education
Pass the state licensing exam
Be sponsored by a managing broker
File a application with Illinois Department of Financial & Professional Regulation & get fingerprinted
Now the fees associated with these step totals up to approximately $900 and that doesn’t include any yearly professional development or renewal requirements.
Flipping Contracts Forever
It is possible for experienced wholesalers to continue flipping contracts in Illinois if they get a license or perhaps partner with another wholesaler who has a real estate broker’s license to continue flipping contracts into the future.
If you would like to discuss how this could affect you and your wholesaling business - schedule a call here
