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Robert
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Is house flipping legal in Illinois? I would like to sell

Customer Question

Is house flipping legal in Illinois? I would like to sell houses I buy wholesale and I would also like to fix up houses and resell them at a higher price. Are both of these practices of house flipping legal in Illinois? Do I need a real estate license if I do this for many years?
Submitted: 2 years ago.
Category: Legal
Expert:  Robert replied 2 years ago.

Hello and thank you for choosing JustAnswer!

Flipping a house is nothing more than buying a house and later selling it for more than you purchased it for and it is certainly legal as long as you make the necessary disclosures.

Whether or not you should get your real estate license is often a heated debate among real estate investors. On the down side, actively using your real estate license can open you up to a little more liability than using another agent. It requires you to provide additional disclosures and can take up more of your valuable time. Additionally, if you join the local Realtor association you are held to a strict code of ethics and can be at risk of having complaints filed against you. However, the upside offers huge advantages when it comes to flipping houses.

To obtain your real estate license you will need to complete the state mandated real estate education. This form of real estate education can give you some insight into the legal side of things but is of little practical use for flipping houses. Having direct access to the MLS is one of the biggest benefits of having your real estate license. It can certainly offer big savings when acquiring homes for real estate investing. Even on a $100,000 property this can easily amount to $3,000 in savings. Having your own real estate license also enables you to list your properties for free on the MLS. The MLS is credited with being responsible for around 80% of all properties sold and far exceeds other forms of marketing for flipping houses.

Fortunately there is a way to get the best of both worlds so that you can enjoy both the access and savings of having a real estate license without incurring the extra liability or adding to your real estate investing work load. Once you have obtained your real estate license, you can now legally get paid referral fees from agents while you are flipping houses. This means that you can actually have another licensed agent do the work and yet have them give you back the bulk of the real estate commission. This puts more profit in your deals and can even give you more upfront cash when flipping homes.

If you are only going to flip one or two houses then it may not be worth your while to get your real estate license and you may want to use a real estate agent or a real estate attorney. You are not required to get your real estate license if you do it for many years but you are required to abide by the disclosure laws that real estate agents learn about in school.

 

You will find the following link helpful to understanding how to adequately prepare for house-flipping:

 

http://realestate.msn.com/five-mistakes-that-make-house-flipping-a-flop

I hope this has helped and I wish you all the best. Please let me know if you need me to further clarify my answer and I will do my best to so clarify.

Thank you,



Robert

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Robert, Attorney
Category: Legal
Satisfied Customers: 1412
Experience: I am a licensed Attorney.
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