A student asks… Is wholesaling legal?

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I just got off the phone with a wholesaler in Texas. I told him that Alaska does not allow wholesaling, per state law. I've even had a title company tell me that they don't do wholesaling. The investor from Texas told me that is not true, that Stewart Title is closing wholesale deals in Anchorage.

You can call it "wholesaling" but it could be seen as violating many of the sections below including 1,7,8,9,10, and 11, depending on how they are structuring their business.

It seems like AREC should consider it as violation because it looks like licensed activity. Otherwise, why don't all licensees drop their license and just engage in "flipping" and charge a 5 or 6 % assignment fee (Which I presume is much less than the 20% or larger fee these people may be charging) to avoid any oversight from the AREC?

If this is allowed there is a potential of consumer abuse and unlicensed activity which was rational to have a real estate commission in the first place. Perhaps the Realtor organization should address this.

Article 02. LICENSING

Sec. 08.88.161. License Required. Unless licensed as a real estate broker, associate real estate broker, or real estate salesperson in this state, a person may not, except as otherwise provided in this chapter,

(1) sell, exchange, rent, lease, auction, or purchase real estate; (to receive commission or sell condos)

(2) list real estate for sale, exchange, rent, lease, auction, or purchase.

(3) collect rent for the use of real estate or collect fees for property management.

(4) practice, or negotiate for a contract to practice, property management.

(5) collect fees for community association management.

(6) practice, or negotiate for a contract to practice, community association management.

(7) as a business, buy, sell, or deal in(A) options in real estate; or(B) options in improvements to real estate.

(8) assist in or direct the procuring of prospective buyers and sellers of real estate, communicate with prospective buyers and sellers of real estate, or assist in the negotiation of a transaction that results or is calculated to result in the sale, exchange, rent, lease, auction, or purchase of real estate.

(9) accept or pay a fee for the performance of any of the activities listed in this section except as otherwise specifically provided in this chapter.

(10) hold out to the public as being engaged in the business of doing the things listed in this section; or

(11) attempt or offer to do any of the things listed in this section.

Article 6. General Provisions

Sec. 08.88.900. Exceptions.

(a) Except as provided in (b) of this section, this chapter does not apply to

(1) a person who is not licensed under this chapter who manages or makes a real estate transaction with respect to real estate the person owns or is seeking to own so long as the compensation the person receives does not include any portion of the commission or other compensation paid to a real estate licensee in the transaction.

Hope this helps,


Jerry Royse, at the helm of Royse and Associates, stands out in real estate education with over 35 years of experience teaching across 46 states and 5 countries. A seasoned educator, Jerry has trained thousands in Sales Pre-Licensing and Continuing Education, also applying his expertise as an expert witness in over 30 legal cases and successfully closing over 1100 homes as a Buyer Broker. His extensive knowledge marks him as a preeminent expert in the field.

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