New state rules for real estate ‘wholesalers’

DES MOINES — The legislature has unanimously approved a a bill designed to set new guidelines for the “wholesaling” of single family homes or properties with up to four residential units.

Senator Mike Bousselot of Ankeny says the bill requires that only licensed real estate brokers can act as a wholesaler — negotiating a contract with the property owner for an agreed upon price and then selling the home to someone else or an investor.  “Many of us have probably seen the signs around the state and in our communities where they say: ‘We will buy your property.’ Oftentimes, though, those folks aren’t actually taking title to that property, but may be in fact taking advantage of the folks trying to sell their house, in the need of that cash for their home,” Bousselot says.

The bill requires more transparency in these kind of wholesale real estate transactions. Bousselot says research shows private equity firms engaged in wholesaling are driving up not only the sale price of homes, but also rental costs.  “By 2030, institutions may hold some 7.6 million homes, or more than 40% of all single family rentals on the market,” Bousselot says. “We need to make sure Iowans have the information they deserve when they are selling their home, whether that’s to a wholesaler or to an institutional investor who might be taking advantage of them.”

Senators approved the bill Monday. It passed the House last month and now goes to the governor for her consideration.