This Markets Regulations Are A Bit Odd

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Transcript

Welcome To The Iowa Edition

SPEAKER_00 0:03

Welcome back to Wholesaling Around the World, the Iowa edition. Today, on the 49th episode of Wholesaling Around the World, we're going to be talking about the Hawkeye State. And yes, because it is the Hawkeye State, I went with the Marvel Avengers Hawkeye, not the black and yellow Iowa Hawkeye's boring logo. No, we wanted to go Marvel Avengers Hawkeye. That's why we got the purple going on and all that. Listen, Iowa comes in as the 32nd most populated state with around 3.25 million people. Okay.

First Iowa Deals And Hotspots

SPEAKER_00 0:44

The first time that I ever did wholesale transactions in Iowa was during the 2020 50-50-50. And back in 2020, when I did the the 50-50-50, I was pulling list, I was skip tracing, and I was sending out SMS text messages to the homeowners. And so each day when I went to the new state, I would pull that list and I would blast it out. And so the first time that I ever got a taste of wholesaling in Iowa was during that day when we got to Iowa, and I ended up getting six signed contracts. I mean, it was incredible. I thought Iowa was the greatest place to ever virtually wholesale back in 2020. And quite frankly, I've enjoyed Iowa through the years. I mean, it's been a fantastic location for us, specifically surrounding Cedar Rapids, Iowa. That's the main city in where we have done the bulk of our volume there. Des Moines is pretty solid. Moving uh closer over to Omaha, there's uh Council Bluffs that's right on the border of Nebraska and Iowa. And so there was hedge funds that would buy deals in Council Bluffs, Iowa, because they were also buying in Omaha, Nebraska. And so Council Bluffs ended up being a pretty little sweet little honey hole for us back in like 2021, 2022.

Iowa’s 2026 Wholesaling Regulation

SPEAKER_00 2:22

That being said, in 2026, things have changed for virtually wholesaling in Iowa, and it's because of the dreaded regulations. Now, Iowa is one of those states that they were so close to getting things correct, but they decided to add in the the portion of regulations that I just don't understand the thought process. Why do we have to include being a licensed real estate agent? How does that protect people? Do we really believe that forcing someone to go to seven to 14 days of classes makes them truly a professional in a field? No. But in real estate, that's how we view it because there's oversight, there's rules, and I guess that makes them protect homeowners. So the regulation is as of 2026, Iowa strictly regulates real estate wholesaling. Wholesalers must be licensed or represented by a licensed real estate broker to engage in the practice of wholesaling real estate. It also requires disclosures. So to be clear, the portion of this regulation that I do not like is that licensing. Okay. The required disclosures, I actually have no problem with that whatsoever. So before executing a signed contract, a wholesaler must provide written disclosures to all parties, including the legal identities of all parties: title holder, wholesaler, buyer, an explanation that the wholesaler holds an equitable interest, not legal title, and a statement that the wholesaler may earn a profit. And the specific disclosure, this transaction constitutes real estate wholesaling, meaning the wholesaler holds an equitable interest in the property and may not be able to convey title. So again, I actually don't have an issue with that disclosure whatsoever. I think it's a little bit over the top when like you're forcing us to tell the homeowner, like, we're going to do this to make profit. Yeah, of course. I think most people are intelligent enough to understand. Like, I don't need a disclosure to know that when I go buy a taco from Taco Bell, that they're selling me that fucking taco to make profit. I mean, I know they're doing that. And so it's like the same thing here. Like, okay, we're we're going to go take our equitable interest and we're going to sell it. Yes, we're going to do that for a profit. Okay. Are are you requiring your beloved licensed real estate agents and realtors to disclose that when their commission is paid, it is a for-profit that they're making. It's just the language that they're kind of forcing us to use. It's a little bit over the top, and kind of trying to persuade the homeowners to not want to sign the contract with the wholesaler. So I that that gets a little bit, you know, it feels a little petty to me. The

Disclosure Timing And The Gray Area

SPEAKER_00 5:58

next part, I do have an issue with I guess the timing of this. Because based off of how this reads, and again, this is all up to, you know, you you probably, if you're going to do uh a significant amount of volume in Iowa, you should probably consult with an attorney. You should probably consult with the title companies and make sure how is this really being policed? Because it does say that before executing a contract, a wholesaler must provide written disclosures to all parties, including the legal identities. And it says in there, buyer. Okay. So my question is that we cannot actually wholesale a property before we have it under contract because that would be brokering real estate. So we cannot do that. We have to have the equitable interest, and then we have to go find the end buyer to assign that equitable interest to. So based off of that, the next part of the regulation is cancelled. Failure to provide required disclosures allows the seller or the buyer to cancel the contract at any time before closing without penalty, and the seller may retain the earnest money deposit. So my question is does this mean that I have to require the disclosure to the seller without the buyer, but then I have to also disclose to the buyer that I'm a wholesaler before sending the assignment? I don't need to know my buyer before sending the disclosure to the seller, right? But it's kind of written in the gray. And so I don't like that. I wish it was a little bit more specific just with the way that I'm reading and doing my research here. I'm assuming that the way and based off the transactions that we've done, there's been no issues. We've never had a seller try to retain the earnest money deposit for canceling because we did not disclose. But again, this is when we're making these rules and these regulations that are attacking the wholesaling industry. I wish it was just a little bit more clear on exactly what they want there.

Penalties And The Wholesaling Definition

SPEAKER_00 8:22

The penalties in Iowa are pretty steep. Violations of this can result in penalties of up to greater of $10,000 or 10% of the sale price. Okay, so not only if you do not follow this, can the seller just back out or can the buyer just back out with no penalty, retain the earnest money deposit, but also you could get fined up to $10,000 or 10% of the sale price. So make sure if you are wholesaling in Iowa, you are abiding by this regulation. And then the final thing that it has here is definition of what wholesaling is. Wholesaling is defined as entering into an assignable contract for residential property to sell the equitable interest. Okay. So I find it interesting how they kind of outline that uh because assignable contracts are very common in commercial real estate. Well, then that doesn't include that. They're they're directly going after the single family wholesalers that have the it's an assignable contract. They're they're this is purely coming after us in what we do. Okay. So going back through this, you have to be represented by a licensed real estate agent, or you have to be a licensed real estate agent yourself. You have to disclose that you are going to be wholesaling this, that you are a wholesaler, that you're going to make profit. And then if you don't do that, the seller can back out on you, keep your earnest money, and you can also get fined $10,000 or 10% of the sales price of the property. So a pretty, pretty steep, pretty uh extreme regulation here in Iowa.

Why Iowa Moves Down The List

SPEAKER_00 10:23

And so, because of that, when I look around the country, I look at Iowa and I, you know, it was probably always mid-pack, you know, it was mid-tier. It was never going to be one of the higher volume states just because it is of population rank, right? Coming in 32nd. So, yes, Cedar Rapids was good for us, Des Moines was okay. There was a short run that we had there in Council Bluffs. The rest of the state is pretty rural. It's always going to be lower volume on the amount of leads that we receive there. So when I look at this, it's impacted us on the amount of transactions that we're going to do in the Hawkeye state moving forward. If I have a choice and I'm looking at two leads and I'm going to buy one, and I've got a lead in Texas or Ohio, because I always go back to Ohio because they have a regulation where it says, hey, I just need to be transparent about the fact that I'm a wholesaler and that that's what I'm going to do. I have no problem with that. But then when you add in, now I have to go find a licensed real estate agent to represent me, and I have to disclose all of this, and you've got a pretty steep penalty if I don't abide by this perfectly, uh, I'm probably gonna go buy the lead in Ohio or I'm gonna buy the lead in Texas, where it's not quite as extreme of a regulation. And so this makes me question the decision makers behind these regulations. Is it truly protecting the citizens of Iowa? Is it is it truly helping all of those people that all those transactions that we did from 2020 basically up until mid-2024 when this regulation hit, and it's only become more and more extreme over the years. What happened to all those people, those sellers moving forward? The seller in 2027 that needs a wholesaler like me that maybe doesn't want to deal with this. Is it truly helping those people out?

Ethics And Why Crackdowns Happen

SPEAKER_00 12:27

That's always my concern with these regulations, because I truly do believe that there is a place where wholesalers help out these homeowners that are in distressed situations. However, I go back to some of the sentiments that I have during the King Close of Reacts, and I listen to the wild shit that is spewed all over the internet where it says just lowball sellers, just lie and manipulate, don't tell them. I literally just reacted to one this past weekend where it was no matter what, do not tell the homeowner you're the middleman. I would ask that person who also is charging for education, how are you doing deals in Iowa where it's the law, you have to disclose that you're a wholesaler. That's the kind of stuff that gets us in trouble. And that's why these regulations continue to come down on us because we lack the ability as an industry to police ourselves. And so, yes, as frustrating as this regulation is to someone like me who has done things the right way for so long in this industry, I understand why Iowa has come down and said, this is what we need to do to protect our citizens. And so it's unfortunate. And I think there's going to be a time and place where maybe some of these regulations have to be lightened up a little bit because it'll be negatively impacting some of the people that live there. But as of right now, I completely understand wholesalers have brought this upon themselves.

Your Iowa Strategy And Closing

SPEAKER_00 14:09

For those of you that are currently wholesaling or virtually wholesaling in the Hawkeye State, let me know. How has this regulation impacted your business? Did you just become a licensed agent? Did you just find someone to work with? Let me know in the comments. Regardless, show me some love. Like today's video. We'll see you guys on the final episode of Wholesaling Around the World next Friday.