This Dumb State Loves Foreclosures & Regulations

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Transcript

Welcome And Why SC Ranks Last

SPEAKER_00 0:03

Welcome to the 50th episode of Wholesaling Around the World. And today we are going to be talking about South Carolina. I held on until the very end to talk about South Carolina because man, South Carolina is just stupid. Stupid. It ranks 50th. That's why it got the 50th episode. All right. I don't like South Carolina. I really don't. I thought I would. I went and visited South Carolina. I drove all the way through it. I really just don't like, I don't like the people there. I didn't enjoy it. I didn't enjoy the scenery. North Carolina is amazing. South Carolina, man, it sucks. And when I say the the Palmetto state is dumb, I mean it's the 23rd most populated state in the United States, okay? But it ranks 41st in education from pre-K to 12th grade, and then 44th in higher education. Now this makes sense considering the dumbass regulations that they have brought down on wholesaling real estate. Like this was the most important thing for the government to step in and fix what's going on in South Carolina, right?

Foreclosures And Market Reality Check

SPEAKER_00 1:30

They need to really get rid of us big bad bully wholesalers, all right? When their state ranks second in foreclosures, one in 743 houses in South Carolina has had a foreclosure filing. So they were like, you know what we need to do? In order to fix all these foreclosures, we need to take away a solution for the people facing foreclosure. Let's get rid of the wholesalers. That'll fix it. Nope. Nope, dummy. That's why you're 44th in education. That didn't fix it. So has South Carolina's real estate market improved since these wild, which I'm going to get to the regulation here in a second. These wild regulations came down in 2024. Um, no, we have an increase in inventory. Um, prices have stabilized, meaning they they have not continued to go up. They're one of the highest producers of new construction, but they have rising escrow costs with the increase in property taxes and homeowners' insurance. So homeowners' insurance makes sense because there's been hurricanes, there's been floods, there's been things like that. So that's outside of their control. But then the property taxes, again, government looking at, hey, we're already the second highest foreclosed state in the entire country. Let's raise property taxes. Let's say wholesaling is illegal. I don't really understand the dot process that's going on here inside of South Carolina and how they think this is helping their citizens. But

What South Carolina Calls Wholesaling

SPEAKER_00 3:22

let's break down what this regulation was brought down in May. So two years now, we've had this regulation in South Carolina, starting off with how South Carolina defines what wholesaling real estate is. Wholesaling means having a contractual interest in purchasing residential real estate from a property owner, and then marketing the property for sale to a different buyer prior to taking legal ownership of the property. Advertising or marketing real estate owned by another individual or entity with the expectation of compensation falls under the definition of broker and requires licensure. Licensure, however, you say that. Wholesaling does not refer to the assigning or offering to assign a contractual right to purchase residential real estate. Okay. So basically, it's us marketing the fact that we, even if it's not the property, the contract. And so it gets real nitty-gritty here. Okay. So having a contractual interest in purchasing purchasing residential real estate from a property owner, then marketing the property. So this includes having contractual interest, marketing or advertising the property before taking ownership, expecting compensation. That's a big one, because they're not outlaw outlawing the assignment. I could go get a property owner contract and I could assign it to myself or my spouse or another one of my entities, that's completely fine. Because I'm not necessarily wanting a compensation for that. I'm just changing the entity. But when we want compensation, that's an issue. And using an assignment or similar instrument to transfer the interest, okay? So if you assign the purchase contract to someone else with no compensation or your own entity, that's fine. But if you sign a purchase contract and say you market it somewhere, but whether that's a Facebook group, it even says word of mouth on here. So really anything that is considered marketing or advertising the property or the contract for sale, pictures and a price, and then you assign and you sell the contract to another buyer, that is considered wholesale in real estate, and it violates the law in South Carolina. The other thing is, is they flat out said that if you're licensed, if you're a licensed real estate agent or a licensed realtor in South Carolina, it is absolutely illegal for you to wholesale real estate in South Carolina, which is odd because a lot of these regulations throughout the United States have been, hey, we want you to get licensed. But this was directly saying we just don't want wholesaling real estate happening in South Carolina anymore. They want it gone away.

Marketing Bans And Agent Restrictions

SPEAKER_00 6:35

And so the real estate commission explicitly stated that including any of the following in your marketing likely violates the statute. Property photos or videos, street address or neighborhood, number of rooms, square footage or year built, rental income details or rehab status, any other description that identifies the real estate. That's crazy. Marketing is not limited to the MLS, it includes social media, private email groups, flyers, phone calls, and even word of mouth. So essentially, South Carolina said no more wholesaling. And there's ways around it. You could take ownership of the property, double close, you can do installment contracts. I've got a uh podcast from several years ago with a guy, Devin in South Carolina. If you want to go watch that, the installment method. There's things that you can do to get around this. I've always said there will always be a loophole, right? Okay, so you don't want us to wholesale anymore. You just want us to take ownership. My question

The Stated Reasons For The Ban

SPEAKER_00 7:53

was: why did South Carolina want to ban wholesaling real estate? Lawmakers recognize that wholesalers often target distressed homeowners facing foreclosure. Well, of course, South Carolina, it's because you're the second most foreclosed state out there. Then it threw in divorce, death in the family. These homeowners were routinely locked into long-term contracts under false pretenses or sold at manipulated prices. The issue that I have here is when we look at facts like hey, you're the second most foreclosed state in the union, okay, in the country. But then when we say these homeowners were routinely, that's not that's not a fact. Routinely, what's the percentage? Was it 70%? Was it 50%? And then it was long-term contracts. Well, what's considered a long-term contract? Is that 30 days, 60 days? If that was the issue, why not put a regulation on how long a contract can be written for? Hey, you can't write a contract for longer than 45 days, whatever. Under false pretenses, what's the false pretense that we were the buyer? Okay, put in a disclosure that we have to then disclose that we are not going to be the buyer, we're going to wholesale. And then they were sold at manipulated prices. What was manipulated about the price? Is it are you saying that we sold it for a profit? Because we made money, okay, and then it wanted to curb unlicensed brokerage. The South Carolina Real Estate Commission defined marketing and selling a property you do not own as acting as a real estate broker. Because unlicensed individuals are not bound by fiduciary duties or ethics. The state banned this practice to prevent unauthorized individuals from collecting sales commissions. Aha. Okay. So you thought we were acting as brokers. But then you said even brokers and real estate agents cannot do this. So how did that how is this helping the people that are in distress situations in South Carolina? You're now mandating that the only way that these transactions can go down is either the in buyer directly buys it from the homeowner, which by the way, can still be a manipulated price or taken advantage of, or it needs to be listed on the MLS, which some investors don't want to do that. They don't want their price, what they purchased it for, disclosed. It's also convoluted, makes it a more difficult transaction. Then the final thing it says here was protecting market integrity. Unregulated we buy houses, operations, often tied up properties without sufficient capital to close the deal, leaving sellers in difficult financial positions when the contracts fell through. Okay, so I agree that that wholesalers have locked properties up, they did not have the capital to close, and left people in difficult financial positions. The situation is that that could happen with any buyer, not just wholesalers. In buyers have done the exact same thing. Okay. Uh deals on the MLS have also been terminated and left sellers in difficult positions when contracts fell through. So when we say they often tied up properties, well, how often? Why is this not specific? Why is it saying it it left sellers in difficult financial positions when the contracts fell through? Well, how often? And then what about on the flip side? Because we're only talking about the negative, and so this is the issue that I always have

Who Gets Hurt By This

SPEAKER_00 12:20

when I see these types of regulations. That's one way to spin the story. How many wholesale transactions prior to May of 2024 took place in South Carolina over a five-year period that actually closed and funded and actually really helped out people in a difficult position? How many foreclosures in one of the worst states for foreclosures were stopped because of wholesalers? How many homeowners were actually positively impacted by wholesalers in South Carolina? When we just throw it out and we say, yes, some bad things happen to some people. Well, you can say that about anything. What about real estate agents that don't do a good job by the homeowners? That go and sit down and they sit at the kitchen table and they say, Mr. Mrs. Seller, we could absolutely sell your house for $300,000. You still sign that listing agreement right there. We'll slap it on the MLS and we'll wait and see. But we're, I absolutely believe we can get $300,000 when they damn well know they're not going to get $300,000, but they're going to get that listing agreement, and then it sits, and there's no offers, and they go, hey, the market shifted, we got to lower that price. We all, if you've been in real estate, you all have seen one of those scenarios play out with the listing agent lying about what the house could sell for so they could get a listing agreement. What about that? What about these scenarios? We can always point to all the other parties that are not being regulated and attacked here that have done negative influences or negatively impacted homeowners in all states, not just South Carolina. But yet this state that is actually in just a distressed situation as a whole decided it was the one that needed to eliminate options and potential solutions for its citizens. That is wild. Wild. Shame on South Carolina for this. There are people that are literally losing their house when someone like me could have helped them, could have helped save their credit, could have gotten that for that mortgage paid off, but instead you said, well, some people have been negatively impacted. So we're just gonna eliminate that. We wouldn't want you to make a profit. We wouldn't want false pretenses. You could have brought regulations down, but you decided that you wanted to go so far extreme that you literally negatively impacted the people that you were hired to serve and protect. It's an embarrassment, it's an absolute embarrassment, and it's not positively impacting the people there, it hasn't shifted what's going on. It's why low education, high foreclosure, you have people in distress situations. Yeah, you needed problem solvers, you needed people that could come in and solve these problems for your people. And you said because you're not licensed, and yes, you make a profit, and maybe you haven't done everything perfectly, instead of trying to resolve that and hold us accountable, you just ran us off. It's an embarrassment. And for that, South Carolina is the 50th state overall for virtual wholesaling, and just quite frankly, in general, it's just a dumbass state that I don't want anything to do with. And so, yeah, I'm a nationwide virtual wholesaler. And yes, do we still do deals in South Carolina? Yes, we do. We just have to work around their dumbassery to be able to do it.

Listener Questions And Series Finale

SPEAKER_00 16:50

So, for those of you that are currently wholesaling in South Carolina or even live in the Palmetto State, how do you feel about these regulations? Do you think it's really positively impacted you as someone that lives there or works there? Or do you think it has a negative impact on the state in general? Let me know in the comments. Regardless, show me some love. It's been a blast. 50 straight weeks. We have brought you an episode of wholesaling around the world, breaking down each and every one of the states and how we feel about virtual wholesaling. My takes, giving the breakdown of the regulations and everything like that. I hope you guys enjoyed the series. I know I enjoyed making it, but I'm also going to enjoy bringing you something different next Friday. We'll see you then.