Is Wholesaling Real Estate Legal In Kansas? A 2024 Guide For Investors

Is wholesaling real estate legal in Kansas? This question is crucial for anyone discovering the Kansas real estate market through wholesaling. This investment strategy allows individuals to enter the real estate world with less upfront capital and reduced risk compared to more intensive investment methods like flipping houses. Wholesaling involves an investor agreeing to purchase a property and then quickly reselling the contract to another buyer at a higher price, making a profit on the difference.

While this approach requires less financial commitment, potential wholesalers should understand both the potential rewards and the specific legalities involved. In Kansas, as in many states, the legal framework governing real estate wholesaling can dictate how transactions must be handled and what contracts are permissible, thereby influencing the viability and profitability of wholesaling as an investment technique. As a result, we've developed this "Is wholesaling real estate legal in Kansas" guide to teach you everything you need to know, including:

• What Do You Need To Know About Wholesaling Houses In Kansas?
• Is Wholesaling Real Estate Legal In Kansas?
• What Are The Wholesaling Laws In Kansas?
• Do You Need A Real Estate License To Wholesale In Kansas?
• Is Co-Wholesaling Real Estate Legal In Kansas?
• Is Reverse Wholesaling Real Estate Legal In Kansas?
• Kansas Wholesale Contract
• Final Thoughts

*Before we begin our guide on whether wholesaling real estate is legal in Kansas, we invite you to view our video on How To Wholesale Real Estate Step by Step (IN 21 DAYS OR LESS)!

Host and CEO of Real Estate Skills, Alex Martinez, provides a comprehensive, step-by-step guide for beginners to start wholesaling real estate!

What Do You Need To Know About Wholesaling Houses In Kansas?

When considering wholesaling houses in Kansas, it's essential to understand various individual strategies, pertinent laws, and market dynamics that influence this investment approach. Wholesaling involves contracting a home with the intent to immediately resell the contract to another buyer for a profit. Key strategies include building a robust buyer network and mastering the art of finding underpriced properties.

It is crucial to comply with Kansas real estate regulations, which may require you to hold a real estate license or adhere to specific contractual standards to avoid practicing brokerage without a license. Market dynamics also play a significant role; understanding local market conditions and real estate cycles can significantly impact your success.

For those looking to answer the question, "Is wholesaling real estate legal in Kansas?" the best resources are typically real estate trade and professional organizations in Kansas. Members of the National Association of Realtors (NAR) or local Realtor associations offer extensive resources, networking opportunities, and up-to-date educational programs that can provide valuable insights and guidance on wholesaling in the Sunflower State. The most prominent real estate trade and professional organizations include, but are not limited to:

• The Kansas Association of Realtors (KAR): The KAR, located in the state’s capital of Topeka (and the state’s fifth largest city), was developed to support local real estate professionals and the local real estate brokerage market. The KAR offers its members a variety of industry information and relevant tools, including the opportunity to earn accredited credentials like CRS or GRI.
• The Kansas City Regional Association of Realtors (KCRAR): The KCRAR was created in 2001 by merging two smaller REALTOR associations. The Kansas City Association has evolved to include more than 30 counties and more than 10,500 members. The KCRAR is a professional association with the NAR, the Missouri REALTORS, and the Kansas Association of REALTORS and serves as a regional voice of advocacy and innovative resources for its members.
• The Realtors of South-Central Kansas (RSCK): The RSCK is a member of the NAR and performs as a local affiliate, supporting each member’s goal to achieve success. It offers local and regional advocacy efforts regarding governmental affairs, member services, and professional development tools and opportunities, plus credentialing and distance learning coursework, among other things.
• The Southeast Kansas Association of REALTORS (SEKAR): Located in the southeastern portion of Kansas, the SEKAR serves real estate professionals working in the greater Crawford County area. It was developed to facilitate the advancement of real estate professionalism and the preservation of Kansas real property rights.
• Flint Hills Association of REALTORS (FHAR): The FHAR is a nonprofit real estate trade organization with over 500 members. FHAR advocates for the local community and its consumers by enabling members to work professionally and ethically within the real estate market of Clay, Dickinson, Geary, Marshall, Pottawatomie, Riley, Washington, and Wabaunsee Counties.
• Lawrence Board of REALTORS (LBR): Established in the mid-1920s as the Lawrence Real Estate Board, the Lawrence Board of REALTORS now serves more than 500 members, including real estate licensees and other real estate business-related partners in the greater Lawrence, Kansas, area.

The state agency in Kansas responsible for administering/monitoring the licensing and activity of each licensed agent is the Kansas Real Estate Commission (KREC). Due to the role of real estate licenses in Kansas, the KREC is an important resource for anyone asking, "Is wholesaling real estate legal in Kansas?"

The Kansas Real Estate Commission

The KREC offers the following services:

• Licensing for Real Estate Salesperson or Real Estate Broker, according to KSA § 58-3043. For more information on real estate laws in Kansas, check out the Kansas Real Estate Handbook.

The KREC issues real estate licenses for two years, with expiration dates expiring on a staggered monthly basis. The alphabet is used to sort these staggered dates.

A Word About the Mid-America Association of Real Estate Investors (MAREI)

The MAREI is a chapter of the National REIA Association, a professional organization dedicated to helping real estate investors reach their financial objectives and independence. The NREIA has 40,000 members and more than 100 chapters across the country.

Read Also: How To Wholesale Real Estate In Kansas: Step-By-Step

Is Wholesaling Real Estate Legal In Kansas?

Yes, wholesaling real estate is legal in Kansas, provided you strictly adhere to state laws. In Kansas, unlicensed real estate investors must carefully avoid activities that could be interpreted as requiring a real estate license, such as assisting homeowners in buying, selling, or marketing properties. Wholesalers typically engage in an assignment of contract, where they acquire the rights to purchase a property rather than the property itself. This strategy involves marketing their contractual right to buy the house to potential end buyers and then transferring this right to an end buyer through the doctrine of equitable conversion.

In return for facilitating this transaction, wholesalers receive a fee, which is distinct from a commission that real estate agents earn. The essence of a wholesale deal in real estate necessitates the wholesaler entering into a purchase agreement with the property's owner. This agreement, or bilateral contract, legally binds both parties to fulfill the terms stipulated. Most of these contracts are inherently assignable unless specifically stated otherwise in the contract's provisions.

It is crucial to understand that while a wholesaler in Kansas has the legal right as a legitimate buyer under an executed contract to sell the right to purchase the property outlined in the agreement, this does not equate to selling or marketing the property itself. This distinction is key in ensuring that wholesaling activities remain within the legal framework established by Kansas state laws.

What Are The Wholesaling Laws In Kansas?

The real estate law governing the behaviors and actions of a licensed real estate broker or salesperson (for a variety of different types of real estate) in Kansas can be found in KSA Chapter 58, Articles 30, Sections 34 through 77, as well as KSA Supp 58-3078 through 3085 – collectively known as the Real Estate Brokers and Salespersons’ License Act.

The most important thing to consider is that a real estate wholesaler must NOT perform any actions that would require a real estate license according to Kansas State Statutes Chapter 58 – Article 30. More specifically, a real estate wholesaler must avoid the actions of a real estate licensee as defined by KSA § 58-3035 (f) (1-10).

Further, KSA 58-3036 notes that unless otherwise exempted, a real estate license is required for these activities:

58-3036. Licensure required. Unless exempt from this act under K.S.A. 58-3037, and amendments thereto, no person shall:

(a) Directly or indirectly engage in or conduct or represent that such person engages in or conducts the business of a broker, associate broker or salesperson within this state unless such person is licensed as such a broker, associate broker or salesperson in accordance with this act.

(b) Directly or indirectly act or represent that such person acts as a broker, associate broker or salesperson within this state unless such person is licensed as such a broker, associate broker or salesperson in accordance with this act.

(c) Perform or offer, attempt or agree to perform any act described in subsection (f) of K.S.A. 58-3035, and amendments thereto, whether as a part of a transaction or as an entire transaction, unless such person is licensed pursuant to this act.

The entrepreneurial spirit is alive and well for Kansas real estate wholesalers. Aspiring wholesalers no longer need to ask, "Is wholesaling real estate legal in Kansas," but instead, "How can I wholesale real estate in Kansas."

*For in-depth training on real estate investing, Real Estate Skills offers extensive courses to prepare you for your first investment. Attend our FREE training and gain insider knowledge, expert strategies, and essential skills to make the most of every real estate opportunity!

Do You Need A Real Estate License To Wholesale In Kansas?

You do not need a real estate license to wholesale real estate in Kansas. Real estate investors in Kansas may wholesale real estate if their actions and behaviors do not fall within those behaviors that require a license in the Sunflower State. Real estate wholesalers must not represent themselves in any way that states they are active in the real estate business of exchanging, buying, leasing, or selling real property for compensation.

One of the more common mistakes of real estate wholesalers is to market the property instead of the contract. It is important to note that it is illegal for wholesalers to market a property because that action requires a real estate license.

Consequently, real estate licensees may advertise real property for sale if:

• The advertising is in no way misleading
• The licensee has the owner or owner’s agent’s expressed written consent. (KSA § 58-3062 (8))

Additionally, KSA § 58-3037 (a-k) allows these individuals & situations to proceed without the required license:

• Someone acting as a Power of Attorney (POA), without compensation
• An attorney performing professional duties
• Trustee/Receiver acting under a court order or within a judicial proceeding
• State/Federal Employee performing duties
• A nonprofit referral system or association of brokers
• Public utilities in Kansas, etc.
• The Lease/Sale of new construction – with certain limitations
• Sale/Lease of land used for agricultural purposes.

Essential Recommendations For Real Estate Wholesalers In Kansas

• Act as a Principal (Buyer) in the Transaction; this requires an executed real estate contract.
• Do not market the house unless you are licensed or an owner (or otherwise exempt). Real estate advertisements are only permitted by a property owner or a real estate agent with the consent/knowledge of the property owner(s). Marketing a house for sale that you do not own (or are authorized to advertise) is illegal.

A real estate wholesaler can market their rights and obligations under a real estate contract, which is very different than marketing the property. To avoid confusion, however, many investors learn how to become a real estate agent in Kansas and get licensed. That way, they avoid any gray areas that would have them acting as a real estate agent when they aren't supposed to.

Is Co-Wholesaling Real Estate Legal In Kansas?

Real estate wholesaling is often a great entry point for those just getting started in Kansas real estate investing. This is because, as a real estate strategy, it requires little (and at times no) capital. However, wholesale real estate must be done with the investor’s eyes wide open—which means a commitment to the appropriate due diligence required to vet out investment opportunities professionally and completely. However, real estate wholesaling offers limitless earning potential from an entrepreneurial perspective.

Many real estate wholesalers work in teams, also called co-wholesaling, with one partner finding the property and the other bringing a cash buyer. In other words, a co-wholesaling relationship can be a one-time or long-term collaboration (denoted by rules established in a joint venture agreement, etc.) among investors with the same investment goal – to turn a profit through real estate wholesaling.

There are several techniques to structure the end stages of a real estate wholesale deal. The most popular ways to close a real estate wholesale include:

• Assignment of a Contract
• Double Closing
• Wholetailing

Real estate wholesalers firmly established in this career are forever building/refining a wholesale buyers list of cash buyers. The more potential buyers a wholesaler works with, the greater the chance of completing the wholesale deal.

While a real estate license is not required in Kansas, obtaining a license may be worthwhile as it opens up access to resources, contacts, and networking events.

Is Reverse Wholesaling Real Estate Legal In Kansas?

Reverse wholesaling is when the steps to accomplish a real estate wholesale deal are reversed from their typical order.

In reverse wholesaling, the wholesale professional first finds a buyer. Some believe that having a cash buyer is more than half the battle to finish the deal. The next step in the wholesaling process is to locate the property being sold by one of the many hurried or distressed homeowners who need a quick close and quick cash.

Reverse wholesaling is often the preferred choice for real estate wholesaling professionals because they build and maintain a curated buyers list (often chock full of private money lenders), as they search for well-priced properties from motivated sellers. In other words, reverse wholesaling allows wholesalers to hunt for specific properties.

Kansas Wholesale Contract

Two legal forms are primarily used to wholesale real estate in Kansas. The Kansas wholesale contract and an assignment contract, each of which is discussed and shown below.

A contract is a legally enforceable instrument that defines the terms of the real estate deal. It includes standard language like:

• The property’s legal description – i.e., metes & bounds, etc.
• The amount of earnest money that has been given by the buyer in good faith.
• Any personal items (i.e., furniture or appliances, for example) included in the sale.
• The financial terms to complete the property sale, plus the option for either party to modify the terms of the contract with the addition of other written provisions to which they both agree.

A real estate contract is assignable (by default) unless the agreement’s language prohibits the use of an assignment within the agreement.

Kansas Assignment Contract

An assignment contract is a legal document that transfers the contractual rights, obligations, and responsibilities of a buyer named in a contract (known as the assignor) to another buyer (known as the assignee). The assignee often acts as a cash buyer who compensates the wholesaler for the work involved in finding or modifying the property.

An assignment delineates the following information:

• The names of the Assignor & the Assignees, et al.
• The name of the obligor – the other party to the purchase agreement in question.
• The Title, the Effective Date & the Expiration Date of the contract.
• The state that governs the agreement, to name a few.

Remember - You cannot assign a contract if the contract’s language expressly prohibits doing so.

In addition, in Kansas, a title company, licensed agent, lender, lawyer or escrow firm can perform closings, however, the title searcher must be a licensed abstractor. Also, much of the land transferred in Kansas can be traced back to Indian origins, which may require approval before the Indian commission.

Final Thoughts

The question "Is wholesaling real estate legal in Kansas?" can be confidently answered with a yes, as long as the involved parties meticulously follow state laws and regulations. Now that you know wholesaling is legally permissible, it's the perfect time to learn how to effectively engage in wholesaling real estate in Kansas. For those eager to start a successful career in this field, Real Estate Skills' Ultimate Investor Program offers comprehensive training and resources tailored to the Kansas market. This program is an excellent stepping stone to mastering the intricacies of wholesaling and becoming proficient in the local real estate landscape.

*Disclosure: Real Estate Skills is not a law firm and the information contained here does not constitute legal advice. You should consult with an attorney before making any legal conclusions. The information presented here is educational in nature. All investments involve risks and the past performance of an investment, industry, sector, and/or market does not guarantee future returns or results. Investors are responsible for any investment decision they make. Such decisions should be based on an evaluation of their financial situation, investment objectives, risk tolerance, and liquidity needs