A new kind of house flipper has infiltrated low-income neighborhoods, prompting local governments and agencies to enact more restrictive rules on home flippers capitalizing on distressed homes.
Instead of buying and renovating homes and putting them back up for sale, wholesalers work to put homes under contract and sell to traditional flippers.
However, in the past year, Philadelphia and Oklahoma have required wholesalers to obtain a license, Bloomberg News reported. Arkansas and Illinois passed laws in 2017 and 2019, respectively, to increase regulations on wholesaling.
Advocacy groups and legal aid services allege that wholesalers dupe sellers into signing a contract for far less than market value and then profit off a sale.
Wholesalers are often novice investors that have taken advantage of low interest rates and…