Ultimate Guide To Wholesale Real Estate in Nebraska 2023

Welcome to our comprehensive guide on wholesale real estate in Nebraska! In this blog post, we will cover the legal considerations, financial aspects, and practical tips for successful wholesale real estate investing in the Cornhusker State.

First, let’s start with the basics. What is wholesale real estate? In a nutshell, wholesale real estate refers to the practice of purchasing a property below market value, often with the intention of quickly flipping it to another buyer for a profit. This is typically done through a contract assignment, which involves transferring the rights to a property from one person (the wholesaler) to another (the end buyer).

Now that we have a general understanding of wholesale real estate, let’s delve into the specific legal and regulatory landscape of Nebraska.

Applicable Law

In Nebraska, the legal framework for wholesale real estate is governed by the Occupation Code, which can be found in Chapter 76 of the Nebraska Revised Statutes. This code outlines the definitions and requirements for real estate brokers, salespersons, and other related occupations.

Amendments to Nebraska Real Estate Commission Regulations Title 299, Chapters 1, 2, 5, and 7, and Title 301, Chapter 1, related to clean up of obsolete language and references, changes related to real estate education and activity reporting and offering equitable interests in real property. https://nrec.nebraska.gov/legal/2023proposedruleamend.html

LB892, passed by the Legislature in the 2022 regular session, requires a real estate license for “publicly marketing for sale an equitable interest in a contract for the purchase of real property between a property owner and a prospective purchaser”, commonly referred to as “Wholesaling”.    Wholesaling involves the acquisition and marketing of an assignable contract for the purchase of real estate for a profit by an investor or other member of the public.

lb892 Nebraska

A new Commission Policy and Interpretation lists and summarizes the agency and procedural requirements.  Under the new law an agent assisting a wholesaler would be a seller’s agent for the wholesaler.  There is a new agency disclosure form for wholesaling situations, the link to the form and instructions can be found below.

Agency roles and responsibilities in wholesaler representation can be found in the Commission Policy and Interpretation and new Agency Disclosure form instruction linked below.

So is Is wholesaling real estate legal in Nebraska? Yes but you need a license!

Occupations Code Sections – Definitions

According to the Occupation Code, a real estate broker is defined as “any person, copartnership, association, or corporation, foreign or domestic, who, for another and for a fee, commission, or other valuable consideration, lists, sells, purchases, exchanges, rents, or leases real estate, or who negotiates or attempts to negotiate any of these activities.”

On the other hand, a real estate salesperson is defined as “any person who is licensed by the commission and acts for and is compensated by a broker in the capacity of selling, buying, exchanging, renting, or leasing real estate or in negotiating or attempting to negotiate any of these activities.”

It’s important to note that in Nebraska, both brokers and salespersons are required to be licensed by the Nebraska Real Estate Commission (NREC). This means that if you’re interested in wholesale real estate in Nebraska, you will need to work with a licensed broker or salesperson.

Content of Required Disclosure

Under the Occupation Code, a real estate broker or salesperson is required to disclose certain information to a potential buyer or seller of real estate. This includes:

• The nature of the broker’s or salesperson’s relationship with the buyer or seller
• Any interest the broker or salesperson has in the property
• Any known defects in the property
• Any fees or commissions that will be charged in connection with the transaction

It’s worth noting that these disclosure requirements apply to all real estate transactions in Nebraska, including wholesale deals.

Assignability of the Contract

In a wholesale real estate transaction, the wholesaler typically enters into a contract with the seller of a property, with the intention of assigning (transferring) that contract to the end buyer. In Nebraska, the assignability of a real estate contract is generally governed by the terms of the contract itself.

If the contract allows for assignment, then the wholesaler can transfer their rights to the end buyer without the need for the seller’s consent. However, if the contract prohibits assignment, then the wholesaler will need the seller’s permission to transfer the contract.

It’s important to carefully review the terms of the contract before entering into a wholesale deal in Nebraska to ensure that it allows for assignment.

The Assignment Instrument

Once a contract is deemed assignable, the next step is to execute an assignment instrument. This is a document that formally transfers the rights of the contract from the wholesaler to the end buyer.

In Nebraska, the assignment instrument should include:

• The names of the parties involved in the transaction (the wholesaler, the seller, and the end buyer)

• The property address and legal description
• The terms of the original contract, including the purchase price and closing date
• A statement confirming the assignment of the contract to the end buyer

It’s worth noting that the assignment instrument should be signed by both the wholesaler and the end buyer, but not the seller. This is because the seller’s rights under the contract are being transferred to the end buyer, not the seller’s obligations.

Representations and Warranties (“Reps and Warranties”) by Assignor

In a wholesale real estate transaction, the wholesaler is typically responsible for making certain representations and warranties to the end buyer. These are statements about the property or the transaction that the wholesaler is affirming as true.

For example, the wholesaler may represent and warrant that:

• The property is being sold free and clear of any liens or encumbrances
• The property is being sold in its current condition, with no hidden defects
• The wholesaler has the legal right to assign the contract to the end buyer

It’s important for the wholesaler to be honest and transparent about any representations and warranties they make to the end buyer, as failing to do so could lead to legal consequences.

Covenants and Agreements

In addition to representations and warranties, the wholesale contract may also include certain covenants and agreements. These are promises or undertakings that the wholesaler is making to the end buyer.

For example, the wholesaler may agree to:

• Procure any necessary consents or approvals for the transfer of the property
• Correct any title defects or issues that arise during the closing process
• Provide the end buyer with all relevant documents and information related to the property

It’s worth noting that any covenants and agreements made by the wholesaler should be clearly outlined in the wholesale contract to avoid misunderstandings or disputes down the line.

Recourse in the Event the Contract or Closing Fails

In the event that the wholesale contract or closing process falls through, it’s important to know what recourse is available to the parties involved.

If the end buyer is unable to close on the property due to issues with financing or other contingencies, the wholesaler may have the right to keep any earnest money deposit that was made. However, if the wholesaler is unable to close on the property due to their own failure to perform (such as a failure to obtain necessary consents or correct title defects), the end buyer may be entitled to damages.

It’s important to include provisions in the wholesale contract outlining the parties’ rights and obligations in the event that the contract or closing fails.

Express Consent from the Owner of the Property

In a wholesale real estate transaction, it’s important to obtain express consent from the owner of the property before transferring the contract to the end buyer. This is typically done through a written assignment of contract, which should be signed by both the wholesaler and the owner.

Obtaining express consent from the owner is important for a few reasons. First, it ensures that the owner is aware of and agrees to the transfer of the contract. Second, it protects the wholesaler from potential legal liabilities if the owner later disputes the transfer.

How Much Do Real Estate Wholesalers Make In Nebraska?

Now that we’ve covered the legal considerations of wholesale real estate in Nebraska, you may be wondering how much money you can make as a wholesaler in the Cornhusker State.

The amount of money that a real estate wholesaler can make in Nebraska will depend on a number of factors, including:

• The size and condition of the properties being wholesaled
• The level of competition in the market
• The wholesaler’s negotiation skills and marketing efforts

On average, wholesale real estate investors in Nebraska can expect to make anywhere from a few thousand dollars to tens of thousands of dollars per deal, depending on these and other factors.

It’s worth noting that wholesale real estate is generally considered a high-risk, high-reward investment. While the potential for lucrative profits is there, there is also the risk of losing money if a deal falls through or the market conditions change.

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

YES! You do!

If you are acting as a real estate broker or salesperson, then you are required to be licensed by the Nebraska Real Estate Commission (NREC). This means that you will need to pass a written examination and meet other eligibility requirements set by the NREC.

However, if you are simply acting as an investor and are not involved in the listing, selling, or negotiating of the property, then you do not need a real estate license. This is because wholesaling is generally considered a form of investing, rather than real estate brokerage.

It’s worth noting that even if you are not required to have a real estate license, you may still need to comply with other legal requirements, such as obtaining express consent from the owner of the property and disclosing any known defects or issues with the property.

So Do you need a license to do wholesale real estate in Nebraska? YES!

Can A Realtor Wholesale Property In Nebraska?

Yes, a realtor in Nebraska can wholesale property as long as they are acting within the scope of their license and following all applicable laws and regulations.

As a licensed real estate broker or salesperson, a realtor is able to list, sell, and negotiate the sale of real estate. This includes the right to enter into a contract with a seller and assign that contract to another party.

However, it’s important for realtors to be mindful of their ethical obligations and disclose any conflicts of interest, such as if they have a financial interest in the property being sold.

How Much Money Do You Need To Wholesale Real Estate In Nebraska?

The amount of money you will need to start wholesaling real estate in Nebraska will depend on a number of factors, including the size and condition of the properties you are interested in, the level of competition in the market, and your marketing and financing strategies.

Generally speaking, you will need to have some upfront capital available to cover the costs of marketing, due diligence, and closing the deal. This may include expenses such as:

• Marketing materials and advertising costs
• Inspection and repair costs
• Closing costs, such as title insurance and attorney fees

It’s worth noting that while wholesaling can be a lucrative investment opportunity, it also carries risks and requires a certain level of expertise and experience. As with any real estate investment, it’s important to do your due diligence and assess the potential risks and rewards before diving in.

What is a typical wholesale fee real estate? It depends on a large range of factors!

What Do You Need To Know About Wholesaling Real Estate In Nebraska?

If you’re considering wholesaling real estate in Nebraska, there are a few key things you’ll need to know:

• You’ll need to work with a licensed real estate broker or salesperson.
• You’ll need to comply with all applicable laws and regulations, including the Occupation Code and the requirements for disclosing known defects and conflicts of interest.
• You’ll need to be prepared to handle the financial and logistical aspects of the transaction, including marketing the property, negotiating with sellers and end buyers, and managing any necessary repairs or renovations.

It’s also a good idea to educate yourself on the local real estate market and trends, as this will help you identify good opportunities and make informed decisions about which properties to pursue.

Pros and Cons of Wholesaling in Nebraska

Like any real estate investment strategy, wholesaling has both pros and cons. Some of the potential benefits of wholesaling in Nebraska include:

• The potential for quick profits: If you’re able to secure a property at a discounted price and flip it to an end buyer for a higher price, you can potentially make a profit within a short time frame.
• Low barriers to entry: Unlike other real estate investment strategies, wholesaling doesn’t typically require a large amount of upfront capital or extensive experience. This makes it an accessible option for new investors.
• Flexibility: As a wholesaler, you have the freedom to choose which properties you want to pursue and when you want to enter the market.

On the other hand, there are also some potential drawbacks to wholesaling in Nebraska, including:

• High risk: As with any real estate investment, there is always the risk of losing money if a deal falls through or the market conditions change.
• Limited control: As a wholesaler, you don’t actually own the property, so you don’t have as much control over the outcome of the transaction.
• Limited potential for long-term profits: While you can potentially make a quick profit through wholesale flipping, you don’t have the opportunity to hold onto the property and potentially earn passive income through rentals or appreciation.

Is Wholesaling In Nebraska Easy?

The ease of wholesaling real estate in Nebraska will depend on a number of factors, including your level of experience, market conditions, and the competition you’re facing.

While it is possible to make money through wholesale flipping, it does require a certain level of knowledge and expertise to be successful. This includes understanding the local market, being able to identify good opportunities, and having the negotiation and marketing skills to secure deals and sell properties quickly.

That being said, wholesale real estate can be a lucrative investment opportunity for those who are willing to put in the time and effort to learn the ropes and build a successful business.

Top 8 Cities in Nebraska to Wholesale In

If you’re looking for the best cities in Nebraska to wholesale real estate, here are eight top contenders:

1. Omaha: With a population of over 460,000, Omaha is the largest city in Nebraska and a hub for business and economic activity. The city’s diverse economy and strong job market make it an attractive place to invest in real estate.
2. Lincoln: As the state capital, Lincoln is home to a number of government and educational institutions, which provide a stable job market and a strong demand for housing.
3. Bellevue: Located just south of Omaha, Bellevue is a growing city with a thriving economy and a variety of housing options.
4. Grand Island: Located in central Nebraska, Grand Island is home to a number of manufacturing and distribution companies, as well as a growing medical sector.
5. Fremont: Located in eastern Nebraska, Fremont is a small city with a growing economy and a variety of housing options.
6. Norfolk: Located in northeast Nebraska, Norfolk is home to a number of manufacturing and agricultural companies, as well as a thriving healthcare sector.
7. Columbus: Located in central Nebraska, Columbus is a small city with a growing economy and a variety of housing options.
8. Kearney: Located in central Nebraska, Kearney is home to a number of manufacturing and agricultural companies, as well as a growing healthcare sector. The city’s relatively low cost of living and strong job market make it an attractive place to invest in real estate.

10 Reasons You Should Wholesale Real Estate In Nebraska

If you’re on the fence about whether or not to invest in wholesale real estate in Nebraska, here are ten reasons to consider it:

1. Strong economy: Nebraska has a diverse and stable economy, with a number of major industries, including agriculture, manufacturing, and healthcare. This provides a strong foundation for real estate investment.
2. Affordability: Compared to many other parts of the country, Nebraska has a relatively low cost of living, which can make it an affordable place to invest in real estate.
3. Growing population: Nebraska’s population has been steadily growing in recent years, which can create a strong demand for housing and drive up property values.
4. Favorable tax laws: Nebraska has some of the lowest property tax rates in the country, which can make it a more affordable place to own real estate.
5. Good rental market: Nebraska has a strong rental market, with relatively low vacancy rates and strong demand for rental properties.
6. Strong job market: Nebraska has a diverse and stable job market, with a number of major industries and employers. This can provide a strong foundation for real estate investment.
7. Good location: Nebraska is located in the heart of the Midwest, making it an easily accessible location for businesses and residents.
8. Low crime rate: Nebraska has a relatively low crime rate, which can make it a safer place to invest in real estate.
9. Great quality of life: Nebraska has a high quality of life, with a variety of recreational and cultural opportunities and a strong sense of community.
10. Strong real estate market: The Nebraska real estate market has been relatively stable in recent years, with relatively low levels of volatility. This can make it a more predictable and secure place to invest in real estate.

Sources

1. “Nebraska Real Estate Commission.” Nebraska Department of Economic Development, www.neded.org/real-estate-commission.
2. “Nebraska Occupation Code.” Nebraska Legislature, nebraskalegislature.gov/laws/statutes.php?statute=76.
3. “Nebraska Property Tax Rates.” Tax-Rates.org, www.tax-rates.org/nebraska/property-tax.

We hope this comprehensive guide on wholesale real estate in Nebraska has been helpful! If you have any additional questions or would like more information on the legal, financial, or practical aspects of wholesale investing in the Cornhusker State, don’t hesitate to reach