Wholesale Real Estate: Fraud in the Inducement. Wholesalers Need To Be Careful

Steve Trang: Alright. And we're live. Hey, guys. Thanks for watching. Thanks for checking this out.

I got my friend Tyler Epstein here, and I'm bringing him on because I was actually browsing through Facebook, you know, totally distracted, not paying attention, whatever. And I saw a post, and it was someone basically getting blasted for teaching people about wholesaling and just saying, hey. You put a property on the contract. You lock it up. You put a long thirty day period inspection period on it, and if you can't move it, then you just cancel it, which is something I've heard for a very, very long time.

And I didn't know that you couldn't do that until I saw Tyler, I saw Cece, and I saw another person in Texas going on explaining that there's this term fraud in the inducement. Never heard of that before. So, before I ex we go into that, Tyler, you wanna introduce yourself?

Tyler Epstein: Hey, guys. Tyler Epstein. I am an attorney. I'm not your attorney. So this is not legal advice.

This is a little bit of legal education. I'm an attorney in Texas. You know, this I've I've I wholesale a few houses. I have rental properties, buying some timber property, building an RV park, you know, as we speak. So I'm in the game.

I'm I'm running around, kinda bouncing off the walls. No, Steve. But I don't specialize in any one thing. I just do whatever makes sense when I have the time.

Steve: Right. And so, I guess, why well well, first, we'll explain we'll explain what fraud inducement is, and then I'll ask why it's a hot button. So first, what is fraud in the inducement?

Tyler: Fraud inducement, it it it's really just common law fraud. Fraud and inducement is is is how the fraud was committed. And so and so it gets a special term because it the fraud was propagated by the the inducing the contract. So I'm a start with just a little bit of basic contract law, offer and acceptance with consideration. Right?

And so, that becomes kind of the the meeting of the minds, if you will. If you offer to buy somebody's house, I'm gonna use wholesaling as as a deal, and you say you're gonna pay cash and you're gonna close in fourteen days, but you don't have the cash or the ability to close in fourteen days, then you induce somebody to rely on that statement in signing the contract. Fraud and inducement. Now you have a contract where and I and I'm gonna go through the legal elements because it's it's it's this is this is for Texas, but every every state's gonna be similar. A material representation.

Hey. I have a $110,000 cash and a duffel bag in my trunk. I can buy this house right now. That's a material representation. That was false.

You better have a $110,000 in your trunk. That was made with the knowledge of its falsity or reckless without any knowledge of the truth. So saying, oh, I I've got private money, but the guy that you last did a deal with said never call me again, then you don't you know, you you it's sketchy whether he's not he's gonna loan you any or she's gonna loan you any money anymore. That was made with the intent that the other party rely on that, and then they suffered injuries. And so if you say you can close in fourteen days and they're $18,000 behind on their mortgage or taxes and you don't close, that's just eating up interest and fees.

That's there there's injuries there.

Steve: Yeah. So before we take a step in into into why it's such a problem, I wanna make sure everyone understands it. So, basically, in layman's terms, is if I lie to you to get you to sign a contract.

Tyler: Yeah. Yep. Right? I mean, I I I wouldn't explain the the elements. But, yeah, essentially, if you lie and get a contract, then it's a problem.

Steve: Right. So let's take it out of real estate. You know? Let's just use whatever you guys learned in law school. Right?

Like, what are some basic or case law or, like, you know, precedent? You know? Like, we learned about, like, you know, frivolous lawsuits from, like, the lady that spilled her coffee on her lap at McDonald's. Right? Yep.

What are some common things?

Tyler: I won't stop you. We're gonna we're gonna play a little sidebar there. 100% not frivolous lawsuit.

Steve: So Okay. Let's just pretend that Let's use another example.

Tyler: Yeah. No. No. But you but you you've gotta go watch the documentary on Netflix because we we had to watch everything. I think it was HBO, maybe.

Mhmm. McDonald's was eating their coffee up to, like, a 190 degrees, so the old people that they gave free refills to wouldn't drink so much. So then not only this lady, when she spilled her coffee, it wasn't like a 120 degrees, and she got a little little chapped. She had to have skin grafts in her crotch and was in the hospital for twenty days, and she only wanted them to cover her medical bills. And McDonald's told them to buzz off.

And so when they sued, they found out this all that's out. Like, they were literally trying to rip off old people so they wouldn't drink so much coffee. Coffee is not that expensive. And that that's so long sorry. Sidebar.

The, again, I'm very conservative, but there's certain things that, like, I don't know. I gotta hold on. That that this is a deal. So, you know, I'll look at it like this if if I, you know, a watch salesman. You know, you go to the street corner.

You're in New York. How many people are selling watches out of the you know, like, it's shocking how many people are actually selling watches on the street in New York. That's not even shocking. What's shocking is how

Steve: many people are buying it?

Tyler: Fair. Fair fair fair statement. Right? This is this is this is a Rolex. Right?

Well, it it says Rolex, but does that make it a Rolex? No. The mechanism and and the and the artistry that goes into a Rolex is what makes it a Rolex. So it that right there. Right?

So when you bought something and and thinking it was a Rolex, the guy selling it to you knows it's not a Rolex. That's that's not actual contract. That that's a that's a bad deal. So you can rescind that and go back, no. I won't here's your Rolex back Rolex.

I want my money back. Because there was never a meeting on the minds. You were buying a Rolex, and he was selling you a Timex to totally get the things.

Steve: So but what about the part? Right? Because what everyone kinda defers to is, like, bud, Tyler, I've got this thirty day inspection period. I've got this subject to partner approval, subject to financial whatever. Like, they've got all these.

Tyler: So third thirty day inspection. Yeah. So so you go through that. Your partner approval, that's that's that's weak. That's very weak.

I I now the inspection the inspection is valid, but you you are going in as an as an expert. Right? So, like, the only way that the inspection you can't go, oh, well, I didn't know that the, the eaves need to be painted. I don't know if I'm by this house anymore. It better come back with, like, a major plumbing issue, a major foundation issue, or a major roof issue that you couldn't spot from the naked eye kinda.

Mhmm. You know? But if you walk into a house and you lay a marble down and it rolls to the right, you're like, I'm pretty sure you knew there was a foundation issue in here. Right. So, like, it there there's a limits to what you can get by with.

The financial approval? No. You're you're not buying an FHA house. You ain't going to FFA FHA and get a loan? No.

No. No. That's something no. Especially if it says cash Mhmm. On on all these wholesaler contracts running around.

The one pager that says cash and, you know, thirty day inspection and partner approval, you're really you're really setting yourself up. So now oh, but it says and or assigns and or not only assigned. So you are committing to purchase the contract. You then have to hustle to try to sell that contract. But if you can't, you have committed to purchase the product.

Steve: Mhmm. So if I go in there and say, hey, Tyler. I've got I I've got I need fourteen days of due diligence.

Tyler: Yep.

Steve: That due diligence doesn't cover me sending to my email list and saying, hey. I couldn't find a buyer, so I my that was my due diligence. You're saying that's doesn't cut the cut the mustard or whatever the expression.

Tyler: Not not at all. And and especially when you're holding yourself out to be an an expert. You know? Right. Like like, the the things that, you know, I've I've walked from a contract before because I knew there was foundation issues, and I said, I've gotta get a guy in here that does this to tell me, hey.

You know, what's it gonna take? I dropped $200 to have them come out and do a foundation inspection and give me a full plat and tell me it's gonna take me, you know, 67 piers to to stabilize this house. I'm like, no. Numbers don't work no more. Went back to the new seller.

It was like, hey. I've gotta pull x number of dollars off this. They were like, no. I was like, okay. I'm done.

Right. We're that's valid. But if you were

Steve: do a real due diligence.

Tyler: Yeah. I spent $200 that you can't tell me I wouldn't do it with my due diligence. I've hired a guy especially to go Go tell me. Yeah. You know?

That's valid.

Steve: Okay. So then what are the consequences? So let's say I tell Tyler, hey. I'm gonna buy your house cash. I can close in fourteen days, and I don't and my only exit is a wholesale.

What are the consequences?

Tyler: So fraud is first of all, it's it's a criminal, and it's civil. So if the DA decides that, you know what, he wants to end the whole the wholesaling nonsense that is happening in his district. He can take that case, and there's criminal charges that, you know, that that can be filed. I'm not a criminal attorney, so don't give me all but so there is criminal on on the on there. That that's an option.

On the civil side, then you have damages that can easily run up to, you know, tens of thousands of dollars. Rescission on top of on top of the criminal plus plus, you know, you you you your name's mud, and they can put liens and judgments against your houses. And, essentially, everybody's like, well, I bought it in the name of my trust, or I bought it in the name of my LLC, and I did all this and that. Steve, you run multiple businesses, and I bet your accounting is not perfect. Right?

Steve: It's actually pretty good, but it took a long time to get here.

Tyler: I'm gonna say it took you exactly. It is pretty good, but you've got people now. Because if you go back to the first two or three years, you're like

Steve: Oh, first ten years. First ten years was a crap show.

Tyler: Yeah. And and your credit card, you're like, I don't know which credit card this goes to. Just put it on it and let's go. Right? So it's not hard for me to pierce a corporate veil even for for for sophisticated people.

My last

Steve: question understanding is a corporate veil does not is invalid in the case of crime.

Tyler: Correct. Criminal. Yeah. So my thing is even even if it was legitimate, it's not hard for me to pierce it much less with, you know, oh, I've got my own my asset protection. I paid, you know, 7,000 bazillion dollars for, what's the I'm not gonna say the name of it, but in Utah.

You know, I've got all this asset protection. I'm good, right, from this from this corporation that settled my my corporate entity. Stroke. Yeah. It doesn't matter.

Steve: Yeah. And so for me, you know, learning about this, the bigger issue really isn't I mean, integrity is important. All these everything's important. But for those who are more flexible, you know, so we I mean, we I was talking to somebody yesterday, and we kinda say, you know, wholesaling. Yeah.

You know, Johnny wholesale with the last rule bender. You know? Like Yeah. We're like, if you're in the in in this industry, you tend to live in the gray. Right?

Absolutely. So but I'll I will say the things that after learning this, for someone that's not careful yeah, maybe you don't get in trouble today. Maybe you don't get in trouble tomorrow. But in five years, when you're wildly successful and an attorney smells this, this could cause you lots of problems later on.

Tyler: I I can say that there's some major there's some DAs and and some major MSAs that that are hunting. They're headhunting. They're they are looking for the right opportunity to really run somebody up the flagpole. I I know I know for a fact that one of them is in Bexar County, which is San Antonio, Texas for people that are not from and it's spelled b e x a r so that you know? But, anyway, it's funny.

Crap bear with an X. But, but yeah. So so there there there's some headhunting going on. And for me, it it for me, it's personal because I make money in this. I don't hide that from anybody.

If I buy a house, I'm gonna have my equity position. I'm not a charity. Never made any bones about that. But if you put somebody in a contract and you string them out for thirty days or forty five days or sixty days, they didn't they don't have the ability to withstand your nonsense. So you're trying to capitalize on somebody while you're actually just hurting them.

And to me, you know, it it kinda pulls on my heartstrings a little bit. So, I mean, I grew up in some situations that, you know, a $100 bill to me was a unicorn. So it is personal when I go into these houses. And and and, yes, I'm making money. I've got two little girls to feed.

I'm gonna do that. I don't ever hide that from anybody. But when you're streaming them on, you're stealing from I mean, you're not Robin Hood anymore. You are the sheriff of Nottingham. You're stealing from the poor.

Yeah. Yeah. And that's criminal to me, and that that's something that I take personal. Like, you offended me, and I I'm not even involved with it, and you're offending me. And I don't get offended really that easy.

So that I

Steve: know that. I know that for sure. Hey, guys. Please ask your questions. Right?

You know, what what your questions about, you know, fraud inducement. You know, maybe if you guys have some scenarios you you wanna run by us like, hey. Is this fraud and this inducement? Is this not? Whatever.

Please, guys, post it in here. You know, we'll we'll we'll go through it because I asked Tyler to come on here because I want him to help our community, do better and also clean up our clean up our community. Right? If you guys are seeing this, you can educate them on this. Like, hey.

You guys can't do that. Right? Now ignorance is not well, ignorance has never been defense, but now for sure it's not ignorance. Now it's willful.

Tyler: And and and that's another thing too is, you know, you can get by by being ignorant for for a minute or two, and and you may get a pass because they're like, he's just dumb. They're just dumb. We'll, you know, like, we'll help him out, but, eventually, you don't have that excuse anymore.

Steve: Mhmm.

Tyler: And so yeah. I mean and we've gotta self regulate. We've gotta call people out. We've gotta get rid of the, the shysters before we're regulated by the government more. Yeah.

Because it's and then it's gonna happen, and that's not gonna help anybody. It's gonna hurt me. It's gonna hurt the sellers. It's gonna hurt every piece of the pie. You know?

Regulation has never been beneficial for anybody but the biggest of the big. Zillow is gonna make a lot of money from it.

Steve: Mhmm. Well, and it sucks because every time the government comes in and sets a regulation, it hurts the little guy. Like, there are instances like, short sales. Right? Like, because of, Dodd Frank, you know, if you didn't get the short sale docs into the bank twenty one days prior to foreclosure, you can no longer do it.

And somehow that was supposed to protect the homeowner, and now we got more people going into foreclosure. Right? And the

Tyler: Industry wide, any regulations only help the established. Do you think Exxon cares about a carbon tax? No. They've got money for days. They're like, okay.

It's gonna squeeze out the little guy, and we can buy buy their assets for less. We're we we survived to the next the next term, the next president, the next policymaker. We we survive. Where when you're just getting started, you don't have those luxuries.

Steve: Right. And the other thing too is the reason why, you know, Tyler is so passionate and the reason why I'm so passionate about this specific thing. I was always always looking at this from an integrity perspective, but now I know there's a legal perspective as well. Is that how many of you guys have gone into an appointment where the person was going to foreclosure in fourteen days and a wholesaler contracts it at a price you know they can't sell it at? And the day before foreclosure, they price drop the seller to a price lower, right, than you would have paid for it.

And they're like, well, if you won't drop it, then I guess you're going foreclosure. Like, that's a problem. That's a problem, and they're screwing the seller. Right? They're taking advantage of a seller where they don't have any more time.

Tyler: Yep. And

Steve: then we're losing to them because they're being unethical and now, you know, illegal, acting illegally.

Tyler: Yep. It's it's it's criminal. It's one of those things that, like, I like I said, I'm I I it it it gets me fired up.

Steve: Yep. Alright. So Rob's question, what would you put in the contract then to protect yourself?

Tyler: I don't put anything in the contract to protect myself. I don't put it under contract if I'm not willing to purchase it at that price.

Steve: Yeah. And so I guess to clarify. Right? This is not to say that you can't wholesale. We're not saying don't wholesale.

Tyler: Absolutely not.

Steve: Right. We're saying if you can't wholesale it, you better be in a position to close on it or whatever else. You just can't have wholesale be your only exit.

Tyler: When when when you put your name on the bottom of that line, you're committed to buy that house. And now I'm not saying you can't buy you can't wholesale it or wholetail it or whatever whatever you wanna do with it, but you've gotta close on that property. Now if you can assign it for more and you can make your money and run, good. But if you put your money on there and said you're gonna pay a $100,000 and you don't have the ability to get a $100,000, you just committed fraud.

Steve: Right. Okay. So I guess to answer this then. Right? So double closing would be a lot safer than assigning.

I think assigning is still fine. Assigning is still fine. Assigning

Tyler: is fine. Double closing is just assigning with two closings at the same time.

Steve: Yeah.

Tyler: I mean, you you really just assigned the contract. It it's not fraud to assign the contract. So so we're we're we're we're getting there. It's it's you when you commit to buy a property, then you gotta be able to close. That's it.

I mean, so if you can't close, if you don't have the, a hard money lender that that is telling you, hey. In this ZIP code, we will lend up to this much, then you're committing fraud. Like, if you don't have the cash in the bank, you're committing fraud. So there is the cash close. Yeah.

If you're not paying with cash, if you're relying on hard money and you're saying you're paying with cash, the contract's invalid to begin with because it's not cash. Cash is if you have green $100 bills in your hand. Otherwise, you're not a third party financer.

Steve: Right. Alright. Let's see what else is here. So so how do you wholesale and protect yourself, especially if you don't have capital to close on the property?

Tyler: You better find somebody that does have the capital to close on a property, before you put it under contract. You build a relationship with a hard money lender in your area and make sure that, you know, they lend in this ZIP code, these streets. Right? Because, I mean, sometimes they're like, oh, we don't land there. So find one that lands in your area, figure out what their criteria is, and make sure that you hit that and then get while you know, make sure that you're right.

You know? Study. Be be be a professional. If they only if they're only gonna lend on three twos, they won't lend on a 21. Don't don't don't lock up a 21.

Steve: Right. And I think this is so again, just to emphasize. Right? Like, our intent is to wholesale. Right?

That is our intent. That that's our preferred exit strategy on every deal with contract. But this is why you guys might heard me referring to myself as the reluctant flipper. I will flip houses that we can't wholesale. Right?

My flip margins are terrible because the houses we flip are the houses that we couldn't wholesale. Right? Those are the ones we might have contracted too high.

Tyler: So I I wholesale a few here and there if it's not an area I particularly want. But, I mean, I close on on every if I put my name on it, I'm closing. I've even I mean, I've yet to put a house under I've I've I've not closed on two houses. One, because the seller started ghosting me, and it wasn't the margins were thin, so I was like, bye, Felicia. And the other one was is because I didn't you know, it was not worth, you know, haggling over it.

Like, things changed. Foundation was bad. They weren't coming down. You know? Okay.

Fine. I'll walk.

Steve: Yep. Alright. So this is an interesting question. What do you do when the buyer commits and doesn't come through? And this is, you know, where, I guess, in two scenarios, right, where if you've wholesaled it and the buyer doesn't come through.

Tyler: Yeah. You're still on the hook for that first that first contract, so you still close.

Steve: Yep. So then the second part is, let's say, I'm a wholesaler and I contracted it. Right? And I wholesale it to Tyler. Mhmm.

And I have a contract with Tyler. And then Tyler says, hey, Steve. I don't have the money. Are you then committing fraud in the inducement?

Tyler: Potentially, there there's some some issues there. It's one of those things that, yeah, I mean, you've got me. You can you've got If I sign that I'm gonna buy and then I back out, you know, there there's there's you have me on the hook. But guess what? You're still the monkey in the middle.

So you're still on the hook too. It's it's it's

Steve: Well, I'll still close on it. But my my point is if I after I close on it, do I have a case for a civil?

Tyler: Absolutely. You do. I mean Yeah. We're talking in broad strokes. Right?

Contracts law stickle, but broad strokes, absolutely.

Steve: Yeah. So that can make that could be something interesting to talk about on assignment contracts. Like, hey. If you don't because we have it here. You know?

If if you don't close, I'm I'm I'm keeping your earnest money, and I'm suing you for damages. Yep. It sounds like here, I can also, well, I guess that's what's that's what it is, is suing for damages.

Tyler: I mean, suing for damages. So so it's one of those things that but but you also have a a duty to mitigate damages. So so, you know, but, yeah, you could still get you could still get more. And And that's another thing. I'm a bring up something else.

On these assignment contracts where but, like, they don't have any, consideration for the option money for their the the, inspection period, that's not a contract. Without consideration, you you don't have a contract. You have you have nothing. You have full of it.

Steve: So if the contract itself doesn't have consideration, whether it's option money or earnest money you're saying

Tyler: Yep.

Steve: If there if there's no mention of it, then it's not a contract.

Tyler: No. And and then if you didn't deliver, if you put on there, you're gonna you're gonna give them a $100, and you don't have you didn't you didn't give them a $100 check or or take a picture of of them getting a $100 for you, then there's an argument that it's not a valid contract.

Steve: Even if you deposit the earnest money at title?

Tyler: If you deposit a title, you're good.

Steve: Okay. So anonymous asks, what about the earnest money? So, like, let's say they they do a contract with the seller and say, you know what? I can't perform. Keep the earnest money.

Are they still committing fraud in the inducement?

Tyler: Yes. Because you didn't have the ability to close. Not closing because you don't have the ability is much different than not closing because you don't want to. But if you don't have the ability when you sign that contract, that that's fraud. Now when you do give them earnest money, just make sure you don't ever wanna get that back because that's not

Steve: Say that again?

Tyler: If you're giving the seller earnest money directly to the seller, make sure you just never want that money back because it's gone.

Steve: Yeah. It's like lending to a friend that or Yeah. Now you just, like, don't expect it ever to come back.

Tyler: Yeah.

Steve: Okay. So this is right here. I guess the option period kinda goes back to our due diligence period. You guys call it different in Texas.

Tyler: Yeah. So your option period no. It does not cover you for any reason. It covers you for reasons listed in the contract. So and, again, as you as an expert now we're we're getting we're wading off in some areas that I'm I there's gonna be somebody yell and argue with me, and that's fine.

But if you're going in as an expert in the industry, you need to be able to to fall find major things. So when you back out of that contract and the seller told you the pipe the the sewer is busted underneath the house because the foundation has problems, and you back out because of that. But you didn't go get a a foundation guy and say, hey. It's gonna cost $30,000 to fix this. You just backed out because, you couldn't assign it, and so you're just gonna use that as an excuse.

You're still wading off into some waters. You don't wait wait off into now. It gets grayer. Right? But it it gets it it's still it's still in a vacuum frog.

Steve: Yeah. And I think this is great, observation here. The comment is that what we're saying here is that, you know, work with someone that knows what you're doing so that you don't put yourself in a bad spot.

Tyler: A 100 a 100%. And and, you know, honestly, it's tougher to find great partners in this industry than it is to, to find money, because there's there's a I mean, our industry is fraud fraught with snake oil salesman. So one of the reasons I would agree to come on here with you, Steve, is you're I mean, there's there's a lot of people. I'm like, no. I ain't going on any anywhere near you in a public place, much less on the Internet.

Steve: Yep. Yeah. Stay tuned. I got I got a a settlement that we just dealt with. We just wrapped up.

And, when I talk about who was involved in that settlement, I think it'll open some eyes. A guru in our space that that, got me involved in a lawsuit that I had nothing to do with, but I had to be in it, and I had to settle. It cost me $10,000 to settle, of which I had no culpability, but the law doesn't care about that.

Tyler: Right? It was it was cheaper than paying your keep paying your attorney.

Steve: It's cheaper to pay $10,000 and make this thing go away than pay my attorney. But, you know, stay tuned. I think it'll be some it'll be very eye opening when they find out the the guru that was involved in this.

Tyler: The, amen? Yeah. So so let's say I'm just starting out. I don't have the money to buy their house. You're legally must tell them that you're wholesaling up front.

Explain what that means. Yeah. Or just make sure you you line up. Be a bird dog for somebody. Make an agreement to JV it.

I've got a guy right now that I'm just I'm selling a house. I'm JVing with him. He brought me the deal. And after expenses, I'm splitting the profit within $50.50. Will everybody do that?

No. I just my thing is is I'd rather row the boat and have everybody like me at the end of the day, and at the same time, I'm making plenty of money. So I'm making my, you know, I'm making essentially $50.50 with him. I didn't do anything besides close the deal, put the money up, and close it in sixty days. Yeah.

But I think it's just

Steve: a lap right here. Right? If I say, hey, Tyler. You know what? The the money you're asking for, I can't pay that, but, you know, I might have somebody that will.

Can we sign this contract? I'll see if I can get them to buy it. If they will, great. We're gonna form. If the people won't buy it, then we can't perform.

But you're disclosing it.

Tyler: And it's You're disclosing it except for there's one thing that and, again, contract law is fun. We just hit the parole evidence rule. So a contract is within those four corners of that contract. Whatever you say that pro evidence is sketchy whether or not you can get it in or out. Mhmm.

So you may need to put that in the special contract. Put it in the contract. Like, hey. I'm gonna go look for somebody that I can't pay this, but I may be able to find somebody. But I can't present this option to them without having this contract.

Steve: Right. And then our good friend, mister Moreno, the key here, the absolute key to all this avoiding this challenge or fraud in the inducement.

Tyler: 100%.

Steve: Ability to close.

Tyler: That's it. You've gotta have the ability to close.

Steve: Alright. So, just for was it making sure for emphasis, again, canceling during the inspection period. Invalid.

Tyler: I mean, it's not invalid if it if it's a valid reason. If you cancel the inspection period because the front door squeaks, then I mean, no. Not really. That's that's that's just kinda like fraud twice. Fraud on fraud.

Fraud squared. If it's a legitimate reason, right, that you couldn't you could not a certain without another expert. So, again, you're you're in I I love this example because it's the easiest to do. If you're walking a house and you don't have a marble in your pocket to put on the floor and or on the counter to see where it goes, then you don't have the ability. So, oh, the foundation needs work.

Now if you call be like, I think it's 12,000, but your foundation guy doesn't go over there, and then you're like, no. I just don't want this house anymore. That that's on a slippery slope. Foundation guy goes over there, and and he's like, no. It's gonna cost you $40,000.

That house is garbage. That's valid to be like, no. We gotta drop the price, you know, $60 because it's gonna take me two more months to to fix the foundation. Again, that's valid.

Steve: Alright. So just to clarify, fraud and new inducement is illegal where?

Tyler: Fraud fraud's pretty much illegal everywhere. And so so it's a it's across the board. Fraud is illegal morally and legally everywhere.

Steve: Yeah. So yeah. So, again, just for everybody. Right? The reason why we're talking about this I mean, yes.

This can come back to bite you later on. Right? Not necessarily today. It could be next year. Right?

But, also, you got your competition that's doing crazy things and is hurting homeowners. And once homeowners are getting hurt, then they're going on TV. They're on the news. And what this is how you get certified certified wholesaler, whatever the hell that means in Philadelphia. You got, in Illinois, you had to be a licensed realtor to be a wholesaler.

You got whatever that's coming up down the pike in Oklahoma. They haven't finalized it yet. But what was it? It was like the predatory Oklahoma homeowner protection act or something crazy.

Tyler: I mean no. And and they're they come up with great great, adjectives, right, to really, really hammer home the point. You know, in Texas, there's a law coming on the books that if it gets passed in September, bandit signs are 10 k a pop. Yeah. So you put that bandit sign out and get busted with it.

You're writing a $10,000 check. They are targeting that I know for a fact that that that law was written to get rid of the we buy houses bandit signs.

Steve: Yeah. And so we need to we need to clean up our industry because if we don't, then somebody in in in the state legislature or the or the congress is gonna clean that for us, and we're not gonna like how that looks.

Tyler: Not at all. It's one of those things that like, it's the boogeyman. I call the government the government's the boogeyman, and it's it's never beneficial. It's it's gonna hurt me and Steve. It's gonna help Zillow.

If you like Zillow, if you you invest in Zillow, then then good for you. But me, at the same time, that that's kinda it. And the and the realtors associations are coming after wholesalers, right, because it's taken away from from their listing. Because before wholesaling was this popular, right, they got to buy a lot of houses off the market because they wouldn't sell. So we're we're money out of their pocket.

Steve: This huge coincidence that the guy that was leading up that Philadelphia certification process was the top one of the top realtors in Philly. I thought that was a huge coincidence.

Tyler: And you I wonder what his rental portfolio looks like, Steve, from from houses that he bought, before they went live on the market or closed them fifteen minutes after he hit the send button.

Steve: It's

Tyler: probably pretty phenomenal.

Steve: Crazy. Crazy.

Tyler: Yeah. I don't I don't I don't trust anybody, much less the people that are making the most money from it without competition. Right?

Steve: Mhmm. And, yeah, I I think just to, to put the the nail in the coffin or just to, you know, for a final emphasis, do what you say you're going to do.

Tyler: That's it. Literally. And if you can't do it, don't say it.

Steve: Right. There. Yeah. So, it looks like that's all the questions. Tyler, thank you for doing this.

I think this is a great message for the, wholesaling community, for the disruptors community. You know, I think that the people that are in our community, real estate roundup and a few other ones, you know, some there's some great, great ones. I think that this is something that if they didn't know, that they'd be happy to know, and it makes it better for all of us.

Tyler: Yeah. I'm I'm gonna follow-up with with, you know, one, this is not legal advice. This is legal education. But, you know, have the ability to close. Please keep wholesaling.

You're helping people. There's people out there that really do need your expertise because they don't have it or the mental faculties around their stressful situation to be able to to learn it in the time that that they need to. So this is not a a hack against wholesalers. It's a hack against criminal, unethical, immoral people.

Steve: Exactly. Alright.

Tyler: Be that guy.

Steve: Don't be that guy. Thank you so much, Tyler. Appreciate it.

Tyler: Absolutely.

Steve: Alright. See you all later.