New Pennsylvania Law will better regulate real estate wholesaling

While residential real estate wholesaling is a legal practice in Pennsylvania, the Pennsylvania Association of Realtors has been concerned that it can lead to predatory practices that can hurt vulnerable homeowners who don’t understand the practice or know the true value of their homes.

The association is applauding the Pennsylvania General Assembly and Gov. Josh Shapiro for passing a new law that would better regulate the practice.

Senate Bill 1173 amends the Real Estate Licensing and Registration Act to define a residential wholesale transaction, requires anyone who conducts residential wholesaling to have a real estate license and ensures consumers are made aware that they are engaging in a wholesale transaction.

Shapiro signed the bill into law on July 8. It will become law 180 days from then.

Glenn Yoder, chair of the legislative committee for PAR explained the process of residential real estate wholesaling.

He said most people might be familiar with signs or solicitations they may see that read “we will buy your home for cash,” or similar such language.

Often, these are unlicensed individuals who have no plan to purchase the property but will take the contract with the homeowner and resell it, often at a significant profit.

“The practice opens up problems for people who are uninformed and don’t know what they’re getting into,” said Yoder. “The main goal is to protect the consumer who doesn’t have an understanding of what their home is worth.”

PAR Incoming President Bill Lublin said the law was needed.

"It will provide protection for consumers by requiring they receive proper disclosures, ensuring transparency throughout the transaction and giving them recourse if they encounter a problem," he said.

The PAR had advocated for the law, saying wholesalers often maximize their profits by targeting seniors and people who are unaware of their home's true value. A wholesaler enters into the purchase of a property, never intending to own or take title of the property. The new law will provide recourse for consumers who believe they may have been harmed to address the wrongdoing that occurred.

Lubin said Act 52 will ensure that all parties involved in wholesale transactions have a knowledge and understanding of the transaction they are party to.

Sen. Pat Stefano, R-Fayette, was one of the sponsors of the bill.

"The swift action on this legislation will now give homebuyers and sellers critical information about what is often one of the biggest purchases of their lives. Greater transparency will offer safeguards for all parties something we can all support," he said.

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