Econsult Solutions, Inc. (ESI) was commissioned by AARP to conduct a review of available state laws regulating the residential wholesaling industry in the United States. The report explores the predatory nature of residential wholesaling and explains how the practice affects local communities, low-income households and older adults. The report includes ESI’s qualitative study, along with a model law to regulate residential wholesaling – developed by the National Consumer Law Center (NCLC).
ESI leveraged qualitative, secondary research using data available from Zillow, AARP, the National Association of Realtors, and ProPublica to better understand the impact of residential wholesaling and the markets where the practice is most prevalent and harmful to the target populations. Over the course of the engagement, ESI completed rigorous state legislative research to understand how the practice is regulated on a state-by-state basis – evaluating and analyzing recently enacted laws over the past several years. Following the qualitative overview, the report provides an overview of common regulatory elements across the relevant state laws and recommendations for future regulatory elements that can better address the issues associated with residential wholesaling.
The qualitative review found that the predatory tactics involved with residential wholesaling pose serious threats to homeowners, particularly to those that may be lower-income or older. The report and model law recommend the following protections for additional state-level protections:
- A non-waivable appraisal requirement and disclosure for the wholesaler;
- Licensing and insurance-carrying requirement for the wholesaler;
- Non-waivable right-to-cancel periods for home sellers; and
- Broader anti-solicitation measures.