Property wholesaling

Question:-

I would like to know if property wholesaling is permissible? If it is not permissible, then what would I have to do, or change, that will make it tick all the boxes?

Answer:-

There are two possible scenarios to your query:

1. The first scenario is as follows: you request the house owner to sell his house to you. If he agrees to sell the house to you, then both parties (the buyer and the seller) finalize and conclude the deal by signing a memorandum of sale (which is actually confirmation of a property sale). Once the memorandum of sale is signed, you take possession of the property (by taking possession of the title deeds or the keys to the property) which indicates that you are in full possession of the property. You then sell the property to a contractor with a mark-up which is known only to you. If the above procedure is followed, then the transaction will be in order. In the above instance, it is not necessary to transfer the property in your name (first) before selling it over to the contractor. A formal sale between the contractor and you will suffice.

2. In regards to the second scenario, we understand that you get the seller to sign a sale document that he/she is prepared to sell his/her property at a particular price. You don’t purchase the property from the seller, rather you try to source a potential buyer. Thereafter, you have the property sold at a higher price to the buyer and any amount acquired over and above the initial selling price, will be your commission. In this instance you are acting as an agent to sell the property for the seller, in which case the commission should be stipulated and fixed or else the transaction will be corrupt.

Yes, if the seller appoints you as his agent to sell the property at a stipulated price in lieu of a fixed amount of commission (which is known to both parties), then the transaction will be in order. For example, the seller tells you (the agent), “I appoint you to sell this property for R1 million and I will give you R50 000 commission if the property is sold,” then such a transaction is in order.

We hope that the above clarifies the matter.

ALLAH TA’ALA KNOWS BEST!

ANSWERED BY:

Mufti Mohammed Desai

Date: 10 Safar 1444 / 07 September 2022