Wholesaling Real Estate: Is Cold Calling Sellers Illegal?
Cold Calling is a hot topic right now when it comes to motivated seller lead generation. However, the recent changes in the law have many real estate investors asking, "is cold calling illegal?". Thankfully I do have some insight on this topic that should put your fears to rest.
***Quick disclaimer, I am not an attorney, the information in this blog post should not be considered legal advice and is provided solely for informational purposes. Everyone who reads this post should conduct their due diligence regarding the specific laws of their state prior to acting on any of the information below.***
Now that's out of the way, let's dive in...
What is the TCPA and why should you care?
TCPA stands for the Telephone Consumer Protection Act of 1991. The Telephone Consumer Protection Act of 1991 was passed by the United States Congress in 1991 and signed into law by President George H. W. Bush as Public Law 102-243. It amended the Communications Act of 1934. The TCPA is codified as 47 U.S.C. § 227. (Telephone Consumer Protection Act of 1991. (2021, August 25). In Wikipedia. https://en.wikipedia.org/wiki/Telephone_Consumer_Protection_Act_of_1991)
In short, the TCPA is the federal statute that regulates the types of software you can use to dial on potential sellers and how you are allowed to go about it. You should care about this, because knowing the rules can keep you out of hot water. That being said, let's move on to how to keep your business safe when cold calling sellers.
Is Cold Calling Sellers Illegal?
Asking "is cold calling sellers illegal?" is not the right question. There is nothing illegal about cold calling, as long as you are not doing it with the intention of harming someone else.
However, the better question is, "is cold calling compliant with the rules of your state?" and it all depends on how you choose to go about it.
Cold Calling and The Do Not Call Registry
Many people ask "Do you need to filter against the DNC when cold calling sellers?"
This can be tricky to answer, but in the end, it all boils down to the "intent of the call". If you are a licensed Realtor calling on sellers to solicit listings, then you must filter against the DNC because the intent of the call is to solicit business from sellers for the purpose of generating a real estate commission.
However, if you are a real estate investor and you are calling a seller with the intent of purchasing their property...technically that is not a commercial sales call. Technically you are not selling anything, you are asking them to sell something to you, and given that type of scenario, it doesn't technically fall under the classification of a commercial call and therefore the DNC would not apply...technically :-).
On the flip side, in wholesaling, if you were going to call on buyers with the intent of adding them to a list to receive investment properties for sale, then that would fall under the category of a commercial sales call so you would need to filter against the DNC.
Is using a Dialer to Contact Sellers Illegal?
According to Reuters, The U.S. Supreme Court on Thursday made it easier for businesses to contact consumers with phone calls or text messages by tossing out a lawsuit accusing Facebook Inc of violating federal anti-robocall law.
Chung, A. L. H. (2021, April 1). U.S. Supreme Court backs Facebook in a case about unwanted texting. Reuters. Retrieved December 17, 2021, from https://www.reuters.com/article/us-usa-court-facebook/u-s-supreme-court-backs-facebook-in-case-about-unwanted-texting-idUSKBN2BO5UA
Again, it's not a question of being illegal or legal it is a question of compliance with state regulations. That being said, the answer to this question is a bit technical too, but in short, due to the Supreme Court siding with Facebook, it makes the answer a bit fuzzy. In this case, it comes down to the definition of an auto-dialer and since that's a really broad term, which can be hard to define, it's going to be harder to regulate until further legislation takes place on this issue.
The best way to maximize your protection is to follow the TCPA guidelines to a tee, don't use a dialer, and scrub against the DNC. However, we all have our risk tolerance that we are comfortable with and have to make that decision individually. The good news, as a real estate investor since we are not making commercial calls to sellers we can continue to utilize this incredible marketing channel to contact sellers in the areas we serve. In my experience, as long as you are professional and respectful, sellers will act in kind. However, if you do reach a seller that is unhappy and does not want to be contacted, then just respect their wishes and remove them from your list.
To Your Success,
- Chris Logan
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