HOUSES WANTED: Experienced real estate investor with cash and credit seeking a wholesale-priced investment property in the Phoenix metro area. The home can NOT be currently listed on the multiple listing service because everyone knows that is where retail buyers go to find a house. If you require that I register on your fancy website with my name, email address, phone number, my kids’ names, and number of pets just to see your wholesale property list then I’m not interested. That’s because I don’t want to receive emails from you with crappy properties located underneath power lines or next to the freeway that no one else is dumb enough to buy. I have access to tax records too so I know what you paid for the house. Don’t jack up the price – that’s not what wholesalers do. Professional wholesalers buy low and sell low and make their money through volume. And if you want to do repeat business with me then don’t try to justify your asking price with ridiculous comps that are old or miles away from the subject property. If your house is priced for more than 75% of market value then find some other sucker to do business with.
Okay, I’m desperate. Call me a motivated buyer. My bank account is overflowing with cash and I need to find below market deals to fix and flip. I’m getting my butt kicked at the Maricopa County courthouse steps. Last Friday, I was out bid on four properties by a combined $75,000. Since May 23rd, I’ve bid on 85 houses and have won zero.
Lately, I’ve been writing tons of offers on REO properties and short sales. I picked up two homes this way earlier in the month. After light cosmetic repairs they went back on the market last Thursday – by Tuesday both were in escrow.
That’s the good news. The bad news is I haven’t found any profitable deals since the beginning of the month. It seems as though the well has run dry.
So I decided to do a Google search for “Arizona wholesale properties”. Did I mention I was desperate? Page one listed 10 local wholesalers. I randomly chose three. Of course, these sites promised deals “perfect for investors looking to buy and sell or fix and flip” and “wholesale homes where we leave meat on the bone!”
- The first property I researched was 2307 N. Azurite Circle. It’s on the wholesaler’s website for $199,900 – and on the MLS for $198,850. The owner purchased it from Fannie Mae on 5/25 for $179,550. There aren’t any recent comps in the neighborhood but a similar model is pending for $230,000.
- The next house I found was 1612 W. Minton. It wasn’t active on the MLS but it was listed and cancelled back in April. The price at that time was $64,900. It’s on the wholesaler’s website now for $72,000 by the same owner.
- My favorite deal is 16165 W. Maricopa. Listed as pending on the MLS for $88,000 this wholesaler has it for sale on their website for $199,900.
These are not wholesale deals. They’re not even good retail deals. The house on Azurite has been on the MLS for 51 days. Minton didn’t sell on the MLS so the seller asks for more on their site? And then there’s the Maricopa property. My hunch is the wholesaler is in escrow to buy it for $88,000 and is hoping to find some dope to pay $199,900.
If you’re looking to buy a rental property or fix and flip don’t be fooled by these gimmicky websites with their flashy graphics packages and flowery language promising you gobs of equity and/or profit (their words, not mine).
Do your homework. Find out if the house you want buy is currently listed on your local MLS or has been recently. Search the tax records to find out how much the seller paid for the property. And do not put any stock in the comps the wholesaler provides you. By doing this you’ll quickly separate the professional wholesalers from the wholesale pretenders.
Editor’s Note: Please see Marty’s follow up to this post/discussion below at: Defining a “True” Real Estate WholesalerHow to Spot a Wholesale Real Estate Pretender by Marty Boardman