Are All Wholesalers “Bottom Feeders?”

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No question about it, there are a lot of bad wholesalers out there…and many of them are “bottom feeders”.

But are they all “bottom feeders?”

In the spirit of full disclosure, I am not a wholesaler myself, but I do purchase properties from wholesalers. Whether it’s just luck or it’s just how I work, some of my best deals have been sourced from wholesalers. On many occasions, I have acquired property from wholesalers, so I can then rehab the house extensively then sell it for a profit. It’s a pretty basic real estate investing formula. And I use wholesalers all the time.

On the flip side, especially when I was first starting my house flipping business, it was hard for me to tell the good wholesalers from the bad ones. So like so many other real estate investors, I too have made my fair share of mistakes with wholesalers. Being new to the real estate investing world, when I first started I wrongfully believed that the majority of the wholesalers I was dealing with were honest people. It’s not that I was naïve, I just have a personal belief system that you should trust people until they give you a reason to no longer trust them.

Since then, I’ve met many wholesalers who I would never deal with in my business. After real estate investing for a while and getting to know the players in my market, there are some wholesalers who have the dubious distinction among the local real estate investment community for being less than honest. Obviously, those are wholesalers I don’t work with. But by the same token…there are just as many real estate investors that I wouldn’t work with either.

Wholesalers: The Misunderstood Real Estate Investors

So why is it that wholesalers are the ones that gets such a bad rap in the real estate investment community?

I’m not sure if this is because they were taught incorrectly, whether they just don’t take it as seriously as they should or whether many of them think that wholesaling is just a quick and easy way to get into real estate investing. True, wholesaling properties can get you started in the real estate investing business with little or no money. and this may be the reason why some seedier elements get involved here, I don’t know.

One thing I am absolutely sure of, if you are short on cash, wholesaling is a great way to get started in real estate investing. Additionally, if you’re not 100% sure if you want to get involved in real estate investing, then getting your feet wet as a wholesaler is a relatively easy way to get going. Very little commitment and money is needed and learning how to be a wholesaler has a fairly short ramp up time; to at least make some money and get some deals going.

It may be BECAUSE of all these reasons above why wholesalers get such a bad reputation. Easy in, easy out…nothing ventured, nothing gained. This mindset may have the tragic side effect of setting up many wholesalers for failure right from the start.

However, some of the best house flipping students I’ve ever coached started as wholesalers – and perfecting their skills in the rehabilitation and renovation side of the business, as well as the sell side, was a logical step for them to increase their earnings. Many of them are now tremendously successful, buy-and-hold real estate investors and rehab style house flippers. And their success now as much to do with them starting their real estate investing careers by wholesaling.

Wholesalers…Just “Wannabe” Real Estate Investors?

Many wholesalers are wannabe house flippers and real estate investors. They start their careers wholesaling in order to get involved in the community so they can eventually become full-time house flippers or buy-and-hold real estate investors. Once they do a few wholesale deals, its a very logical leap from wholesaling to other forms of real estate investing.

The term “wannabe” tends to be extremely derogatory to many people. But it shouldn’t be. We all got our start somewhere. At one point in my career I was a “wannabe” real estate investor. Now, I am a real estate investor. We all need to start somewhere.

True, many wholesalers do want to get into house flipping, but many don’t. One of my partners actually enjoys wholesaling more than he does doing the renovations of traditional house flipping. It’s his personality. He just likes wholesaling better.

And he’s really good at it too, having sent me dozens of deals – a handful of which I did actually end up buying, rehabbing and selling for a nice profit.

Because he’s a wholesaler, does that make him a “bottom feeder”?

Every Industry Has Its “Bad Apples”

Wholesaling is a real business and should be treated as such; as a serious business done with honesty, integrity and always keeping an eye out on doing the right thing. Of course, this isn’t always the case. There are many wholesalers who don’t take it seriously (could be that easy in, easy out thing) and feel that dishonesty is the way to grab the quick cash because they really don’t care about the long-term ramifications. This is really too bad.

However, it’s not the wholesaling that makes you dishonest – only the individual can make themselves dishonest. It’s a choice we all have.

Yes, we know as real estate investors that there are a lot of unqualified wholesalers. But there are a lot of dishonest real estate investors as well. And as we all know, there are lots of dishonest “house flippers”.

Let’s take it a step further. The same could be said of the medical profession, the legal profession, or any other profession you can think of. There are tons of dishonest doctors and there are loads of dishonest lawyers as well. The list goes on: plumbers, electricians, carpenters, teachers…the list goes on and on. There are bad apples in every bushel so to speak.

There are plenty of fraudulent real estate investors as well. But what industry doesn’t have their fair share?

House Flipping and Wholesaling: Are They One and the Same?

When you really think about it, traditional buy, renovate and sell house flipping and traditional wholesaling are both house flipping. One flips a house after significantly renovating it, whereas the other flips a contract.

The types of house flippers that merely slap “lipstick on a pig” and run away for a quick profit get their fair share of negative press as well.

So as a card-carrying member of the house flipping club, I realize that the same can also be said that house flippers are bottom feeders. I get this accusation all the time. And although it upsets me, I see where the confusion comes from. If you buy a distressed property at a significant discount to the market due to a short sale, foreclosure or any other way in which you can acquire a property below market, slap on some minor changes and then throw it back on the market in basically the same condition hoping for a quick sale, that can be called “house flipping” as well.

These are the kinds of house flippers that give this particular niche of real estate investing a horrible black eye. As much is this reputation upsets me, I can see where the confusion comes from. In house flipping, there are good, reputable and honest house flippers and there are bad, deceitful, dishonest house flippers. I get it. I don’t like it, but I do understand it.

With wholesalers though, this distaste seems to go much deeper. And because house flipping oftentimes gets a bad reputation, this may be the reason why I am quick to defend the wholesaling profession. Wholesalers have gotten a bad rap for long time and probably will continue to carry that same reputation as long as their deceitful ones out there. And as long as people think that wholesalers are just after a “quick buck” so that they can get on to “real” real estate investing, that reputation will probably continue.

But don’t throw the baby out with the bathwater… although wholesalers may have the reputation of being the bottom feeders in the real estate investing world, when done correctly by an honest businessperson, they can be a vital source of deals for any real estate investor.

What do you think? Are wholesalers bottom feeders? Am I completely naïve? If you’ve made it this far, please leave a comment below and let your opinion be known! I would love to hear what you think, no matter which way you feel.
Photo: Michael Filion

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About Author

Michael LaCava is a full time real estate investor, house flipping coach and the President of Hold Em Realty located in Wareham, MA. He runs the website House Flipping School to teach new real estate investors how to flip houses and is the author of "How to Flip a House in 5 Simple Steps".

49 Comments

  1. Hey Mike… enjoyed the post! I’ve found quite a few dishonest wholesalers in my area, which I’m sure isn’t unusual. As you mentioned, due to the “no barrier of entry” you’re going to get all kinds of characters entering into the business.

    Not that I’m condoning their dishonesty, but I will say that it’s not always a bad thing, at least not from my perspective. I’ve recently done a few deals with sellers who were lied to by the wholesaler they were trying to work with. When I met with the sellers and explained everything and how it worked, they appreciated my honesty and straighforwardness. I gave respect, and got it back in return. There was a meeting of the minds, and I got the deals. This truly can be a business where everyone walks away smiling. It’s a shame that the dishonest are cheating themselvs of this pleasure.

    Thanks again Mike for the post!

    • I completely agree that there are plenty of shady/horrible wholesalers out there. I believe this is due to the fact that many people starting out in real estate get the idea from the real estate “gurus”. They put the idea of wholesaling in their head as the ideal way of making quick cash in RE without having any $. The fact is you need a lot of money to market for the distressed properties.

      I have seen many newbie wholesalers present a property under contract that has absolutely not way of producing a profit for anyone. It’s as easy as not doing business with them. As long as you run your own numbers on the house than you should be fine.

      Having said that, I am a full time wholesaler. I never lie to the seller or the buyer. Real Estate is all about networking and making relationships with people. Being dishonest is a good way to end your RE career and earn a bad reputation in the community.

      • That is great Mike & because of wholesalers like you is why I wrote this post.
        It is all about the win-win-win. The seller, the buyer, and wholesaler.

        Keep it up! Where you wholesaling these days?

        • I agree its all about the three wins. Great article by the way. I am currently wholesaling in Delaware right now. I want to get more established before I move to other markets.

    • That is great for you Jerry. Capitalize on this and continue to set yourself apart by doing it the way you do. It is unfortunate because I think some of the wholesalers that are new and meeting with the sellers have been trained this way & maybe just don’t realize what they are doing is wrong. Then of course there are those that do whether they are new or seasoned.
      Thanks for your comments.

  2. Mike Carr – thanks for your clear and insightful comment. I’ve been a full-time investor for 4 years now and have wholesaled a number of deals that came my way but that I didn’t want to rehab myself for various reasons. Most of my wholesale deals don’t ever make it to the public boards because they go to one of my “short list” buyers first.

    I also look for deals from other wholesalers, and agree with your comment that “it’s as easy as not doing business with them.” The market and community have a way of either educating these folks about a good deal or weeding them out.

  3. I don’t see wholesalers or flippers in a negative aspect. Although I am new to Real Estate Investing, I plan on getting my homes through wholesalers, agents, and anyone else that presents a property where I will gain equity capture, cash flow, etc… The investor whom buys the property best be doing their homework, and due diligence.

    • Hello Mark –

      As an investor you should have many different lead sources to bring you deals & at the end of the day you must do your due diligence and make sure the #’s work. As you do more deals and start to build a reliable trustworthy team it will get easier.

      Thanks for your comments.

  4. I think the key is what you said, it is an easier way to get started in real estate investing without much money and risk, and, therefore, easier for the “bad apples” to get in. However, I also believe that their are more good apples than bad. Secondly, it really is up the the buyer to find a wholesaler he trusts, and to do his homework in order to only buy the real, worth buying wholesaled deals, so how can we blame the “bad apples” wholesalers. In other words, if people didn’t make the mistake of buying homes from the wholesalers not worth their weight in salt, then they would stay in business. Due diligence….!

  5. As a fix-and-flipper, I don’t think of wholesalers as bottom-feeders. I don’t mind paying a fee to get a good deal. In fact, I look forward to finding a wholesaler that can bring me a good deal here in the LA area.

  6. I don’t believe in shady wholesalers or bottom feeders. As investors we have to be able to distinguish a good deal from a bad one. I appreciate every property that someone sends me. Are they all good deals- absolutely not, but I appreciate everything that gets sent my way and look at it as an opportunity.

    I do agree there are a lot of new people trying to break into the business through wholesaling and that there are a lot of deals being presented that aren’t even close to working. Just because it isn’t a deal that will work doesn’t make someone a “botom feeder”. There are plenty of MLS listings that don’t work, plenty of estate deals where people want too much and examples of every source of investor type homes known to man out there where the numbers don’t work; so why do we refer to wholesalers as bottom feeders if their deals aren’t what we’re looking for.

    I guess my thing is: Give me first shot at em “bottom feeders”. I’ll make my own evaluation and if it doesn’t work, I’ll be here waiting for the next one that hopefully will.

    • Good points Kyle – I try to encourage every new wholesaler that brings what they think may be deal by taking the time to explain to them why it is not & give them my formula as an investor so they know the next time where the numbers must be for me and allow them to get their fee as well.

  7. I am a wholesaler who started as a landlord.
    Not all wholesalers are newbies. Honesty
    is a strong point for me. I do not provide inflated
    ARVs or deflated repair estimates. In fact I require
    my buyers to get their own. This eliminates a
    lot of investors who would be prone to make a bad
    deal. I have seen companies take advantage of new
    investors (Hello Property 23!) just because they
    were ripe for the picking. Unfortunately I am the
    one who must break the news to them that their
    house is worth about $20,000 less than they paid
    for it.
    Treat others the way you would want to be treated
    yourself.

    • Exactly Andy & they are the worse ones of all because they take advantage and they know what the real #’s are. Dishonest SOB’s. Great suggestion to your buyers because if you can not accurately price those items then your off the hook. ARV is everything and if you get that wrong from the get go it is all up hill as you know.

      Thanks for being one of the good wholesalers.

  8. Thanks for posting this, Mike!

    I’ve seen a lot of negativity about wholesalers on the BP boards since I joined. I am a wholesaler who has done just a couple of deals and I’m trying to found my business on accurate numbers and honesty. Although I’m very determined and pretty confident in my choice to start out as a wholesaler, after seeing the negativity in the forums about wholesalers I felt like I had a lot more to prove than someone starting out using a different method. I’ve also seen you encouraging and trying to keep the discussions objective which is appreciated. Anyway, this article is refreshing. Thank you.

    – Eddie

    • Eddie –
      There is a good reason why many experienced investors have negative impressions of wholesalers, as it is touted as the quick and easy way to make money in real estate. ANYTHING that is labeled the “quick and easy solution to riches” tends to attract people who may not be the folks you want to do business with.

      Given that there are relatively few places online where people are giving others the truth about wholesaling, I believe the warnings you and others find here are very important.

      Look, there are good people out there doing wholesale deals, but the 80/20 rule likely applies here and 80% of the people are certainly not going to be around in a year’s time.

      Mikes post is a great one and is certainly balanced. Thanks for leaving your thoughts.

    • Hi Eddie –
      Great to here you take that approach. Stay the course & your hard work and determination will help you get there. One suggestion I have for you is to reach out to a local investor & tell him you want to help him find good deals but would like to meet up with him so you can learn from him what he is looking for and how you can help.
      You will build credibility & create good relationships this way. Just be honest and up front with him. Good Luck & continue to use BP as a great resource to help you!

    • Hi Eddie –
      Great to here you take that approach. Stay the course & your hard work and determination will help you get there. One suggestion I have for you is to reach out to a local investor & tell him you want to help him find good deals but would like to meet up with him so you can learn from him what he is looking for and how you can help.
      You will build credibility & create good relationships this way. Just be honest and up front with him. Good Luck & continue to use BP as a great resource to help you!

  9. As Napoleon Hill said, “look for the seed of opportunity in every problem” (or similar).

    We know that there are bad actors in every walk of life, so why don’t we use this knowledge to be extra careful and vigilant, whatever we do. This extra vigilance will also sharpen our senses when it comes to spotting honest errors by others, or flaws in our own strategies.

    This mental attitude will also help us make the best decisions…

  10. Melodee Lucido on

    I may get burned at the stake for this post. It seems this BAD wholesalers debate is soooo over worked and has been an often topic here on BP.

    I really can’t understand why anyone would just take a wholesalers word for a deal. It seems that the responsibility lies with the one who takes on the prop. Maybe I’m just ocd but I check the numbers on a deal until I know i can trust the one they’re coming from.

    There are people in every profession that will just try to get by or get a way with something.
    Example:
    I used to own hair salons and train people fresh out of beauty college. I spent my time and energy to give these people a leg up in the biz. Step by step I would show them exactly what to do. Then after they finished the hair cut I would check it and found several (lazy) errors.

    I still have a hard time going to just any salon to get a haircut because you can never be too sure what you’ll walk away with. I can honestly say I see many more bad haircuts than good ones. This doesn’t mean all hairdressers are bad. Some care about professionalism and some don’t.

    Maybe these articles keep popping up to keep wholesalers on their toes. It’s just been talked about too much imho. The responsibility lies with the one that takes the deal.

    • You are correct Melodee & that is why I did this blog. I always say in the end you are the captain of your ship & the one who is ultimately responsible. Your point is exactly what I was trying to get across that there is good and bad in all professions.
      Wholesaler, Investor, whatever you must do your due diligence even if you are given the best advice, comps, list of repairs…… by an expert, #1 real estate agent, contractor with 25 years experience. The more information you compile the better you will be able to make an educated decision on your action. With a great team that process will be much more smoother of course.
      Thanks for your comments

    • Melodee hit the nail on the head! If you are to be successful in RE investing (or any other business), you must TAKE RESPONSIBILITY for your own success or failure. It’s the risk of failure that provides the opportunity for success. Most people conduct more due diligence when choosing a TV than buying a property. Don’t be most people!

  11. Hi Mike, As an experienced landlord and rehabber turned into a wholesaler, the brief reply that comes to mind is: “Trust but verify.” Those of you who were doing this back in the Reagan era may recall these immortal words. Anyhow, as you point out very appropriately, in any industry there are varying levels of expertise and integrity. Wholesaling and Rehabbing are not exempt from this. My best advice to anyone buying a contract from a wholesaler is to know what you are buying and be intimate with your exit strategy. Faltering on either will be expensive.

  12. Hey Mike-
    Yet another great article! You mentioned it in the earlier comments … Wholesaling is all about creating the win-win-win for the seller, the buyer, and the wholesaler. It’s a great philosophy because ultimately everyone is happy! You’ll also develop a great reputation in the REI community, and we all know how important that is. You’ll also have rehabber buyers that buy your deals from you time and time again because you’ve gone out of your way to perform much of the due diligence for them.

    Great post!

    • Hello Zachary –

      I am glad you agree that it is about the win-win-win. Nice to hear from you. I will try to think of you next time I get to not your average joes for lunch. Love that place !

      Thanks for commenting!

  13. Great article, Mike. As a full-time wholesaler in the north Texas area, I have surely run across “the good, the bad, & the ugly” in every facet of the real estate industry. For the most part, though, I believe most wholesalers do mean well and try to provide value in the contracts they offer. Most of the “newbies” who err in their numbers just need more experience, and anyone buying from a wholesaler they have not done much business with before should definitely double- and triple-check their numbers before signing on the dotted line.
    What “gripes” me as much is the vast number of “professional” real estate agents who don’t have a clue but they do have a license so they must be reliable. Don’t get me wrong, there are some awesome Realtors out there who know their markets inside out . I’m referring to the agents(and the Brokers who guide them) who will tie up a distressed property for 6 mo-1 yr at a way-over-market listing price just to get the listing, forcing the seller into foreclosure. You can tell them not only by that list price, but by the “I’m not even presenting that offer!” attitude when a wholesaler steps up to help out. Also, most of these don’t have a clue what their state contract really says, or it’s ramifications to the Seller. To sum it up, I think any real estate professional should be willing to do that extra studying to keep current, conduct their business with honesty and integrity, and be willing to “help out” the newer or less-informed guys, instead of just bashing them. We CAN all work together.

    • Exactly Rissa and that is my point. Bad wholesalers don’t have the exclusivity to bad business people. Every industry has to deal with this. You make just another analogy and a good one. There are some GREAT Real Estate professionals and some bad ones and dishonest ones as well. A great real estate person & a great wholesaler & a great contractor & a great attorney is what we strive to achieve or should to have a great business. It is a TEAM sport for sure.

      Thanks for your comments.

  14. As a real estate investor who has had his fair share of dealings with wholesalers, I have found that there are more bad apples in this group than there are good. It’s too bad, because it gives the whole industry a black eye and makes me not want to deal with them. I have not found any wholesalers who I have wanted to deal with on a regular basis. From the looks of all the comments from this post, it seems that they are out there, but in my experience, I have not found them, with most being brand-new, inexperienced and out for the quick buck. I’d love for anyone to prove me wrong on this, but this is my experience.

    • Travis, too bad youve found this to be the case. the truth is you need to dig deeper. There are good ones out there, you just have to find them, network and ask others who they use and trust. Its like any other field, theres good and bad wherever you go.

  15. Mike –

    I have been a full time wholesaler for about 5 years now. I have been a real estate investor since 1998, so I guess you could say I got the whole process “backwards”. I started out doing rehabs and buying rentals. My actual plan was to do 2 rehabs, build up some cash and buy a rental.

    As a newbie, one of the biggest mistakes you make is not buying the property quite as cheap as it should have been. I didn’t make any terrible mistakes, and I never lost money. However all in all, I paid too much for those first few properties. But in the beginning, I just couldn’t wrap my mind around wholesaling. It just didn’t seem possible to me that you could buy those properties as cheap as wholesalers said they did and do it ethically. That was a lack of understanding of wholesalers and that process on my part.

    A few years ago when rehabs first began sitting on the market for what I considered to be “too long”, I kind of fell into wholesaling. I took a good look at what I was really good at, and that was marketing. Marketing was definitely one of my strengths. At that point in time, I became what I like to call “a transaction coordinator”. Since the folks on my buyers list buy from me time after time, I think that speaks for itself.

    If I get into a close negotiation with someone, I even have buyers on my list that I can call to try to work through a deal. I might say to one of my cash buyers, “here is where I am in the negotiation; the house is not quite as cheap as either one of us would like, but it is still a great house. If I take a little less, would you be willing to also pay a little more for this house”? I have built those kind of relationships over time, which also brings up another point. I have some great, ethical buyers on my list. Would I call everyone of them and have that conversation? No. But there are a number of them that I could call in this situation.

    The point I really want to get across here is that there are both good, ethical wholesalers out there as well as good ethical folks on my buyers list. We are both looking to make money, but we are also trying to provide solutions to folks that need them.

    The last point I want to bring up is that wholealers like me provide a very useful service to real estate investors that either don’t know how to market, or they don’t want to market. Whether it is a lack of time or a lack of interest, there are those folks out there that simply want to rehab, or close on buy and hold deals. And these folks are happy to have someone feed them good deals.

    Sharon

  16. Great article! I am a fairly new real estate investor and have to do what many noobs had to do when they started; wholesaling. Like you mentioned, there are bad, unethical people in all walks of life. Of course, there are outstanding and trustworthy people too. The way I see it, I can’t be concerned about “wholesaler’s reputation” or wondering if an investor I speak with thinks I’m a “bottom feeder”. No, I don’t want to be seen in a light like that, but I can’t force an opinion about my current real estate position on anybody. I take much pride in the way I do business and subscribe to the philosophy that if I conduct myself ethically and focus on all parties involved being a winner in the transaction, then I will be more successful in the long run. I left my day job in 2012 to focus on my business and continuously grow it. 80/20? Perhaps that is the general figure, but if you DECIDE to be a real estate investor and not “try it out”, and operate with integrity, success will follow. Stay focused, stay determined, execute, and get out there and crush it!

    • Hi Jeff
      You are so right. If you run your business that way you can’t worry about what others think. Don’t take things personally is one of the agreements in a book I read called the 4 agreements. Great short read.

  17. Good article!
    Like any profession you are going to have some good wholesalers and some not so good ones. On the extreame there will be a small percentage that are just scumbags that are blatantly trying to screw you over to make as much money as possible on a deal.

    Even the good ones will bring you some duds, or at least what you think is a dud.
    I have seen deals that I have had no interest in that get snapped up by others as quick as they can write a check. Even though it did fit what I was looking for these other investors are happy and usually do well with the deals.

    • Well put shaun. Nothing should take the place of doing the research on any property purchase. Whether you are buying from a wholesaler, broker, owner or whomever it doesn’t matter. You are truly the captain of your ship and make the final decision. Wall find out the hard way some times but we learn from that and don’t repeat.
      Thanks for your comments! See you at south shore reia Wednesday.

      • Yes it is all about doing your own Due Diligence.
        You have to make sure it fits your criteria for buying and that you know your exit strategy.

        Always check and verify any numbers you are given. If you blindly trust the info given to you and you buy a stinker then shame on you for being careless.

        Have fun Wednesday. The South Shore meeting is a tough one for me to get to. It is on my list of ones that I want to go to but have not figured out the logistics with the kids and my wife’s schedule.

        • Hey Mike,
          I’ll let you know how all that stuff pans out.
          We need to sit down sometime to talk about some of those ideas we were throwing around.
          I’ll shoot you an email later this week and maybe we can get lunch or something to talk.

  18. Wholesaling anything means buying or optioning something and selling your interests for quick money.

    Like Gordon Gekko of the movie Wall Street said, “Greed is Good!”
    “Greed, for lack of a better word, is good. Greed is right. Greed works. Greed clarifies, cuts through, and captures, the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge, has marked the upward surge of mankind and greed, you mark my words, will not only save Teldar Paper, but that other malfunctioning corporation called the U.S.A”

    I like serving the seller in lease option assignments, which is the opposite of “drilling down the seller” to get the lowest price. Like I learned from Ron Legrand,
    “What is the lowest you will take for the property?
    Is that the best you can do?”
    And then you offer alot less than that.

    So you can make a small fee.
    And the rehabber can make more.

    Can you do that day in and day out?

    Granted you can think, “Well no one will pay very much for this stinking dump anyway.”

    So how is my LOA business different than Wholesaling?
    Am I a Gekko?
    Am I taking advantage of someone’s situation to make a fast fee?

    The LOA business
    Well I find sellers not behind in PITI, and they are listed with an agent or listing has expired, and I offer to buy on terms instead of cash. They get more money if they they help a buyer buy it. I do assign the deal for a fee and act as a principal in the deal.

    What to Do
    If you just find sellers that bought at the wrong time, say top of the market, 2006 – 2007, offer them a sales price average comps as a purchase price, no agents’ commission, no closing costs, no seller’s concessions, no minor maintenance to pay, they can move out anytime they want, and if the LOA is structured right, the buyer will pay more than market rent (market rent plus a monthly option payment.)

    Is that a Gekko? You decide.

    As always, Mike, great article!

    And go Bruins!

    • Well put Brian. Too bad the patriots lost but Brady gets to go relax in his new house now.
      Not to shabby. I like your LOA as it can give both parties what they want. Always know their WHY as I am sure you know & then you can structure the deal accordingly.

  19. Wholesaling is how we got started, & we still do a fair amount of it though we, have also added rehabbing, rentals, owner finance, etc.

    I was taught by someone who knew the real estate world and shared some techniques that many wholesalers haven’t learned. My business partner and I made our share of mistakes when we started out, but so has everyone, no matter what area you start out in. Now that we actually do rehabs, we have honed our numbers, & have a better idea about actual costs for repairs. Even so though, we know that problems do arise that weren’t budgeted for, even above a contingency cushion.

    I think its just easier for people to blame someone else, like the “evil wholesaler” instead of taking responsibility for making your own mistakes and being very focused on doing your own due diligence for any and every property you buy, whether from a wholesaler or from an mls listing, or an individual seller.

    It’s true that there are a lot of wholesalers who don’t seem to know what actual values of properties are, but why would you not know this yourself before you buy? You must have access to the mls, whether directly, or by finding realtors that can give you accurate comps. Then there’s a whole new story. I suppose none of you have ever purchased property from realtors who embellished the comps, to make it look like a better deal. We haven’t, but a few realtors out there have sent us comps from properties not even close to the same sub-division.

    As wholesalers, we’ve made some mistakes along the way, especially when we first got started, nut I can honestly say that we never tried to mislead a buyer & we always said, this is what we’ve found, but you need to do your own due diligence.

    We too have run across wholesalers that we just won’t work with, who have burned us by lying cheating, and going behind our backs to a seller, trying to get them to ditch our contract and sign aother one with them….but guess what, I’ve had rehabbers do the same thing.

    Integrity is essential if you want to have an ongoing business relationship with others. Find the good apples & work with them, but for Pete’s sake don’t make blanket statements about wholesaleers being bottom feeders who have no integrity. There are lawyers, who teamed up w/ rehabbers in the area where I live that have gone to prison for unethical dealings. Just don’t let that be you. Deal honestly with others, trust but verify what they tell you, and make up your mind that you will be above board in everything you do. Not because you will get caught, but because you’re a person with character. Even if you are “a wholesaler.” Happy house hunting….I think good wholesaleers are worth their wieght in gold! It takes a lot of effort to be a good one.

  20. Hello Cheryl – Thanks for sharing your story but I just want to be clear I AM NOT calling wholesalers bottom feeders. Read the article again because I defend them and agree with your statements that basically there is good and bad in all real estate classes along with business in general. They do get a bad rap however but I just wanted to point out the good ones and there business model. Good to see you are a great wholesaler and worked your way through the tough times of starting a business. I know the feeling.
    Thanks for taking the time to read and comment and hope business is good for you and If I buy in Texas I will look you up or if I know anyone looking there.

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