Real Estate Wholesaling

Rehabbers, get to know some Real Estate Wholesalers

Expertise: Flipping Houses
19 Articles Written

In real estate there seems to be a culture of do-it-yourself. There is a swagger amongst investors who will tell you they can do almost everything and anything in no time at all. Now, I'm sure you could learn how to be a lawyer at the public library but I think formal training might be of some value.

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You can’t be all thing or all people in real estate. In the next few weeks I will write a post about forming a Master Mind Group but for now I want to give a special plug to wholesalers. I want to both convince investors to work with wholesalers (specifically rehabbers) and I want to help wholesalers add value to their services. The first step to any business is to learn the business and the next is to learn what you should delegate to others.

Keep Your Friends Close and Your Wholesalers Closer

There is another cultural norm in real estate: if you can be cut out of a deal you will be. I don't know how many times I've seen wholesalers, realtors, and mortgage brokers cut out of deals after performing significant services for which they were never paid. This is one reality that makes it very difficult for wholesalers to provide their best services. They have to spend almost as much time securing their position as they doing trying to get the deal done. Wholesalers don't have the protections that realtors have. They're actually a pretty skittish bunch. Cultivating a relationship of trust with your wholesaler will ensure they can give you the best service and increases the chance that you'll get more good deals coming your way. The wholesaler/buyer team is much like a marriage. It can't work very well if there isn't trust or if only one partner is working on the relationship. In fact, I know many would-be wholesalers that leave the business because they bust the humps to find deals but then can't find reliable end buyers. That is just a crying shame considering how rare the good deals. Help your wholesaler help you.

Value your Wholesaler

I’m sure you’ve heard the old saying, “you make your money when you buy a property.” Well that saying is true, very true. So if you find a human that has the rare ability to find and capture the elusive deal then you’ve got yourself a star player and you better move quickly to make him your franchise player.

A good deal finder can be priceless. It is hard to place a value on such a person in terms of how much time and money they might save you. But, here are some things to consider that might help you put your own value to such a person.

You make your money when you buy. Well once you’ve closed on a profitable deal the money is yours. It’s yours to capture or to loose and loose it you will if you’re not watching the details and managing the project. One poor design choice or overlooked deficiency could cost you a fortune. Diverting your attention from your deals in progress to find future deal could end up being very costly.

A lot of people say that you might be lucky to find one good deal for every 100 properties you look at. I think that is pretty close. How long does it take you to look through 100 properties? It takes me a couple weeks and I’ve become good enough at it to not have to actually visit all 100. I can screen out a good portion of properties before I actually visit them.

It takes a good day to drive around and hang up a thousand bandit signs. Not to mention the cost of the signs and the fact that so many people pull them down and throw them away. There is also a potential for getting a ticket by communities that has outlawed bandit signs.

Hours are lost talking to sellers who don’t have a deal and who may be less than 100% honest about their property.

There can be significant amounts of time and money spent in placing ads in newspapers and maintaining websites to attract sellers.

Wholesalers, Be Valuable

With all this said in favor of wholesalers I must also urge wholesalers to provide maximum value to their buyers. I get so many calls from wholesalers who say they have a great deal but the property is out of the MLS and the wholesaler doesn't have anything in writing from the seller or even the foggiest idea of what the seller might accept. I would be ok with paying for the services of someone who eliminated 95 of the 100 homes and just brought me the 5 best deals. That is more along the lines of what I expect from a realtor. And that's ok, but I would really pay for the person who eliminates 99 and brings me the deal on a silver platter.

In general when the wholesaler starts calling people on his buyer’s list he should have a property already under contract or very close to it. The property should meet the buyer’s criteria. You must take the time to know your buyer. If you just throw up prayers you’re going to waist your buyer’s time. Be reliable. When you say you have a deal, have a deal. If your buyer can’t define his or her criteria then move on. Time is a critical commodity for you just as it is for the real buyers out there who you need to go find.

A real good buyer will help the wholesaler by properly defining her desired buying criteria and her ability to close. This will help the wholesaler be more successful in his job. It allows the wholesaler to focus his search and gives him the confidence to move quickly to secure a good deal.

Be willing to take risk. Those who said there is no risk in wholesaling are setting you up for failure. You need to be willing to put down an attractive earnest money deposit on a good deal if you're confident it is a good deal and that you have or can find a buyer for it. You probably don't want to put down a big deposit on your first couple of deals. If you're a beginner it's ok to be risk averse until you learn the ropes.


I just spent all day today looking at two properties and writing offers on them. I don’t think I have much of a chance of getting either of them. I just sold the last property in my inventory last week and I’m eager to get going on the next project. I would like to have at least two going right now.

With the time I’ve spent in this business I feel that my greatest value in the process is in oversight, finance, management, and marketing, which is plenty and could hardly be considered specialization. These tasks are very time consuming so area canvassing for deals is an additional chore I don’t need. I am happy to pay a nice finders fee to any wholesaler who can feed me the deals.

You should be aware that there is just too much in this business to do everything yourself, or at least to do everything well. But there are also no absolutes in this business. Go find help but be very cautious when ever you let someone into your business.

Photo Credit: That Canadian Grrl via Flikr

Justin’s work ethics and values are based on his small town western upbringing and eight years of active duty in the United States Marine Corps. He currently resides in the D.C. area. He holds a B...
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    Replied almost 11 years ago
    Anytime I deal with a wholesaler they are the first ones to get paid. Once you do a couple deals you should be on the top of their list. There are definitely two breeds of wholesalers though. I would estimate 10 bad deal pitching wholesalers to every good one. .-= Steve´s last blog ..House #23 Wholesaled =-.
    Michael Perry
    Replied almost 11 years ago
    What a GREAT article. My favorite wholesaler knows exactly what I like. He knows that I am willing to pay a decent, but not enormous premium on deals that still have lots of meat left on the bone. He knows how much rehab I will do. He knows my areas and what I want to get in rent. Most times, I put his stuff under contract before I ever go visit the property. We have a lot of trust between us. If something goes south and I have to back out for whatever reason, he is going to refund my earnest money because he knows that I close 90% of the time. I’m loathe to pay money to any person who is simply advertising someone else’s property before he even has it under contract. I just don’t feel that that kind of person has done anything to justify earning any kind of fee whatsoever. How about those guys who never have any pics of the properties that they are trying to sell? They send you a pic from the tax records that may be 5 years old, along with a copy of the polaris information. No current pics and no scope of work! I hate that! I could go on forever.
    Justin Pierce
    Replied almost 11 years ago
    Steve, I agree, there are at least 2 breads of wholesalers. You certainly have to find the right one. Thanks for the comment
    Justin Pierce
    Replied almost 11 years ago
    Michael, It sounds like you have exactly what I’m advocating whith your wholesaler. I think you can certainly take some credit for your wholesalers success and vice versa. Sounds like you’re a good team. Yes, presentation is a huge issue. I really try to keep these posts short but I still should have taken some time to adress that issue. That is an excelent point. You can’t just toss up a prayer, hope someone bites, and then demand a finders fee. Thanks for the comment.
    Justin Pierce
    Replied almost 11 years ago
    Michael, It sounds like you have exactly what I’m advocating whith your wholesaler. I think you can certainly take some credit for your wholesalers success and vice versa. Sounds like you’re a good team. Yes, presentation is a huge issue. I really try to keep these posts short but I still should have taken some time to adress that issue. That is an excelent point. You can’t just toss up a prayer, hope someone bites, and then demand a finders fee. Thanks for the comment.
    Dick Rosen
    Replied almost 11 years ago
    Justin, I just want to thank you for writing this piece. I have been in this business for a short 5 years and just recently (due to a lack of employment) decided to learn more about being a wholesaler. I consider your article as a very good educational piece.
    Justin Pierce
    Replied almost 11 years ago
    Dick, Thanks for the kind words and you’re welcome. Thanks for reading. Good luck with full time investing. Alot of people look back at situations like yours and say it was the best thing that ever happened to them.
    Anthony Stewart
    Replied over 10 years ago
    It was nice to have discovered this blog. Because all the things that I have read and been studing as a wholeseller makes me feel confident that I am on the right track to be a successful wholeseller. Your blog was very well written and fill with a lot of pertinent information. In your next article could you suggest how one goes about finding buyers or how to obtain a list of buyers. If you have any suggestions pls contact me at the above website.
    Justin Pierce
    Replied over 10 years ago
    Thanks a lot, Anthony. I will keep that topic suggestion in mind. In short, if you want to build your buyer’s list you just need to start networking and calling people who advertise that they buy houses. Once you find a potential buyer go ahead and ask him/her their buying criteria (I’m sure you’re familiar.) My one unique suggestion is to also ask the buyer for an actual adress of the last two properties that they purchased. There are so many pretenders out there. You have to weed them out. Actual buyers will have, most likely, purchased the home, put some work into it and then advertised it for sale or rent. Ask them if they have a website were you could view their last deals or if they have the rent or sales listing. You can tell them that it will help you tailor your search to their particular exit strategy. You have to be super confident that you have a real buyer if you’re going to spend your valuable time finding a property to meet their needs.