Why Should Your Work with Real Estate Wholesalers?

by | BiggerPockets.com

A forum discussion that I came across about working with wholesalers recently caught my eye. This person was saying something to the effect that they wanted to go around the wholesaler and work directly with the seller. I can tell you that doing that with the wholesalers I know, would guarantee that you would be off their list — forever!

Why in the world would someone think it would be OK to “steal” that lead from the wholesaler? Do they really think it’s OK to make their own deal with the seller, and then tell the wholesaler to figure out how to get paid?

If you are new to real estate investing it might help you to understand the process, and also to understand the rehabbers and landlords that buy from wholesalers do so for a reason.

The Process of Getting Wholesale Deals

I can only speak from my experience, but those leads don’t just “appear”.  Each month I spend a considerable amount of time and money to get the phone to ring. I have ongoing direct mail campaigns and use various other methods to get leads. Continuous direct mail campaigns done correctly can be costly, and for every lead that ultimately turns into a deal, there are many more that don’t.

What this means is that the wholesaler has to talk to a lot of people and look at a lot of houses to get one deal. This takes a lot of time, and it takes a lot of work.  Everyone is familiar with the formula used by real estate investors to buy houses. The wholesaler has to buy the property below that threshold in order for it to be a good deal for their investor buyer and for them to make money too. They have to build their fee into this equation when making the offer.

The Gold Is In Your Buyers List

Now that I have finally found a deal that I know will be profitable for the folks on my buyer’s list it’s time to get in touch with them; with my “A list”.

I can tell you that I not only appreciate them, but I cherish these folks!  I’m thrilled that they “want to be on my list”. When they see my name come up on their caller ID, I want them to be excited to see what I have for them.  In this business, your reputation is everything — you live or die by the way you run your business. It is important for me to be known as the person that has good deals. It’s no good for me to make money if they can’t make money too.

Why Work With a Wholesaler?

The answer is simple. Because they have good deals that they can pass on to you! These are deals that you didn’t have to spend your time and money on marketing to find. 

Most rehabbers and landlords I know are always on the lookout for a good deal. If they run across one, they snap it up. Some folks hang out on the MLS. Others drive around and knock on doors. Whatever methods they are using, I can guarantee you that they don’t have a formal marketing plan they follow. These folks don’t want to do marketing. They just want to rehab, build their rental portfolio, or . . . you fill in the blanks.  They are thrilled to have someone bring them good deals they didn’t have to look for.

In the same way that I nurture my relationship with those folks on my buyers list, I can tell you that they reciprocate. They do what they say they are going to do. Always!  I never have to worry about these folks doing something unethical. That’s why they are on my “A list”. You see, this is a two way street that is designed so that everyone can make money — a lot of money over time. This also goes back to the proven theory that real estate investors that build good teams make more money than the “lone rangers” that try to outsmart the system.

About Author

Sharon Vornholt

Sharon has been investing in real estate since 1998. She owned and operated a successful home inspection company for 17 years. In January of 2008 she took the leap of closing her business to become a full time real estate investor.


  1. Chris Clothier

    Susan –

    Your article is right in so many ways I wouldn’t know where to begin. I will tell you that a solid wholesaler can be a direct link to some incredible real estate deals. We have been dealing with the same wholesaler for almost 10 years now and he earns every bit of a 6 figure income off the properties we purchase alone. He even has bank relationships that would take us years to develop. I would much rather buy from him and not have to worry about building the type of relationships he has. I only have to build the relationship with him.


  2. Couldn’t agree more with what both of you are saying. The value in wholesalers is incredible because of all the time, money and headaches you will be saving with each property you buy. A good wholesaler will feed you these deals on a silver platter on a weekly/monthly basis without having to make dozens of offers before one gets accepted.

  3. I’ve been lending hard money loans in Atlanta for a number of years and I can count on one hand the number of deals that I have been able to finance that were sourced from wholesalers.

    My experience is that the typical wholesaler grossly overstates the after repaired value and similarly understates the scope of work and budget to bring the house to retail value.

    In the typical wholesale deal I see, the wholesaler will cherry pick comps from better neighborhoods than the subject property. Than the wholesaler will prepare a scope of work/budget that will bring the house up to rental quality at best. So they are presenting a deal with a high end retail value with a rental quality rehab.

    I hear the same from the other hard money lenders in the Atlanta area that I network with. I would love to hear from any of the Atlanta area wholesalers that have true wholesale deals. A number of my clients are looking for good deals.

    PeachStone Capital

    • Wade –

      I think your folks are working with the wrong wholesalers.

      When I buy property, I always figure repairs on the high side. I also figure in a sizeable “fudge fund” for the things that will inevitably show up that can’t be seen. When you start your rehab, you will always find something you didn’t count on. The rehabbers I work with are very proficient at figuring their own repairs. Even though I do repair estimates, they ALWAYS do their own (before signing on the dotted line). Investors should never depend on someone else’s numbers.

      As far as comps go, there are three things I look at.

      #1. What are the low comps; the numbers investors are buying houses for?

      #2. What are the high comps? I throw out all of those that aren’t realistic in that they are just too high to use as a realistic comp. A lot of my rehabbers actually end of getting their houses sold for the high comp numbers because they are very good at adding value. I’m happy for them if the exceed my projections.

      #3. What is the average that houses are being sold for? I look closely at amenities such as garages, basements etc. to be sure they are alike.

      When I present a house to an investor I will hand him all of the comps, the good, the bad and the ugly. I will tell them I feel good about a quick sale at the mid price range.

      In the end, they will do their own numbers. I just give them my opinion. And since the same folks work with me over and over, I would say that is certainly evidence that I send them great deals. Some of my buyers are cash buyers, but there are others that use investor loans with strict guidlines. I’ve never had one not get financing because they paid too much for my house.

      New investors often pay too much for their first houses so maybe that is part of the problem. If I can’t get a house cheap enough, I have to just walk away. I have learned that you can’t sell marginal deals.

  4. Sharon,
    I’m a new wholesaler. In the process of building up my buyers list, I contacted one buyer, told him the truth-that I was a new wholesaler in the area. He invited me to his office and explained what he does, showed me pics of his past projects and explained what he’d like from me as a wholesaler. Out of all the people I contacted and added to my buyers list, he’s the only one who actually took the initiative to meet up with me personally and get to know me.
    shortly after, I found a deal, negotiated it to the price he was comfortable with, from 98k down to 60k, we’ll be closing this week ( yay! my first deal), we’re working on another deal at the moment and I have a couple more in the pipeline that I’m working on
    Out of all these deals, guess who’ll be the FIRST to get a call from me? This guy! moral of the story; a good wholesaler is worth his keep and if you treat your wholesalers right, you’ll always get the BEST Deals, Trust me.
    @ WADE MUNDAY I believe your people are really working with the wrong wholesalers, just as sharon pointed out.We work hard, we’re constantly looking for deals via marketing, word of mouth,probates etc.and to be honest wholesalers do not need a huge list of qualified buyers, just a good group of investors that are looking to buy.

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