Real Estate Wholesaling

Why I Vowed to Never, Ever Work With One Investor Again (& How to NOT Be That Guy)

Expertise: Business Management, Personal Development, Real Estate Wholesaling
59 Articles Written

Guys, I must share this story. I had a very unfortunate encounter with an up-and-coming real estate investor in my area. Every time I tied up a property with this guy, without fail, he would back out of the deal.

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Every single time!

Now, I’m not for sure if he’s a wholesaler trying to tie down a deal with his buyers and the buyers are backing out or what, but this has been the third time he has entered into a purchase agreement with me and backed out.

I have a rule — three strikes then you’re out!

It’s nothing against him. I really like him, and I want to move forward with working with him, but when it comes to my business, I just can’t give precedence to someone who constantly backs out of properties over others.

Guys, what’s really frustrating is that I actually turned two other buyers away in order to work with this guy! That ended up putting me in bad light because I had to go back to these buyers and ask if they were still interested since he backed out.

It’s frustrating because not only does it makes me look bad, it also creates a lot of drama and unprofessionalism because now my other buyers are skeptical of the property, and it makes them wonder why the previous buyer backed out.

I’m not going to name drop because I want to be respectful in honoring this company, but I want to use them as an example to bring a point home in today’s post.

Let’s jump into it!


Why Ethics Matter as a Real Estate Wholesaler

Guys, I don’t want you to experience the encounter I had with this guy. That’s why we must understand the importance of being people of integrity and having ethics in real estate.

Trust me, it matters!

When people hear the word “wholesaler,” the vast majority of people get a bad taste in their mouth because they know wholesalers have a poor reputation of being unreliable.

Related: How to Stand Out From Other Wholesalers by Developing a 5-Star Reputation

They know wholesalers are looking for a quick buck, looking to rip people off and tie up a bunch of properties and back out. They know wholesalers are making huge margins, not leaving any meat on the bone for their end buyers.

Does this sound familiar?

It’s those types of wholesalers who ruin the reputation for everyone!

Why Trust Matters

As an investor, it’s super important that you establish trust.

With the rise of the internet these days and the empowerment of the consumer, you need to provide people with a means to something called “permission marketing.”

Technically, everyone is in the marketing business, so I would highly recommend reading a book called Permission Marketing: Turning Strangers into Friends and Friends into Customers by Seth Godin. This book goes in depth on how traditional marketing and advertising has become less effective due to the loads of information shoved into people’s face every day. Permission marketing encourages you to create reasons for people approach you about your business instead. Check it out!

When you’re a business owner, the more people who trust your brand and think of you as legitimate, the better you’ll be.

For example, there are buyers on my buyer’s list who automatically receive special treatment compared to everyone else because we have history and we’ve established trust.

And vice versa.

There are people who I can call right now, who would drop everything they have on a dime and do a favor for me.

Don’t you think it would be the same for you?

I’ve had so many opportunities come my way simply because I have established a relationship and trust with people, and I won’t do anything to violate that trust.

Trust matters!

Backing Out Hurts Your Reputation

I really want to speak to this because if you’re a wholesaler and your primary strategy is assigning contracts, that’s great — but if you can do it ethically and morally, that’s even better!

It would have to be a BIG move for me to ever work with the investor I mentioned again, and I’ve said this before in past posts, but I have intentionally lost money on deals simply to maintain my word and good standing.

To me, losing $2,000 is far less important than losing a relationship with another investor who is going to bring me in more money in the long run.

If you create a business model where you assign contracts and back out of deals like it’s nobody’s business, then the big players in your market will not take you seriously.

They don’t mess around, and if you want to work with the big players, you can’t be flaky!

Trust me.

If you get blacklisted and your reputation diminishes, get ready to find a new career because that’s the number one deal breaker in your business.

You don’t want that!


Real Estate Wholesalers Need to Change

Guys, we’re looking to build a legacy in our business.

We’re striving to make a difference in this industry, and we have to rise up and stop being bottom feeders operating with a scarcity mindset.

Related: 5 Ways to Be a Wholesaler Other Investors (Actually) Want to Work With

As a wholesaler, your goal is not to make as much money as possible by exploiting people!

If you operate with that mindset, people are going to realize very quickly that you’re a shady person and won’t do business with you anymore.

There’s this concept where if you have several boats in the ocean and the tide rises, then every boat rises along with the tide.

You have to realize there are plenty of opportunities for everyone to make money as wholesalers.

It starts with treating people right, and if we do that, our business will boom.


So with that, I hope this post has encouraged you guys today!

Whether you’re assigning contracts, flipping houses, or whatever your investment strategy may be, put ethics at the top of your business model and watch your business flourish.

Have you ever worked with wholesalers (or other types of investors) and been sorely disappointed by their lack of morals?

Let me know your experiences with a comment!

Brett Snodgrass is a licensed real estate broker and wholesaler who hails from the Indianapolis metro. His mission in life is to glorify God by serving as many people as he can through his real estate business. He has a pretty active community growing on Facebook and is also the founder of Come check it out now and connect!

    Jeff Dimock Flipper/Rehabber from Norcross, GA
    Replied about 3 years ago
    Thanks for sharing your experience and thoughts. Backing out of any deal is bad for a reputation and I’ve seen it many times – though thankfully mostly at the stage of a verbal offer. It is for this reason that I won’t allow assigning of my contracts when I’m wholesaling a property. If another wholesaler has a buyer for my property, I need a contract with the end buyer and I’ll sign a separate fee agreement to pay the wholesaler at closing. And I generally don’t allow inspection periods and require a non-refundable deposit. Until the non-refundable deposit is received I am free to accept someone else’s offer and deposit.
    Jackie Botham Investor from Grand Rapids, Michigan
    Replied about 3 years ago
    Thanks for posting! I worked with a shady wholesaler briefly a couple months ago. He had this multi-property Land Contract deal he wanted me to buy that had crummy terms with over-inflated purchase prices. He made offers to the seller that I never authorized, put on the hard-sell, begged and tried guilting me into buying this crummy deal. The seller “countered” his own counter-offer a few times with higher prices, claiming a cash buyer had showed up. Lol. I found out too that there was a realtor involved and that wholesaler and the realtor would each be making 5% off the deal. After I told him “no” multiple times, he kept calling, texting and emailing me repeatedly, trying every way he could think to get me back to do the deal. I was really disgusted at this person’s behavior and never answered another communication from him. Any trust that I may have built with this person was immediately destroyed by his greedy behavior. I do realize that this was one bad apple and I am currently networking with more professional wholesalers for off-market deals. Thanks again. Great post!
    Henry Omenai from Akron , Ohio
    Replied about 3 years ago
    Great info! As a new investor to the area, I appreciate the advice on what makes a good business model to follow. Trust and reliability are at the top of the list. Well done with this post. Keep the pointers coming! Thanks Henry
    Replied almost 3 years ago
    Meanwhile, another guy recently wrote a post saying, that as a buyer, he will not talk to the wholesaler unless the wholesaler already has the house under contract. So here is the dilemma. wholesalers are expected to sign contracts that they know they cannot perform,ie close, on their own. Nor do many end-buyers expect them to be able to close on their own. They are supposed to assign, or double close, or something, but not actually ever “own” the property. But if they cannot find that end-buyer for whatever reason, they must back out because they do not have the wherewithal to close. It is not a matter of losing a couple thousand dollars. No inspection period, and a non-refundable deposit? That’s ridiculous. I just backed out of a house because the home inspection showed $200,000 worth of work (mostly ongoing water damage) and the seller refused to renegotiate the price. Why not have the seller repair, you might ask? I did not want that because what both the home inspector and the pest inspector found was evidence of a number of previous shoddy repairs that were cover-ups instead of actual repairs. The ongoing water damage was one such repair. The water was leaking under the kitchen sink at the point where the pipe entered the wall. The “repair” consisted of putting a piece a plywood about an inch forward of the leak, a faux wall, and leaving the leak to continue leaking. There was also a faux floor under the sink about 4 inches above the real floor. There was also an ongoing leak under both shower pans. So both bathrooms, the master bedroom and the kitchen needed to be redone, and the likelihood of more damage discovered when all those rooms are opened up for a proper repair. The house has fallen out of escrow yet again, so I guess right now the seller is looking for a greater fool.