All
Members
Companies
Blog
Forums
Podcast
Webinars
    User Log in  /  Sign up
  • Forums
    Newest Posts Trending Discussions Followed Forums Real Estate News & Current Events General Landlording & Rental Properties Buying & Selling Real Estate Deal Analysis See All
  • Education

    Read

    BiggerPockets Blog BPInsights: Expert Analysis Guides Glossary Reviews Member Blogs

    Watch

    Webinars Video Library Financial Independence Blueprint Intro to Real Estate: Rentals

    Listen

    BiggerPockets Real Estate Podcast BiggerPockets Money Podcast BiggerPockets Business Podcast Real Estate Rookie Podcast Daily Podcast (Audio Blog)

    Topics

    Business Operations Finance Finding Deals Property Management Property Types Strategy
  • Network

    Recommended Vendors

    Real Estate Agents Mortgage Lenders Companies Hard Money Lenders Contractors Investment Companies

    Search

    Members Events Jobs
  • Tools

    Calculators

    Rental Property Fix and Flip BRRRR Rehab Estimator
    Wholesaling Mortgage Payment 70% Rule Airbnb

    Services

    BPInsights: Property Insights Tenant Screening Property Management Lease Agreement Packages

    New Feature

    BPInsights (beta)

    Quickly analyze a property address or ZIP Code to compare your rent in your neighborhood.

    Analyze a property
  • Find Deals
    Real Estate Listings Find Foreclosures External Link Ads, Jobs, and Other
  • Bookstore

    Real Estate Books

    Profit Like The Pros Bidding to Buy See all books

    Featured Book

    BiggerPockets Wealth Magazine book cover
    BiggerPockets Wealth Magazine

    Written by financial journalists and data scientists, get 60+ pages of newsworthy content, expert-driven advice, and data-backed research written in a clear way to help you navigate your tough investment decisions in an ever-changing financial climate! Subscribe today and get the Oct/Nov issue delivered to your door!

    Get the Magazine
  • Pricing
Log In Sign up
User
Quick search links
Podcast Hard Money Lenders Books Washington
BlogArrowReal Estate WholesalingArrowHow To Land Quality Deals While Working With a Wholesaler
Real Estate Wholesaling Jan 30, 2021

How To Land Quality Deals While Working With a Wholesaler

Andrew Syrios
Expertise: Mortgages & Creative Financing, Business Management, Landlording & Rental Properties, Commercial Real Estate, Real Estate Deal Analysis & Advice, Real Estate Investing Basics, Personal Development, Real Estate News & Commentary
223 Articles Written

Want more articles like this?

Create an account today to get BiggerPocket's best blog articles delivered to your inbox

Sign up for free

There have been some discussions lately about the legitimacy of wholesaling. Darren Sager has made a good case that wholesaling is, for all intents and purposes, similar to a net listing (which is illegal in many states). Furthermore, Illinois has severely restricted the practice of wholesaling and other states are likely to follow suit.

Still, others argue that it can be done properly with full disclosure and reasonable margins between the wholesaler’s purchase price from the original seller and the sales price to the end-buyer.

While I have misgivings about wholesaling and we don’t wholesale ourselves, we do buy from wholesalers from time to time. And there are plenty of wholesalers around these days. So it’s worth knowing the best way to buy properties from them as there are, sometimes, good and ethical deals to be found.

How to Find Wholesalers

Wholesalers are not at all hard to find. You’ll meet plenty at your local REIA (Real Estate Investment Association) and they will generally have advertisements up all over Zillow, Trulia, Craigslist, etc.

Whenever you inquire about their properties, they will want to add you to their list. If you are active at all in real estate, they will be calling and texting you to get your criteria (price point, size of rehab, where you want to buy, etc.) so they can put you on their buyers list.

Thus, if you start getting on their lists, you will start getting inundated with potential deals. Most will be junk, but not all. From what I've seen, it's extraordinarily hard to get a BRRRR deal or a 70% rule-quality flip from a wholesaler, but there are a good number of decent deals available from them (about 10% to 20% equity). Of course, there is a lot of trash as well.

Many (though by no means all) have very bad rehab estimates. They seem to have gotten better in the last few years, but I’ve seen estimates that were off by several hundred percent. I’ve also seen “rehab budgets” on houses that were bulldozer bait. So yes, you need to put together your own rehab estimate and not trust that of the wholesaler.

And while it should go without saying, some of them are a wee bit oversold. "40% Cash on Cash!" "25 cap rate!" "$50,000 under market value!" "This deal will cure cancer!" etc., etc. Again, value the property yourself.

Related: Wholesalers: Having Trouble Estimating Rehab Costs? Try This!

What Wholesalers Are Looking For

The second most important thing when negotiating with a wholesaler is speed—both the quickness with which you can get to the property to make an offer and the quickness with which you can close. Most want you to close in two weeks or so, which makes bank loans all but impossible. Buying for cash or having a partner or private lender lined up is the way to go here.

I’ve seen three ways these properties are put up to view.

  • Lockbox combo (which is given out when requested)
  • Scheduled showing
  • Group showing (usually when the property is occupied or rented)

Regardless, getting there quickly and making your offer quickly with a quick close is the way to get an offer accepted.

There also seems to be a bit of a myth out there that it’s “take it or leave it” and you cannot negotiate with a wholesaler. You most certainly can. Offer what you are willing to pay. Don’t just walk if you think the price is too expensive. Sometimes it will go highest and best as it would with a real estate listing, in which case you should, again, offer what you are willing to pay.

The Best Way To Find Good Deals With Wholesalers

When it’s all said and done, the best way to find really good deals with wholesalers is to get to the top of their list. Wholesalers generally make their money with volume. (Indeed, the good ones always do, as those who make their money with huge margins above the price given to the seller are really pushing if not outright breaking ethical boundaries.)

For this reason, wholesalers often take their leads to their go-to buyers before blasting them out to their email list. This is where you want to be, as there is less competition and therefore a higher likelihood of getting a good deal. To get on this list, you need to prove that you can close.

As Brett Snodgrass points out, “The biggest asset you can have in this business is your word. If you say you’re going to do something and our relationship proves that I can trust that you’ll actually follow through with what you say, that is what will distinguish you from the crowd and get you at the top of my buyers list.”

The main selling point wholesalers offer to the original sellers is the ability to close quickly. Therefore, an end buyer who doesn’t follow through is a big problem for them. And thus, buyers who they know will close are gold for wholesalers. Most wholesalers are willing to take a bit of a discount to sell to someone they know will close.

Of course, you can’t prove you can close until you buy one and that might be hard the first time around. (Sending them a proof of funds or reference letter to build your credibility is not a bad idea.) But once you do close one, ask if they have something else.

Try to move up to the top of that buyers list, as that’s where the best deals are to be found. Don’t settle for one and done; try to string off a few in a row when you buy a deal with a wholesaler.

Related: The 8 Most Common Lies Newbies Believe About Wholesaling

Conclusion

Again, I’m not a big fan of wholesaling as a practice and don’t do it myself. But I’m also not going to avoid making an offer on something that’s on the market if it makes sense to buy. Regardless of what you think about wholesaling, there are ways to find good deals from wholesalers. It just involves sorting through the junk, acting quickly, and following through.

How do you feel about the ethics of wholesaling?

Join the debate in the comments.

By Andrew Syrios
Andrew Syrios has been investing in real estate for over a decade and is a partner with Stewardship Investments, LLC along with his brother Phillip and father Bill. Stewardship Investments focuses on the BRRRR strategy—buying, rehabbing and renting out houses and apartments throughout the Kansas City area. Today, they have over 300 properties and just under 500 units. Stewardship Properties on the whole has just under 1,000 units in six states. Andrew received a Bachelor's degree in Business Administration from the University of Oregon with honors and his Masters in Entrepreneurial Real Estate from the University of Missouri in Kansas City. He has also obtained his CCIM designation (Certified Commercial Investment Member). Andrew has been a writer for BiggerPockets on real estate and business management since 2015. He has also contributed to Think Realty Magazine, REI Club, Elite Daily, Thought Catalog, The Data Driven Investor and Alley Watch.
Read more
4 Replies
    Steve Morris Real Estate Broker from Portland, OR
    Replied 24 days ago
    With a wholesaler, you're on your own. I guess if you can accurately assess the CapEx needed and the ARV and the price works, go for it. I just wouldn't trust a thing (even that he has a contract) they say without a lot of verification. You can add OR to your list of place I can report wholesalers to the REA also.
    Andrew Syrios Residential Real Estate Investor from Kansas City, MO
    Replied 24 days ago
    That's true. They have no fiduciary duty to you and aren't bound by license law. Under no circumstance should you just buy the wholesalers contract before closing and always close with a title company!

    Report Abuse

    Why are you reporting this?

    Additional Comments (optional)

    Cancel

    Report Abuse

    Why are you reporting this?

    Additional Comments (optional)

    Cancel
    Gene Neal Investor
    Replied 18 days ago
    I am currently entering into the wholesale market. I feel if you obtain a Real Estate license as well as not over drain a clients equity, then you can operate a successful entity. You're pretty much a concierge service for investor's.

    Report Abuse

    Why are you reporting this?

    Additional Comments (optional)

    Cancel
    Zev J. CPA from Denver, CO
    Replied 14 days ago
    I think wholesalers play a good role in the market by focusing on selling discounted off-market properties. However, every buyer should independently verify the rehab estimates, make sure title will clear, read through and understand everything in the contracts, and research liens when you're buying from a wholesaler. Many wholesalers are just transactional based and not relationship based. I think the best wholesalers are relationship based and want you to succeed over the long term and therefore buy more properties from them. It's hard to find those types of wholesalers but they do exist.

    Report Abuse

    Why are you reporting this?

    Additional Comments (optional)

    Cancel
Rotate Log in or sign up to comment

Related Blog Posts

Real Estate Wholesaling Jan 30, 2021

How To Land Quality Deals While Working With a Wholesaler

By Andrew Syrios

Find great wholesalers and then get on their good side to ensure you’re the first to know when the best deals are up for grabs.

Read more →

Real Estate Wholesaling Nov 13, 2020

Opinion: I Don’t Trust Anyone Who Wholesales—Here’s Why

By Darren Sager

To me, wholesaling is the Wild West of real estate transactions. Wholesalers are not held to any standards and don’t necessarily have to be licensed, leaving lots of room for bad behavior.

Read more →

Real Estate Wholesaling Oct 30, 2020

The Key Phrase in Wholesale Contracts That Could Cost You

By Marcus Maloney

Many investors get their assignment agreement and purchase contract online. But there’s verbiage in your assignment that can cost you.

Read more →

Real Estate Wholesaling Oct 26, 2020

Betting on Wholesaling: One Couple’s Journey Into Joint Investing

By Marcus Maloney

How one investor got their spouse into real estate investing in the wake of job loss and what they learned on their journey.

Read more →
Log in Sign up

Log in

Forgot password?

If you signed up for BiggerPockets via Facebook, you can log in with just one click!

Log in with Facebook

Or
btn_google_dark_normal_ios Created with Sketch. Continue with Google

Let's get started

We just need a few details to get you set up and ready to go!

Use your real name

Use at least 8 characters. Using a phrase of random words (like: paper Dog team blue) is secure and easy to remember.

By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.

Or
btn_google_dark_normal_ios Created with Sketch. Continue with Google

Why create an account?

Receive a free digital download of The Ultimate Beginner's Guide to Real Estate Investing.

Connect with 1,000,000+ real estate investors!

Find local real estate meetups and events in your area.

Start analyzing real estate properties, we do the math for you.

It's free!

Explore

  • Membership
  • Community
  • Education
  • Marketplace
  • Tools
  • FilePlace
  • REI Resources
  • Perks
  • Glossary
  • Reviews
  • iOS App
  • Android App

Company

  • About Us
  • Press
  • Advertising
  • Careers
  • Stats
  • Contact Us

Important

  • Editorial Guidelines
  • Terms of Use
  • Rules
  • Privacy
  • FAQ

Social

  • Facebook
  • Twitter
  • YouTube
  • Instagram
© 2004-2021 BiggerPockets, LLC. All Rights Reserved.