Well-executed wholesale deals feel like well planned checkmate.

89 Replies

This post has been removed.

Originally posted by @John Thedford :
Originally posted by @Mary B.:

If you build it they will come. The haters that is. 

 @Jamal L.

Notice that there's never a licensed attorney that goes on the war path about whether wholesaling / assigning a contract is legal or not. lol, just the others... 

Hopefully you won't let negative comments on here deter you from wholesaling again. The owner had a board up that he was paying taxes on and probably getting letters from the county / city threatening fines also. Particularly if it was a hot part of town, L&I always seem to step up then. The property was free and clear and you put $30K in his bank account while simultaneously helping rid of a liability for him. Your end buyer will either flip it retail or rent it out. The neighborhood will be better off as are all parties involved.  If your P&SA was a legal contract in the State of Maryland at the time of execution and it was assignable -- your transaction was Perfectly Legal. Again, job well done.

Kudos,

Mary

Mary: read his post again. He did not put 30K into the sellers account. The seller got 24K and the "wholesaler" got 6K for giving a taxi ride.

Thanks John :-). I mistated the amount by adding in the assignment fee. 

Kudos,

Mary 

Jamal Lee great for you

I missed posts while writing my rants, LOL.

I love to see newbies make a deal. No doubt about it. Jamal carried the ball.

Now, as a "coach" I may use locker room tactics. short cuts on getting a point across (short cuts....LOL) and some thin skinned types may think I'm just too tough on folks. Maybe so, I never led my Army unit to tea parties with honey in my hand either!

Real estate is a tough business, it requires a thicker skin than selling shoes, it takes drive, hard work, knowledge and an understand of the ceiling we must operate in.

Nothing I said was meant to deprive Jamal of his success, I pointed out the issues all wholesalers seem to face and tried to explain the why about it all. A forum post isn't the best platform to go into details. 

You don't kill the messenger because you got bad news, send him back out for the good news! :)

This thread is like groundhog day.

Today (again) we are applauding @Gilbert Dominguez  for another insightful post - what a great writer!

Keep it up!

Originally posted by @Bill Gulley :

I missed posts while writing my rants, LOL.

I love to see newbies make a deal. No doubt about it. Jamal carried the ball.

Now, as a "coach" I may use locker room tactics. short cuts on getting a point across (short cuts....LOL) and some thin skinned types may think I'm just too tough on folks. Maybe so, I never led my Army unit to tea parties with honey in my hand either!

Real estate is a tough business, it requires a thicker skin than selling shoes, it takes drive, hard work, knowledge and an understand of the ceiling we must operate in.

Nothing I said was meant to deprive Jamal of his success, I pointed out the issues all wholesalers seem to face and tried to explain the why about it all. A forum post isn't the best platform to go into details. 

You don't kill the messenger because you got bad news, send him back out for the good news! :)

I get that you are probably considered a 'hard @ss' educator of sorts. I mean no disrespect to you or anyone. Often times I have been called innocently tactless(if there is such a thing as I can say things without considering ones feeling( I just want to tell the truth or share my thoughts). Yet I'm aware of that along with other flaws that I possess so I try to work on it. I state that to tell that we all have various ways of expressing ourselves and some times more than a little they can be mean and uninspiring in turn not yielding any good results... 

The title under my name says wholesaler even though I have experience in other aspects of the business. BP just picked one and ran with it. I'm ok with that. Soon I will be getting my license and it may still say wholesaler *shrugging*. Oh well.

Anywho, my gripe was it seemed that you weren't giving Jamal well wishes and I thought that was unfair as he did nothing wrong. At least from his stated thread he didn't. No hard feelings as we shall meet again. :-)

Kudos,

Mary

Very inspiring post!  Thanks for sharing.

Originally posted by @Bill Gulley :

Some can't follow the nose in front of their face!

@Mary 

@Mary B. undefined

Did you hear me say it was illegal? Have you read anywhere that I said assigning a contract was illegal, or unethical? I can tell you, no you have not. 

Just bringing you up to speed, Jamal didn't pay the seller 30K, he paid them 24K, he sold it for 30K without touching the property.  

I totally agree with you in taking care of distressed, dangerous, uninhabitable properties and solving the owner's problem.  

Mary, seems you missed it, negative comments? You mean anything contrary to your naive, uniformed encouragement to other newbies is negative, to the contrary Mary, my first words to Jamal were to say well done. All of what I have explained must have flown right over your head, it's not about DOING a wholesale transaction, it's about HOW most are trying to do them and HOW they value their service as a strawman.

Please note above where I mentioned special situations where one might be of greater service in dealing with a distressed property. I was saying, learn to justify the price based on the property, not how hard up the owner is of if your car payment is past due and you need to make up for a bad month.  

@Brian Gibbons  put up a video yesterday I believe with an attorney who works with investors and legal council for a state real estate commission. They pretty well explain what the beef is, it's the intent of contracting to buy with no intention of buying and deceiving a seller into thinking they are selling. The other issue is stealing more equity than is reasonable and fair. They also went into advertising properties for sale or rent by someone who doesn't own the property. He might post it again here.

What is reasonable and fair, it's very hard for sociopaths to determine that, it's difficult too for those unfamiliar with the differences in dealing in real estates as opposed to dealing in shoes or T-*****. For those with predatory attitudes, please go sell shoes and T-Shirts, get out of real estate because there are different laws and rules in real estate. Really, millions can be made in shoes and T-Shirts!

I'm not falling on my sword here, there are times, ways to assign a contract legally and doing so above board, ethically. It's just that what people learn from gurus and the uniformed advocates doesn't fall into those areas. Just know the difference!

If you're going to be the cheerleader, follow the game!

Again, Caveat Lector! Absolutely Jamal, pay attention to who you listen to in public forums. :)

There are 4 videos...

  1. Contract Red Flags Watson Invested

  2. 2 Ohio Department of Commerce Division of Real Estate Watson Invested

  3. 3 Marketing No Nos Watson Invested

  4. 4 Earnest Money Watson Invested

Folks, its pretty simple:

If you are not going to actually buy the property and get on title, tell that to the seller.  And be licensed because it is brokering in most states. 

The regulators are pissed about YOUR INTENTION!

Are you going to "tie up the property and not really market except for Craigslist"?

And if you are marketing on Craigslist, say you are assigning a contract, not selling a house.

C'mon @Jay Hinrichs  

Time to get that transactional funding cash for wholesalers so they can get on title and resell.

Originally posted by @Gilbert Dominguez :

@Tom V. ,

I think you are missing the value of the post. It is about someone feeling positive about something they did. Obviously Jamal is a newer participant in the real estate business and is presenting to the community something he did that worked out well for him. We should join him in his celebration and encourage him. No doubt in the course of time people like Jamal learn how to do their job and business on a more professional level. 

Do you see the positive energy the community has responded with? I have been in the business for over 30 years and I because of the position I am in might have done the deal totally free for the seller because I understand more the needs of an elderly couple. 

I once bought a piece of land because of a private investor that put up the money. I only had construction experience and architectural design knowledge. After about a year the property had gone up in value. The private investor needed to get out of the deal. At that time my credit and financial situation had improved to where I could qualify for a loan on my own. I took out a loan and paid back the investor. I proceeded to keep up the payments on the property for about another 2 years and one day the broker called me up and told me the mortgage holder's financial situation had taken a turn for the work. They were a private party. They asked if I was willing to sell the property so I could pay off the loan. I not only agree to sell the property but signed it over to the private mortgage holder so they would get their loan money back as well as benefit from the further appreciation the property had gained. It was my way of showing my appreciation for those that supported me and I again did not need the money at that time. I was fortunate. 

You can quote laws if you want to and point out people can always do things better, You can criticize whenever you care to knock people down or you can choose to do something to help. This whole forum is about people helping each other and sharing the ups, downs, and consequences of negative experiences. It is a place to ask questions and opinions. The very fact of people participation on this forum is and effort to do things more professionally, gain knowledge, and contribute. 

I am sure you have allot to contribute to this community. However you being more professional by self proclaiming yourself as an authority and a judge I see little value by kicking someone that is new in the business. Your actions are not in keeping in the spirit of this forum and you fail to see the fact that others are rallying behind Jamal for his effort, accomplishment, and good spirit. No one is judging, we all have much to learn, and there is always something we could have done better. 

Tom V. I am so glad you are perfect and that so many people including myself aspire to be just like you. 

 He who lives the Golden Rule gets the Gold here too.

Thanks for the post.

Nice deal @Jamal.

From Florida Realtors website:

ORLANDO, Fla. – To help protect homebuyers and sellers from unlicensed real estate practitioners, Florida Realtors® wants to spread the word that unlicensed real estate activity is a crime.

It is a third-degree felony in Florida for someone to act as a real estate broker or sales associate without a license. Officials with the Florida Department of Business and Professional Regulation (DBPR) urge the public to report unlicensed activity by calling its toll-free hotline at (866) 532-1440.

The department’s Bureau of Unlicensed Activity is responsible for coordinating unlicensed activity through its regional program administrators, as well as providing information to consumers and other regulators regarding the dangers of using unlicensed individuals. To learn more, go to www.myfloridalicense.com and click on “Report Unlicensed Activity.”

In Florida form RE2200 is the form used to report suspected illegal activities for both licensed and unlicensed parties. I have not researched the OP's home state laws but in Florida, marketing a property not owned by the person and not listed with a licensed agent is illegal. Florida is cracking down. Ohio shut down all these schemers. In the OP post, they state they "marketed" the property. I would be curious to see if the state of MD looked at this transaction and what their opinion would be.

I have both viewed and listened to the tapes posted on here referencing the state of Ohio. 

It is important to know, and this is according to my understanding of what I saw and heard, It is not, I repeat not illegal to wholesale in Ohio. What the authorities are pointing out and discouraging is that you cannot represent to be selling a piece of real estate that you do not own. You can however get a house under contract and advertise your contract for sale. Your interest is in your contract and your right to purchase the property but not the property itself. I can list the address so that people will know what your contract is for but you cannot post pictures of the house or in any significant way imply you have the right to sell the house. The question of pictures was left as a grew area because again you have to be able to show what your contract to purchase if for. 

I would caution that the authorities will most likely not allow a whole lot of time for you to close on the purchase of the house. If you however can line up a cash buyer in a reasonable amount of time then you should still be good. You may need to get creative to let others know about the house and its location. The whole point is to avoid you preventing the seller from getting what they expect and that is that their house will be sold. 

Contract law in Ohio says you have the right to sell your contract because you do have a vested interest in the contract just be careful not to say or imply you have the right to sell the house because you cannot sell a house you do not own and you do not have the right to represent the owner, that is a licensed activity. 

For example: You cannot advertise a 1500 sq. ft home at 123 Main St. for sale. You can however state, Contract for sale for $2,500.00 to purchase  123 Main St. at the price of $X

You can include ARV, costs of repairs and purchase price according to your contract.

This is my understanding. You cannot advertise, market, or sell real estate that you do not in fact own, but you can your own contract and it rights. 

Now one thing I see is the possibility of obtaining transaction funds and doing a double closing or arranging for the closing on the same time in tandem. 

Who knows this may open the door to transaction lenders to provide funds at a lower rate than they are doing now. After all if I had 2 million dollars in cash and  someone closed with my funds every other day I might earn 100% on my money in one year. I would certainly be looking into this if I was a lender. Every wholesale in town or in the state might want my funds at .5% per day or 1% for smaller funds. This way a wholesaler could actually buy the properties and advertise something that they owned. 

Often when I've corresponded with lawyers I've been told its all about the wording of a contract that can hinder or help you. The State Commission is made up of about 50% brokers and when they look at the numbers from property sold quarter to quarter and per annum with all of that profit made and they didn't get a piece of the pie I'm sure they are livid. They know when a broker was involved in a transaction or not(often cash purchases they aren't involved). Which drives them to total annihilation of non-licensed property sales (aside from those already on title) activity in some States moreso than others. They(the r.e. commission) are politicians and surely aren't looking out for the consumers best interest here. They are looking out for their own interest. Yes I'm a law abiding citizen and I'm well aware of what's going on. Who knows they may even move to require homeowners to use an agent to sell their own property whether its OO or NOO at some point. That too can vary State to State.

~A Breakdown for Newbies~

When I'm in wholesaler mode I'm the 2nd party(the seller/owner is the 1st party) whereas the broker/salesperson is always the 3rd party. So long as I put $1.00 EMD of my own money I'm removed from the 3rd party position. In assignment of contract my end buyer takes my place as 2nd party and I am removed from 2nd party position. However, the contract isn't satisfied so there is the issue of me being a 3rd party at that time; which can be conceived as acting in the position of an agent(3rd party). In double closing, I remain the 2nd party until closing thereafter becoming 1st party, holding title for a few hours at most. Some may hold title for a day or so depending on the structure of the agreement. There can be a disagreement whether my end buyer is the 3rd party or 2nd party in a double closing -- yet there is a separate contract with (myself) wholesaler and the end buyer.

[breakdown ended]

This is why I primarily do double closings as appose to assignment of contract. Iffiness is known to bring concern(s) and discomfort. I am a creature of comfort. Yet let that take no joy from the OP. Who seemed to have been frightened away from his own thread. I apologize if you, Jamal Lee, were offended in any way by any of our comments. I think everyone meant well in their own way...a little if not entirely. :-) 

This is a good thread indeed, obviously my sentiments, as I've returned a few times. There's no where else novices, newbies and seasonal investors and agents/brokers and the likes can all gather and share their points of view, topic by topic in length regarding their business woes, celebrations, to seek knowledge and to educate AT NO CHARGE might I add. Thank God for BP, you rock ;-). 

Kudos,

Mary

@Mary B.

  it goes to intent  and if someone is a high volume wholesaler and sends out letters and has a website and all other manner of marketing.. they can couch it any way they want but they are working in an unlicensed capacity..  who advertises a contract for sale.. I bet nobody.. LOL...  These license laws have been on the books since a RE license was required in the first place.

I totally disagree with your assumption that you have jealous RE industry trying to shut this down .. or in some cases they are shutting it down.. it simply the states enforcing laws that are on the books. And with the advent of the INternet and to a great degree what is talked about on BP and supported by folks like you, it has created a mass of newbie non educated in the ways of real estate and some down right crooks out there scamming the public.. its the bad apples that are spoiling the bunch.. the state is responding to complaints from sellers not from realtors... or the real estate industry.. I have been a broker for 40 years still am.. I have never seen on our MLS bulletins any talk of going after wholesalers.. They talk of why you need a license and what unlicensed activity is and that is not legal... ITs a wave taking the nation because so many newbies undercapitalized folks find it to be their dream to get into real estate the bar is far to low.. the only real training they get is on websites like these ( which is only people like you and me giving our personal opinions for whatever they are worth and its not MUCH really.. that's why the attack on wholesaling is coming about... Many people in the public are getting hurt.. Many are helped also know this especially in low value dumpy properties.. but many are hurt very badly I have done well over 10 foreclosure rescues the day of or day before the sale .. were some no money throw it up against the wall wholesaler just BS the people all the way to were they almost lost the property. it happens and that is why the states are going after them and its a wave that is growing. its not going away.

@Mary B.

  and Mary what are you going to do when the title companies require you to wire in the purchase price for your transaction and you cannot use the buyers funds to close your double close.... this is already happening in many states.. its one of the reasons I am in business in certain markets  facilitating these so my guys stay legal... This is also a growing trend with title companies and states.. Many title companies also only accept wired funds because of all the cashier check fraud and bad checks.

Originally posted by @Jay Hinrichs :

@Mary B.

  and Mary what are you going to do when the title companies require you to wire in the purchase price for your transaction and you cannot use the buyers funds to close your double close.... this is already happening in many states.. its one of the reasons I am in business in certain markets  facilitating these so my guys stay legal... This is also a growing trend with title companies and states.. Many title companies also only accept wired funds because of all the cashier check fraud and bad checks.

Guess my epilogue statement didn't quite catch on... ok I don't use my end buyers funds to buy the subject property on double closing. That might as well be an assignment of contract. I never inquired if this is allowed or not by title companies because I have a transactional lenders in place.  Those funds are indeed wired. Thanks for participating ;-)

Kudos,

Mary 

@Mary B.

  there ya go Mary why do you not say that up front.... why with hold that key critical part of your transactions.... this is were the industry is going.

And then I suspect in a few more years transactional funding will be disallowed and I will be out of a job   LOL

Originally posted by @Jay Hinrichs :

@Mary B.

  there ya go Mary why do you not say that up front.... why with hold that key critical part of your transactions.... this is were the industry is going.

And then I suspect in a few more years transactional funding will be disallowed and I will be out of a job   LOL

 LOL, Hey Jay, you must know by now if you've seen any of my posts that I generally don't type lengthy statements as I prefer to keep it light is all. My apologies if you feel that I omitted key info. On my breakdown for newbies, my aim was to give a small example of the various parties ( on contract only) during a wholesale r.e. transaction which depending on the location(State) of the subject property and the position said party is in can lead to discrepancies, especially if one is the wholesaler.  I certainly didn't mean to leave out the money lender. How could I as there'd be no closing. :-)

Oh my, disallowing transactional funding would be tragic. Still, I doubt you will ever be out of a job...  

Kudos,

Mary

Originally posted by @Jamal L.

was trying to tell you, 

if you really want repeat business, you got to think about that seller and how can you help them. 

Again I don't know what the condition was or the urgency for money from the seller, but that I think it's Bills point

I'm going to use an analogy of financial planning and life insurance

If I'm talking to a father that has a wife and four kids, I going to talk about term convertible life insurance and disability income, I'm not gonna talk about whole life insurance and I'm not going to talk about an annuity because it's not appropriate.

And Im going to make sure he gets a will.

Why? Because they probably don't have very much money and they need to take care of life's risks, which is dying too soon and losing your ability to work and get a paycheck.

The word for "fiduciary" means that you got a moral obligation to do the best thing and that's what generally agents have, is a fiduciary duty, to do what's best for that seller, and that's why seasoned agents and brokers really don't care for wholesalers too much. It's basically they are opportunists. 

And when you use the term check mate, it's going to take something like

"I slammed that seller into a contract and I grabbed a big fat check!!!"

I think the litmus test for a wholesaler should be, 

if that was your grandparents, and they probably had all their wealth of that house, 

why should I pay 20% when they could've paid 3% to the buyers agent?

I'm going to start a thread and post those videos on there and basically title the thread,

why do seasoned real estate investors and seasoned real estate brokers/associate brokers hate wholesalers?

I bet you I could get 40 responses in 24 hours from people that of been in the business for at least 10 years with probably 10 reasons each

Please make sure that you KNOW I'm not slamming you here, just watch how you title posts,

you might've titled that post,

                                         "I got my first deal, what do you guys think?"

Thanks to everyone who left a comment positively or otherwise.  I choose to learn from every encounter Im involved in and this has been very insightful... Until the next post Happy investing..... 

@Jamal L.

Like my girl Tay Tay always says

"the haters gonna hate, hate, hate, hate, hate
Baby, I'm just gonna shake, shake, shake, shake, shake
I shake it off, I shake it off"

Congrats on the deal!  Use the momentum to continue your growth.

I have to agree, the use of the word "checkmate" comes across like you out witted an old man and are doing the Ickey Shuffle. The post doesn't read that way, you seem like a good guy, maybe just a poor choice of words. 

I think Jay hit it on the head, the "wholesale only" model is set up to broker transactions. I've done it myself and I thought so even then. Of course I'm a terrible wholesaler and I usually recommended that folks get an agent to get the most for their property. 

There are, however, some flimsy aspects to some of the anti-wholesale arguments. If Jamal and the seller agree to a $24k sales price who cares if Jamal gets on title or not? The seller still gets the same $24k. If it's a legal issue then I'm all ears but it often comes across as a moral objection and it's over a technicality. If the problem is with the wholesalers profit, well the seller got what he agreed to and can always hire an agent to represent him.

Great Job! It is wonderful to hear that wholesalers are out there with the intent of helping. That is always my intent when I approach a wholesale situation. I read a post right here on BP that was so negative towards wholesalers and it really hurt to hear other investors thought that way. I am so glad to see someone like you doing it right and helping all of us out there who are doing whoelsaling the right way get a better reputation overall. People helping people is what its all about and I am happy for your success!

Just copied off of Craiglist:

I am in possession of an assignable purchase agreement which will allow me to purchase a home in Estero. I am selling the purchase agreement that will allow you to purchase the home.

If you are interested in buying the purchase agreement, please contact me right away. Don't wait!

$94,995.00 (agents welcome, add your commission on top)

This 875 sf 2 bedroom 1 bathroom house with a 1 car attached garage was built in 1965 and features central AC, an air conditioned Florida room, a screened porch, inside laundry, and a month to month tenant in place. Your choice if they stay or go.

Call me today! Owner wants it sold now!

Is this guy brokering without a license? I quote "owner wants it sold now". Is he representing himself, or the owner? $1000 says this is typical for this "buyer" and that he indeed is acting as an unlicensed broker.

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