Petition for BP to Discontinue Wholesaling Discussions...
Brandon SturgillBusiness Member
Real Estate Broker · Columbus, OH · Member since 2013 · 3k+ posts · 1k+ votesPetition for BP to Discontinue Wholesaling Discussions...
Most Popular Reply
Residential Real Estate Agent · Orlando, FL · Member since 2015 · 139 posts · 106 votes
11yI'm not sure why I'm even responding to this insulting post but since you've hit a nerve, I'm going to try. Wholesales and wholesalers are an intricate part for many investors. Considering we move 30-50 properties a month to our investors may show that wholesalers play an important role for many investors. We work to provide quality investments and take over all the hard work and time it takes to acquire properties for our investors that don't have the time, desire or knowledge to accomplish. Sure, there are bad seeds out there in the wholesale world, but there are bad seeds in every aspect of business. I find BP to be an incredible resource for me as an investor and a wholesaler. For you to want to begin a petition to rid posts and forums about a particular side of investing seems selfish and a little "one sided". I can only assume you've had a bad experience, but to burn the industry as a whole really doesn't provide much credibility on your part.
311 Replies
- 11yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
you bring up some pearls reminds me of holding Chain as a kid.. I love it.
- Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes11y
Agree to both, when complaints roll in or when regulators see the public at risk, they will act, sometimes they see something and act anyway. Look what just happened with seller financing under Dodd-Frank (as well as other lending operations) they got fed up with predatory practices by a few and lowered the hammer on everyone.
My bet is that while assigning a contract is legal, the hammer will come down on everyone in RE, including the occasional assignment transaction where an investor or even a home buyer has a change of plans and really wasn't trying to assign as a business venture.
And yes, Realtors must eat too, can't blame them for not spending their day working a 20K listing when it could be just as easy to get a 200K listing.
Banks got hit for not serving the needs of a community in lending under the Community Reinvestment Act, forcing a % of the loans to qualify under community investment rules. Maybe we will see a Realtor's Service Act requiring a % of their brokerage activities be spread over a spectrum of prices. LOL, doubt you'll get a brokerage specializing in high end properties listing a 20K rehab!
Maybe having newbie Realtors fit more of that requirement would be good, 25% of your deals in the first 3 years must be at a certain level, they would get good training then! No idea, just speculating....... :)
- Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes11y
Wholesalers with no money in the deal delivering empty promises to the homeowner are doing all of us a great disservice. Sure, shady wholesalers can waste our time as investors, but what about the poor homeowner with no knowledge or options, waiting on someone? Irks me to no end.
I, too, have been an incidental wholesaler like @Joe Villeneuve just eluded to. May be a high end house or developable land that my marketing or just being in the biz so long has generated. Doesn't fit into my portfolio or my niche, Even then I don't offer anything I wouldn't or couldn't do myself and I don't leave homeowners hanging. I still put money down. They called me for a reason. If they wanted to go through a realtor they would have. Believe it or not, not everyone wants to slog through the long and expensive process of listing. With no guarantee! To argue there is no need for wholesalers in incorrect. Quality wholesalers that are homeowner focused are a necessary part of the market!
- 11yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
like I say its a regional thing.. not going to find any 20k listing by and large on the west coast... 200k maybe :)
when I started as an agent in 1975 in CA.. we used one page contracts that were deposit receipts ( Earnest Money) and escrow instructions all on one page document and there were no disclosures laws.
Today when I buy in CA.. there are 10 different disclosure docs and 15 page contracts :)
One of the things most people are forgetting here with buying through a wholesaler is I have yet to see a wholesaler provide a state mandated Disclosure form to a buyer.. As any RE broker or agent has to do. now the buyers could probably give a rip. IN our state the only one's that are excluded from providing the sellers disclosure is a lender who foreclosed and us New construction builders we just sign the front page and put the permit number we do not have to fill out the entire form. this pertains to 1 to 4 unit properties regardless if they are rentals or owner occ. And I know most if not all states have the same laws.
But buyers should also know the laws. in our state of Orygun.. if you were not given the state mandated disclosure doc prior to close you can cancel at anytime and get 100% of your EM back ... so you can come up to closing day and if you have not been provided with the disclosure you can just back out. Little things like this that the RE industry does to protect the buying public.
Wholesaler shaming under the guise of ethics is slippery. Let's face it, any offer less than full price, all cash, 3 day close with no contingencies or realtor fees is injurious to the seller.
When I sell a property, that's all I want 99% of the time. Anything less and I suffer to some degree.
- Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes11y
Even when I ran non-profits I wasn't working for free. I did when I volunteered to assist.
Thanks to the gurus, newbies and even old salty investors have a mind set of taking rather than earning. What they don't get is that in order to build wealth in RE, it's a slow steady progression, not an overnight event. RE is a social business, without a reputation you won't last long.
Yes, starry eyed newbies are impressed with claims of taking in large sums for little effort, void of knowledge of basic business practices, dealing in good faith, meeting of the minds, parties having similar knowledge and right to disclosures aimed at a more level playing field, they also don't get general business agency relationships, principal agent duties, and they are far from understanding that there is always a basis to evaluate value of any service or tangible item on the planet. They also miss the aspect of social expectations, the good of the public, the basis for rules, regulations and laws.
And, it's not just newbies, we have old timers, the street corner guys that have been wheeling and dealing from the old days that still can't grasp underlying issues of what they post. Suggesting wholesalers use weasel clauses like partner approval when the is no partner, total horsefeathers and that is what gets people in trouble, trying to out smart century old traditions, laws and ethics.....you can deal up front and accomplish the same thing in the end!
Okay, I'm gone, I'll leave it to the younger crowd experts trying to teach wholesaling and let them see if they can snag a "deal". :)
- 11yMike HurneyPro MemberReal Estate Investor · Boston, MA · Member since 2009 · 2k+ posts · 545 votes
@Matthew Fragassi OK Red *** treatment for toots. Now what would you advise to avoid that problem?
- Real Estate Broker · Tucson, AZ · Member since 2012 · 410 posts · 337 votes11y
Originally posted by @Brandon Sturgill:
@Karl Krentzel you continue to miss the point, though I appreciate your passionate response. So, blowing or earning money has nothing to do with anything whatsoever..though I agree there is significant importance to growing wealth. Here is the deal: you are currently in a mindset that will not contribute to investing in RE as a whole. Wholesalers need to eventually graduate to a higher investing purpose...you can only scheme for so long.
Dude, you need a hot chocolate intervention...
Okay @Brandon... You are absolutely right...
As a Wholesaling Investor, Broker and Coach... I can assure you of ONE thing.
Wholesalers DO need to GRADUATE... Graduate into kicking a ton of you know what of arrogant Investors who think that they are "one shot ponies."
Trust me... wholesalers are THE BOMB... Why? Because they KNOW how to FIND THE DEAL. Which apparently you have a problem with.
Here's something to consider... The WORST wholesaler... who has a good deal.. can find a partner to JV and do the deal with.
YOU... no matter HOW good you are as a "Real Investor" (I snicker when I say this) can't do DEE Doodly SQUAT without a deal... no matter how much money you may claim to have.
Honestly.. the one who has the deal wins. I teach people to get them before people like you so they can rub it in your face and sell it to someone else out of spite.
My last reply to your nonsensical, argumentative, purely hyperbolic post.
Have a DAY. - Professional · Nokomis, FL · Member since 2013 · 123 posts · 99 votes11y
Originally posted by @Jay Hinrichs:
that's what BP is for spirited classy exchange of ideas and opinions..
I know I only bat about 57% with my wife agreeing with everything I say :)
I am only on the second page and have a ways to go before I catch up, but can we focus on the REAL discussion here... How on earth did @Jay Hinrichs get his success rate over 50% when going up against his wife on ANYTHING? Today is my 22nd anniversary and I am STILL lucky to hit the low 30s.... :-)
- Investor · Dallas, TX · Member since 2014 · 2k+ posts · 1k+ votes11y
Originally posted by @Edward Hamill:
Originally posted by @Jay Hinrichs:
that's what BP is for spirited classy exchange of ideas and opinions..
I know I only bat about 57% with my wife agreeing with everything I say :)
I am only on the second page and have a ways to go before I catch up, but can we focus on the REAL discussion here... How on earth did @Jay Hinrichs get his success rate over 50% when going up against his wife on ANYTHING? Today is my 22nd anniversary and I am STILL lucky to hit the low 30s.... :-)
I find it difficult to believe that either of you got out of the single digits, unless your wives are simply trying to make you feel better! :)
- Investor · Los Angeles, CA · Member since 2014 · 69 posts · 19 votes11y
We all got trolled so hard in this thread hahaha
- Real Estate Broker · Columbus, OH · Member since 2013 · 3k+ posts · 1k+ votes11y
@Karl Krentzel I'll do the hot chocolate intervention, but only if you buy. Appreciate the perspective.
- Bedford, NH · Member since 2012 · 2k+ posts · 1k+ votes11y
Originally posted by @Jay Hinrichs:
One of the things most people are forgetting here with buying through a wholesaler is I have yet to see a wholesaler provide a state mandated Disclosure form to a buyer.. As any RE broker or agent has to do. now the buyers could probably give a rip. IN our state the only one's that are excluded from providing the sellers disclosure is a lender who foreclosed and us New construction builders we just sign the front page and put the permit number we do not have to fill out the entire form. this pertains to 1 to 4 unit properties regardless if they are rentals or owner occ. And I know most if not all states have the same laws.
But buyers should also know the laws. in our state of Orygun.. if you were not given the state mandated disclosure doc prior to close you can cancel at anytime and get 100% of your EM back ... so you can come up to closing day and if you have not been provided with the disclosure you can just back out. Little things like this that the RE industry does to protect the buying public.
You just provided an excellent tool for any Oregon investor wishing to screw with a wholesaler. If enough people extend closing to the last minute (of the wholesalers contract) and then back out on these grounds, wholesaling in Oregon dies.
- 11yRonald PerichPro MemberInvestor · Granite City, IL · Member since 2014 · 658 posts · 301 votes
So I guess I am confused on something. I don't find wholesaling all that attractive. I'm not doing it as part of my regular business practice, but I can see where it might be a beneficial tool in the future.
Let's use the standard fix-and-resell formula of 70% ARV - rehab - expected closing on a $100K ARV house. It needs $20K in rehab. Expected closing costs in the range of $9K (agent commissions and concessions).
Math equates MAO at $50,000 (70K - 20K)
If this were listed with an agent in my area, they are going to list this somewhere in the neighborhood of $75K. And it would sit there gathering dust for a couple of months before the price is reduced to $69K. Couple of more months and it's down to $59K. It finally sells for $55K. After closing costs and commission, the seller is going to walk with $52K. They will have spent at least a $1-2K in utilities, insurance, and general upkeep of the property.
When I make them that offer, I tell them everything I wrote here. If the seller is happy with $45K and a fast sale, as opposed to a six month battle with selling it, is there any harm in that?
And then I assign that contract to a rehabber for $5K, how have I done anything wrong for that seller? How have I done anything wrong for my buyer?
And I guess my last question is if I instead bought it for $45K and chose to rehab it myself for a $95K re-sale, does that somehow make the overall sale any better or worse for the seller?
- 11yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
nothing wrong the way you lay it out.. the issue comes with this totally unregulated activity in a few ways.
1. some states see that as acting in the capacity of a licensed agent so that is a violation of licensing laws.. See Ohio FLA CA. and more states will start as well its a trend.
2. because so many undercapitalized or new investors see this as a way to make cash the reasons there are so many complaints and the states are perking up is many who do not have any money any experience tie up property and basically fib to the owners and then walk with weasel clauses.. there by in the perception of the sellers and regulators damaging said seller.
we all buy low or we hope we do and we try to sell high or we hope too..
Its just like building new construction we expect to make a profit but we need to be properly licensed bonded and insured.. so the biggest rub is the non license activity and a totally unregulated activity.. now many wholesalers have their cash lined up take title resell etc and that is were the states make the distinction.. But when someone with no ability to close ties up a property then just throws it back on craigs list that's the rub.. Or worse yet you have wholesalers tieing up MLS listed properties and trying to flip those... and that really can erk some folks.
- Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes11y
Originally posted by @Richard C.:
Originally posted by @Jay Hinrichs:
One of the things most people are forgetting here with buying through a wholesaler is I have yet to see a wholesaler provide a state mandated Disclosure form to a buyer.. As any RE broker or agent has to do. now the buyers could probably give a rip. IN our state the only one's that are excluded from providing the sellers disclosure is a lender who foreclosed and us New construction builders we just sign the front page and put the permit number we do not have to fill out the entire form. this pertains to 1 to 4 unit properties regardless if they are rentals or owner occ. And I know most if not all states have the same laws.
But buyers should also know the laws. in our state of Orygun.. if you were not given the state mandated disclosure doc prior to close you can cancel at anytime and get 100% of your EM back ... so you can come up to closing day and if you have not been provided with the disclosure you can just back out. Little things like this that the RE industry does to protect the buying public.
You just provided an excellent tool for any Oregon investor wishing to screw with a wholesaler. If enough people extend closing to the last minute (of the wholesalers contract) and then back out on these grounds, wholesaling in Oregon dies.
I wanted to know more about this seller disclosure law. Actually, there are few more exclusions from the OR seller's disclosure. PRs, executors, trustees, conservators, etc selling real property are also excluded as are government agencies. I know of no such similar disclosure required of sellers in CA. There are plenty of CAR requirements.....but those are not state law.
Messing with wholesalers by going into contract and backing out based on not receiving such a disclosure doesn't kill wholesaling. Buyers want deals, they don't go into contract for the fun of it. For every buyer wanting to back out, there are 10 more buyers wanting to buy on the seller's or wholesaler's terms. I've never read a case where an AG or DA went after an investor buyer who was not provided with proper disclosures and who didn't complain.
- Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes11y
@Account Closed
I'd say you're right, except that closed transactions show up in audits after closing, it's not the closing agent responsible for such matters but the selling broker.......in their absence, the seller. The fun begins when the seller is seen as "being in the business" not just homeowner Joe. If you don't follow state laws, you'll get nailed, sooner or later. :)
- 11yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Account Closed
I am not advocating that buyers wait till last day and go behind the wholesalers. I was just pointing out that in Orygun.. wholesalers who do not provide a sellers disclosure risk losing the deal and also have to return any EM that has been put into escrow or given them
I do business in 15 plus states and its rare to get a disclosure from a selling OREO broker I do get them in MS .. for example.. every state of course is different. I have to take my CE for my CA brokers license this year and will hone in on this one.. CA usually leads the nation in these type of things.
and of course it won't kill wholesaling.. LOL
- Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes11y
Originally posted by @Jay Hinrichs:
@Account Closed
I am not advocating that buyers wait till last day and go behind the wholesalers. I was just pointing out that in Orygun.. wholesalers who do not provide a sellers disclosure risk losing the deal and also have to return any EM that has been put into escrow or given them
I do business in 15 plus states and its rare to get a disclosure from a selling OREO broker I do get them in MS .. for example.. every state of course is different. I have to take my CE for my CA brokers license this year and will hone in on this one.. CA usually leads the nation in these type of things.
and of course it won't kill wholesaling.. LOL
My comment about killing wholesaling was in response to Richard C.'s idea to mess with wholesalers by by going into contract and canceling at the last minute.
If the OR seller disclosures are required by ALL sellers (except the lawful exclusions), what's going on with FSBOs? Are all FSBOs really using the required disclosures?
Do you know if the law disallows waivers? Without a specific disallowance in the law, I'd be tempted to use a waiver. If the law prohibits a waiver then I'd use the damn disclosure. It's not a deal breaker.
- 11yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Account Closed
yes FSBO s are required to use it... and the law only pertains to the ability of a buyer to back out last second and not loose EM.. but if you were in a subsequent lawsuit and had not provided one I think it would weaken your case at the civil level.
Oregon is pretty picky on licensing. For instance and this one is violated everyday as well.
Any person or corporation that buys even ONE home or commercial property with the intent or rehabbing or doing any work on it and reselling to the public must either be a licensed GC or a Licensed Developer. Its not good enough for the investor to just hire a GC to do the work for them they MUST be licensed as well.. The Developers license requires no test but it cost about 5k to get set up.. you need a 20k bond and 1 mil insurance policy plus the cost to the state. And the state does random checks on rehab projects the fine is 5k per event. I know this is another one that most people would not believe and its not the same in most states that I work in... WA used to be the same way but they JUST changed the law... So yes I am a licensed Developer and as a licensed Developer that allows me to rehab and also to build new construction.. My insurance companies on the 10 year liability also want to see this license in place. But the Developer cannot Physically do any work on the property Nothing by law.. if you do you then need to be a GC take the test pass it and get licensed and bonded.. the state of Oregon is very tough on these guys they do all sorts of driveby's and license checks. You can do that when 3/4 of your population all lives in the Willamette Valley !.
In addition Oreogn on the lending side is one of the few states that any loan on any 1 to 4 unit requires NMLS broker to handle the paper work. this is violated all the time the state did shut down some of the bigger private guys and they either had to get licensed or hire mortgage bankers like me to run their paper work. so for me to do what I do in Oregon I am a NMLS mortgage banker a Licensed Developer and a Licensed RE broker... and that equates to a bunch of CE each year etc.. but I am totally legal. :)
- Richmond Hill, NY · Member since 2013 · 4 posts · 2 votes11y
Too bad, Like it or not wholesaling will be around with this forum or not. Put an'' H'' on your back an d handle it.
- Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes11y
Originally posted by @John Gerald:
Too bad, Like it or not wholesaling will be around with this forum or not. Put an'' H'' on your back an d handle it.
It my very well be around on the forum but not practiced in Ohio anymore. One of the forum posters (in Ohio) stated he no longer wholesales. They love to go on and on about the "service" they provide but some government agencies don't see it as a "service". I personally have seen several people victimized by these people. It is now illegal in Ohio and I believe that is a good thing and that it protects homeowners from dishonest sheisters. Get a license. Operate honestly and ethically. Nobody can complain about that.
- Investor · Santa Fe, NM · Member since 2015 · 11 posts · 2 votes11y
if you don't like us dont buy from us, someone else will. The wheels keep spinning like they always have.
- Real Estate Broker · Columbus, OH · Member since 2013 · 3k+ posts · 1k+ votes11y
I think they will temporarily @Jayrel Stephens
Thanks for tuning in to the discussion
- Investor · Tampa, FL · Member since 2013 · 20 posts · 6 votes11y
Originally posted by @Karl Krentzel:
Originally posted by @Brandon Sturgill:
Given wholesaling is not a form of investing in real estate...perhaps licensee's and true investors should start thinking about a push to do away with related discussions...
An Open Letter...
It is always fascinating to me, the level of arrogance displayed by those who claim to be "True Investors."
Quite honestly, I've suffered the ignorance of others in silence mostly because I have felt that my opinion is of no consequence.... truthfully, it feels as though you are "pushing rope" with the mindsets of the lesser minded.
However, it is in times like these that it becomes incumbent upon all investors, Realtors® Wholesalers, and others involved in the real estate arena to strike out, and call lunacy what it is.
This is clearly the most uninformed, ridiculous post I've ever read on BP.
The notion that "true Investors" are ONLY those who aren't licensed, or the wholesaler is complete and utter foolishness.Ignorance? Or Fear?
I often wonder if it is people who believe as you do... are they ignorant (lacking knowledge or awareness in general; uneducated or unsophisticated. in case you need a definition)
OR
They are AFRAID.
Fear.. because they know that the Wholesalers and Investing Realtors® like myself are taking the deals from you and giving them to others who are more worthy?
Either way... whether Ignorant (knowing that WHOLESALING IS INVESTING) or Fearful (Investing Realtors® like myself stealing your deals out from underneath your untrained self)
A statement like the one you made on BiggerPockets today is both lacking awareness in general, and simply displays your lack of education.
May I suggest you take a step back and LEARN From those who are INVESTORS like myself, who are also INVESTORS, REALTORS® AND Wholesalers....
You see... people like me? We are in your marketplace... And if you want to limit free speech on a blogpost about a topic.. TURN IT OFF.. Don't Read it....
But in reality, I think what you are secretly wishing for is the absence of Wholesalers and Realtors® in your "Real Life"... so you PRETEND it could be that way on your Online one.
May I respectfully suggest that you.. instead of critique or criticize the way others do business... you sit down and listen or read??
I would be willing to bet you that you will learn something... Trust me.. there are people on this forum that have FORGOTTEN More about Real Estate than you have ever KNOWN...Written in the typical arrogant self absorbed greedy double dipping "profesional" narrative. What fear did you call upon to write this? I'm not a fan of wholesalers since I have not found a single one in my area that adds any value. I did listen to the Larry Goins courses and he teaches only adding a few grand (5) and send out to buyers. Everyone of the people I get lists from use a ARV number to extract absolute maximum value out of the deal. That leaves rehabbers with little room and create bad rehab projects. Just a bad model. It's called Asymmetrical Knowledge and is a principal cause for market failure. The same can be said of RE agents but that would really get your panties in a bunch.
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