What The H*** Is Wrong With Wholesalers
Investor · Fort Wayne, IN · Member since 2014 · 1k+ posts · 515 votes
Ok I am just going on a rant tonight. I get an email from a guy trying to sell me a house I have already looked at and know who is selling it. The price has dropped but I explain to him that I know who is selling it and they only give quit claim deeds, and I wouldnt accept a quit claim deed. He says no problem so I ask him if he has pulled title on it yet, as I know there are liens on it, and he says no but I will. I HAVE LOOKED AT THIS HOUSE AND PULLED TITLE, I KNOW THE OWNER, WHY THE H*** WOULD I LET YOU WHOLESALE TO ME? He then sends me 4 more listing from the same seller and ask if I want to see them. IF YOU DONT HAVE A CONTRACT YOU CAN NOT WHOLESALE!
WHOLESALERS NEED TO BRING VALUE TO A DEAL! Even if I wanted this I could cal the seller and not have to worry about his markup!
Oh thank goodness!! I thought a whole week was going to go by without another wholesaler rant!!
You think wholesalers have issues? Try working with some "Investors" who think they want to buy and hold with their newly cashed out IRAs Or a whole new crew of Newbie Flippers every three months. Can't make up their minds, over pay for all their repairs, cry about a non refundable deposit, want a complete contractors write up just so they have something to nit pick, or worse, want a guarantee that's all the work to be done!
Wholesalers, here's a novel concept that has worked for me for years. Do your due diligence to be sure....you have to anyway before you can make an offer. But there's not a good reason to share that with your Buyer. They are going to do their own due diligence anyway, and any discrepancy between the way you think and the way think will ONLY put you in a negative light with them.....as demonstrated by many a wholesaler rant....(Never mind that any two Investors or contractors will have differing opinions anyway!)
Don't give them ARV, FMV or any other speculative number. Two numbers, and two only do I ever give my Buyers.....the address and the price I want. Serious buyers will have an answer for you in an hour or two and a check for the deposit by the end of business that day. If your buyers are not behaving like this, you have the wrong guys. Ditch the whiny babies and go find a real one.
I have folks lined up for my buyer's list all the way to Australia...I need more buyers like a hole in the head. I have exactly 3 on my list that buy 98% of what I get under contract before the ink is dry. Craigslist takes care of the other 2% Buyers are a dime a dozen. Those that want to rant....man up and go find your own deals; then you'll have nothing to complain about.
I did email the seller to let him know this guy just tried to sell their property.
What would be the purpose behind doing this?
Hygiene.
I respectfully disagree that I "slam all wholesalers in one rant" and buy in another. I know it was early morning when I was commenting, so I went back to read my comments and here is my intent and my basic position, exactly quoted.
“I give anyone credit who goes out and works hard to put together a deal. I am happy to pay a WS for the value they create finding and getting a true deal under contract. But I pay them for "value created" not effort.”
If you are co-wholesaling, or whatever the gurus are currently calling it, I don't and can't do business with you because I am licensed. I deal only with the party having equitable interest. Period.
I love hearing negative comments about wholesalers because it really fires me up and makes me want to master my craft (I am a wholesaler by the way). I am 20 years old and wholesaling properties while away at college, and recently having great success. I do attribute some of my success to my mentor, though. Regardless of my age and lack of experience, I have proven that I can close deals in my market.
But who has time to be negative? As investors and entrepreneurs, all of our focus should be on our next deal and hitting our goals. Don't waste time complaining about wannabe wholesalers - just don't work with them! If one is an experienced investor, I could imagine it would be very easy to tell the scammers from the performers.
Everyday I look for morning motivation - so I thank the complainers for providing mine for the day!
Motivation is what drives this business as we all know, and I love the thoughtful discourse because in the end we all just want to make a living doing what we love (at least that's what motivates me). I truly mean I provide constructive criticism, and offer my assessment of a deal and why it doesn't work for me, or my clients. If I can show them what it takes for me to consider a purchase, we both win long term.
Oh thank goodness!! I thought a whole week was going to go by without another wholesaler rant!!
You think wholesalers have issues? Try working with some "Investors" who think they want to buy and hold with their newly cashed out IRAs Or a whole new crew of Newbie Flippers every three months. Can't make up their minds, over pay for all their repairs, cry about a non refundable deposit, want a complete contractors write up just so they have something to nit pick, or worse, want a guarantee that's all the work to be done!
Wholesalers, here's a novel concept that has worked for me for years. Do your due diligence to be sure....you have to anyway before you can make an offer. But there's not a good reason to share that with your Buyer. They are going to do their own due diligence anyway, and any discrepancy between the way you think and the way think will ONLY put you in a negative light with them.....as demonstrated by many a wholesaler rant....(Never mind that any two Investors or contractors will have differing opinions anyway!)
Don't give them ARV, FMV or any other speculative number. Two numbers, and two only do I ever give my Buyers.....the address and the price I want. Serious buyers will have an answer for you in an hour or two and a check for the deposit by the end of business that day. If your buyers are not behaving like this, you have the wrong guys. Ditch the whiny babies and go find a real one.
I have folks lined up for my buyer's list all the way to Australia...I need more buyers like a hole in the head. I have exactly 3 on my list that buy 98% of what I get under contract before the ink is dry. Craigslist takes care of the other 2% Buyers are a dime a dozen. Those that want to rant....man up and go find your own deals; then you'll have nothing to complain about.
I'm not sure if its a wholesaler issue as much as a people issue. I know some good mechanics and I know some bad ones. People by nature are inconsistent and some are good and some are bad that goes across the board and applies to every trade!
Wow, just adding negativity to his brand. Hopefully he learns from his mistakes.
@Joseph Ball What is this 3/2 you speak of? I'm a newbie investor interested in starting with wholesaling to build capital, but I really just want to do something and get my first deal done so that I can have a bit of experience under me.
A standard 3 bedroom, 2 bath single family residence. The bread and butter of buy and hold landlords and fix and flippers. As long as it is bought fairly well (below market value including renovations) is also the least likely to be horribly damaging financially even with some missteps since they can almost always be sold on the open market at retail prices.
Thanks, Paul. I was considering what Brandon Turner calls "house hacking" and starting my rental portfolio with a duplex. That's also because I watch too much Income Property, lol. Nice, I'm learning some REI lingo. Today was a good day.
If you were successful building your own wholesaling business you know how hard it can be. You know how the process is to start, instead of slamming the newbie (which I presume they are) you need to be helping to educate them about your needs.
I had a conversation with @Crystal Smith yesterday on the phone as I am looking at Chicago, she asked me the perfect question any Wholesaler or Agent should be asking,
"What are the metrics that are important to you, and what are the number you need?" If a wholesaler brings me something without asking, adds me to their email list and keeps emailing me crappy deals, I just ignore them and their calls, but someone who wants to take the time and hold a conversation, I'll gladly talk to. And if the numbers don't work, I'll take 5 minutes to explain to them why it either a) doesn't work for me or b)isn't a deal. Worry more about tenant and contractor issues than wholesaler issues.
<snip awesome rant>
I have folks lined up for my buyer's list all the way to Australia...I need more buyers like a hole in the head. I have exactly 3 on my list that buy 98% of what I get under contract before the ink is dry. Craigslist takes care of the other 2% Buyers are a dime a dozen. Those that want to rant....man up and go find your own deals; then you'll have nothing to complain about.
I'll just go ahead and assume you dropped the mic prior to leaving the stage.
Mostly unrelated to Jerry's post, buyers, do you ever inquire with wholesalers to determine how they acquired the property they are trying to flip to you? I think the answer to that question will go a long way in determining the quality of that wholesaler. If their reply does not include the word "marketing", I will go out on a limb and suggest that it probably is not a very good deal.
My point is this, and @Aaron Mazzrillo sums it up beautifully on his podcast (37): to be a quality wholesaler, you need to acquire a higher level knowledge (via education and experience) of marketing, negotiation, appraisal, rehab estimates, RE contracts, and local real estate law & customs. That's a pretty tall order for a newb.
Wholesaling seams to be the easiest and cheapest avenue to get into REI, and from what I've seen the most likely sector to be flooded with people who don't know what they are doing. The concept is sound, but I have found 1 decent and honest deal out of about 300 I have been sent in the last 6 months. Between inflated ARV's and clueless renovation estimates, I can't imagine any of these get actually picked up by investors, unless there are as many clueless investors as there are wholesalers. (I doubt it because when your money is at stake you tend to learn pretty quickly) I am sure there are some wholesalers who are good at their jobs that are just as annoyed because the unreliability of others gives the whole practice a bad rap.
Keep in mind that a lot of wholesale deals go under the radar. I have a handful of SERIOUS cash buyers who I know can close, so if I have a tight deadline to close I will usually personally call them and my other buyers will never see.
Keep in mind that a lot of wholesale deals go under the radar. I have a handful of SERIOUS cash buyers who I know can close, so if I have a tight deadline to close I will usually personally call them and my other buyers will never see.
Good point John. I stand by my statement that there seem to be a lot of wholesalers that haven't mastered their craft, because it is the entry point to real estate pitched by the gurus who then flood the market. But like I said as well, the concept of wholesaling is sound and a good wholesaler who works hard and knows their market is worth their weight in gold to an investor. I personally haven't run across any for my area yet, but as a new investor I may be screened as much as I am screening. My intention is not to heap more coals on the fire of wholesaler hate, as much as it is to state that it's frustrating to spend so much time in due diligence on leads that won't turn a decent profit. I am still hopeful I will find one or two who I can build a great business relationship with.
I had a moment while waiting on my delayed flight in Louisville this evening to catch up this thread, and it's interesting the reaction to what I believe is fairly common in most markets.
New investors/wholesalers believe they can put out some craigslist posts and some bandit signs, get a phone call from some "motivated" buyer, and get it under contract before anyone else. They haven't really assessed true ARV or repair costs, or considered what a buyers exit strategy might be. Do they even have a max offer in mind or just try to get it as low as the seller will come down at his kitchen table the first time they meet.
I didn't mean to question anyone's manhood or the extent of everyone's global buyers list, but if this thread offends you, then it obviously strikes some chord. I will continue to credit those that have mastered the craft of WS because it's probably the hardest part of the business. It's where the value is created and everyone down the line benefits.
I would advise new wholesalers to know the process and have a plan before you jump in. How many messages do we see each day on BP like:
"I just got my first call from my mail campaign. Now what?"
"I just got my first offer accepted. Now what?"
If you don't know what to do after you get an offer accepted, then you probably shouldn't have made it. Why people think they can jump in without any preparation like you would do for any other business, escapes me. Especially a complex business like real estate.
I would advise new wholesalers to know the process and have a plan before you jump in. How many messages do we see each day on BP like:
"I just got my first call from my mail campaign. Now what?"
"I just got my first offer accepted. Now what?"
If you don't know what to do after you get an offer accepted, then you probably shouldn't have made it. Why people think they can jump in without any preparation like you would do for any other business, escapes me. Especially a complex business like real estate.
I can tell you exactly why. Because most of the Guru courses dole out just enough information to get you interested and then tell you it will be another $1200 to find out what to do with it, so they skip that bit of ridiculousness and pray they can figure out the rest on their own. There are few step-by-step resources that actually cover a real estate transaction from Nothing to money in the bank to educate them. Like a real estate investing for dummies book. (Note: might want to check that, there actually might be that book out there, oddly I have never looked)
Correction, I just looked and there is. I wonder if it is any good.............
I personally would only deal with licensed agent and close with title company for them to do title search and grant GW deed so that if there is clouded title or liens on properties the owner or bank will pay it. Otherwise wholesale deals are like thrift store, sometimes you find something very good deals, other times trash.
I think a lot of people are confusing 2 things here: people that are looking to get into wholesaling vs wholesalers. Wholesalers are actively closing deals. I myself have done over 100 in the last 3 years. I wouldnt be able to do any if I wasnt bringing value to real cash buyers. I think real wholesalers get a bad rep due to the fact that people looking to get involved with wholesaling call themselves wholesalers but have yet to do a deal or even educate themselves. There is a big difference between the two.
@AJ S. some of my best deals come via quit claim deed, yes I know what I am doing, Yes I know the Story, Yes my title company checks things out, and mostly I pay the liens and title policy, but if the numbers work at the end of the day I dont care too much, if I have a good title insurance policy. IE banks screws up the FC and is willing to sell u a QC deed for .10 on the dollar, then you have to quiet title, not really a problem to me, just saying.
It's probably the hardest part of the business,And it"s where the value is created and everyone down the line benefits. Certainly for me ENUFF SAID!
@Uyenchi Ho A lot of posts have been written about all the things a good wholesaler has to do and while I have not yet seen one personally I still believe in unicorns.. Kidding aside, I think the best advise I can give you is work closley with your best buyer. Ask him if you can see a property right after he has bought it. Inspect the condition, ask how much he paid, try to estimate rehab cost and see what he thinks. Follow the consruction process. This way you get a good iead about what your buyer likes to buy and for how much. Once you have a clear goal and you know what deal exactley you are looking for you can aim for that and dont have to worry every time if its a good deal or not. And in general, dont worry too much about screwing up, you are learning, be sinciere and open about the fact that you are new and everyone will help you out.
It looks like while away this post struck not one but a few cords out there. There are so many theories and so much knowledge here about what the wholesaler has done, didn't do, how to get the deal for their end buyer and how they need to educate themselves, gurus...etc. Now, let's just assume there was a call from a "motivated" seller off of one of them signs. The wholesaler qualified the lead by asking the seller multiple questions. Wholesaler knows the area and determines the property is worth checking out, pulled the comps, ran the analysis and set a time to see the property. Shortening this story a bit, the wholesaler determined the value and said this is perfect for John Doe. John jumps on the line and said yeah Bobby Jones I'll check it out. My question is, wouldn't Bobby do the same qualifying before going to see that property? If the wholesaler said the ARV is XXX. It's a 3/2 in this neighborhood (address even better) and I'm assigning it for XXX$, said end buyer did the due diligence, why would there be ARV issues and with who dropped the ball? I understand fuss about rehab analysis. I do not understand fuss about ARV. JAQ...
Im new to this wholesaling thing but imo i think if investors want better deals than they should give themselves direct exposure. let wholesaler know exactly what you are looking for on your profiles, fb accounts, groups. For example BP has a section under profile thats asks what youre "seeking." Let us know which markets you invest in what types of numbers you want and an example of an ideal deal you would buy...and update as often as needed. Ive been doing this a week and after speaking with some investors in southern california to get some information as simple as a question like "what types of properties do you invest in"...its like pulling teeth. Ive seen some investor blogs that say exactly what cities they are investing, types of properties they invest and the amounts. They have sections where they provide numbers which can give us wholesalers an idea of the kinds if deals we need to find. Those are the investors creating success on both ends. But if investors are not doing either exposing exactly what they are seeking in social accounts....then you receive what you give or reap what you sew.
Also, big websites like this should create apprenticeship programs where qualified investors may teach and train new wholesalers. I would not mind joining some type of program of this setup. The problem is most wholesalers (like myself) come in with little to no money. If we are in the spirit of helping each other and can forsee the longterm benefits of creating a system that educates and empowers new wholesalers/entrpreneurs. Just a suggestion and probably not a new one....BP could set up a fee to join and investors can do 50/50 splits for the first 4 deals or however long the training lasts. This will help wholesalers know right away whether or not this business is for them. Many investors may feel there is nothing in it for them but there is, you will make a lot more than what many of these so called trainers are making and you will continue to get solid deals from your wholesaling team even after theyve finished the program. Just a thought.
The issue is that most wholesalers are not really capable of closing on a deal hence are merely lead generators, and they don't even know this. They think of themselves as investors but they are no different mentality ypthan someone who works flea markets.
At least the flea market operators really buy the stuff (assuming it's not stolen merchandise).
It is interesting reading the rants and raves about wholesalers who do not have good deals or real deals, or even understand the business. We can all cry foul about investors, real estate agents and lenders too. For all I know, every business has participants who deliver less than their best effort or do they?
People working in the real estate industry at large bring different skills and knowledge levels to the table. There is no rule that says every one must conform to one way of doing business. There is also no rule that states how anyone is supposed to go about gaining knowledge. This industry works as a whole and is inclusive of all things good and not so good.
We all benefit from both sides of the spectrum. There is not a person among us who has not made mistakes, blown it at least once and had to learn something new. Thank goodness we get to encounter situations that teach us something, either good or bad.
The wholesale business is a vital part of real estate just as any of the other fields one can choose in which to participate. The "bad" deals or inadequate deals will continue but finding the solutions to the problems these create is another opportunity.
It is interesting reading the rants and raves about wholesalers who do not have good deals or real deals, or even understand the business. We can all cry foul about investors, real estate agents and lenders too. For all I know, every business has participants who deliver less than their best effort or do they?
People working in the real estate industry at large bring different skills and knowledge levels to the table. There is no rule that says every one must conform to one way of doing business. There is also no rule that states how anyone is supposed to go about gaining knowledge. This industry works as a whole and is inclusive of all things good and not so good.
We all benefit from both sides of the spectrum. There is not a person among us who has not made mistakes, blown it at least once and had to learn something new. Thank goodness we get to encounter situations that teach us something, either good or bad.
The wholesale business is a vital part of real estate just as any of the other fields one can choose in which to participate. The "bad" deals or inadequate deals will continue but finding the solutions to the problems these create is another opportunity.
At issue is the lack of standards of training, competency and ethics, not to mention any indication of the ability to perform.
I've known plenty of people who possess real estate sales licenses who are clueless and I was one myself. We all have to start somewhere. However, at least there's a licensed broker involved so that a rogue agent doesn't stray to far.
Anybody can call themselves a wholesaler. Just as curious, same is true with a the term 'investor'. Just as you can go to lots of school PTA meetings but that doesn't make you a parent, you can sit at lots of REIA meeting but that doesn't make you a competent wholesaler or an investor, either.
If you want to debate semantics, I'm up to the task however the better solution, in my mind, is to better define the role and deferent use yourself from the boneheads. My friend Mike Cantu is one of the most active and successful wholesalers that I've known in nearly 40 years in this business. His would be a standard few would reach.
So, how do you differentiate yourself from the incompetents? How do you distance yourself from the people who only create chaos rather than solve problems? Ain't my problem because I steer clear.