Rookie Mistake: I Lost Money to a Wholesaler

120 Replies

First of all, I'm not a rookie, but I behaved like one, and I write this post as more of a cautionary tale rather than an attempt to seek advice.  I know I should have done more due diligence, and I know what my options are to attempt to remedy the issue.  Giving non-refundable deposits to wholesalers to "lock up a deal" whereby the check is written to the wholesaler has become customary in the wholesaling world of real estate in the Houston, TX market (I can't speak for other markets).  In May of 2015, I gave Troy Joyner or FPM Houston Homes and FPM Development a $3,000 check to lock up a $85,000 house located at 2710 Wheeler Street Houston, TX.  As the closing date approached, Troy had excuse after excuse as to why the closing was being delayed.  Then he went silent.  I later learned that he entered into multiple contracts on the same property, and he did this with other properties at the same time. Multiple investors are now attempting to locate him in an attempt to retrieve their money.   Though I had met Troy in person on a couple of occasions at networking events, I did not know him that well.  At the end of the day, giving a wholesaler a deposit is the same as giving him or her a short term unsecured loan only you have a contract instead of a promissory note.  I learned that I need to a) do more due diligence on the title of the property and b) do more due diligence on the wholesaler prior to writing a check to the wholesaler for any kind of deposit.   I am embarrassed that I let this happen to me, but, even more so, I don't want it to continue to happen to others. Be careful out there; don't let my $3k mistake be your own. 

@Waylon Themer Mistakes happen! Call it tuition in the school of hard knocks! Thanks for the share and good luck!

Ouch. So did he give you an assignment contract and a copy of the sales/purchase agreement with the seller?  Were there any signs ahead of time that the guy was shady?

I didn't get the agreement between him and seller.  We signed a two page real estate contract rather than an assignment contract and he was going to double close it.  I should have requested his contract with the current owner.  I didn't have the best "gut feel" about Troy but I had seen him at a few networking events and I talked to a few other guys that knew him so I was thinking that my worst case scenario would be to end up with no deal and my $3k back.  I never would've thought that he would actually steal the money and kill his reputation in the industry.

OH MAN! I gotta tell you, as a wholesaler (that has yet to do a deal) this acgers me to my core. It's bed enough us wholesalers can barely get sellers to trust us. Now, I hear about this and there goes our reputation with Cash Buyers. Here in CA, all deposits and any other money exchanges are to be handled through escrow. No checks, and I mean no checks, are to be written directly to me until closing. I thought that's how it works.  

Sorry to hear about this...just know that we aren't all like that. Those of us that are trying to get our first deal are honest-to-goodness business people. I learned something in this as well. 

Probably wasn't easy sharing that @Waylon Themer but I'm sure you've saved some people some heartache by doing so. FYI-this guy has two separate accounts set up on BP....members beware!

Sharon Tzib, Real Estate Agent in TX (#653488)
832-745-8657

Thanks for sharing and sorry for your loss @Waylon Themer .  How short-sighted can a guy get?  I hope you get your money back.

Never do business with the crooked no matter how good the deal appears!    Seems to be a theme this week.  

It's sad that people put a price on their integrity (and their business' integrity). I'm sure just by posting this and saving someone else some heartache and headache that you will be rewarded some way or another @Waylon Themer

Thank you for sharing @Waylon Themer .  A guy like that should be exposed.  This kind of dishonesty is what gives wholesalers and RE investors, in general, a bad name.  

Ouch - not cool!  I haven't done a lot of business from wholesalers, but I've always wondered if that kind of thing happens.  Unfortunately for them, a bad reputation from quality buyers spreads very fast even in a big city like Houston.  Thanks for letting us know who to stay away from.

Thanks for sharing!

Thanks for the lesson! Your awesome for sharing.

@Waylon Themer I am obviously very sad you lost that money, and I hope you are able to recover it. I do want to thank you for posting this mistake here though.  Often reading through the forums all we see are stories of how people made money. We need more stories of the mistakes and failures we all make. 

Russell Brazil, Real Estate Agent in Maryland (#648402), Virginia (#0225219736), District of Columbia (#SP98375353), and Massachusetts (#9​0​5​2​3​4​6)
(301) 893-4635

As a local wholesaler in the Houston area, there are a lot of losers in this industry who have no integrity at all. Investors, if you are locking up a deal on a property never write the check directly to the wholesaler or his company name, always to the title company and double check the comps! This protects you as the investor and the wholesaler. Last week I had a woman who is realtor back out of my wholesale deal two days before closing. However, my contracts states I keep the EM if buyer does not close except if we cannot get clear title.

@Waylon Themer I'm sorry that happened to you.  Don't blame yourself: even when you do everything "right" things can go wrong...especially when dealing with [dishonest] people.  He'll get his.  Thanks for posting. 

Wow that's horrible, thanks for sharing your bad experience. Hopefully we can all learn from this. Hope you make back your money soon @Waylon Themer

thanks for sharing @Waylon Themer

I need to hear that to remind me of the crooks in this biz 

Good luck to you 

Painful lesson but you paid it forward by sharing it with us. Thanks again and I hope you can get your money back. Surely there is some sort of fraud that can be reported for this if he did it to many people. And small claims court should be relatively easy and cheap to file, so you might want to look into that.

Waylon Wow So Sorry to hear that Keep your Head up Buddy I hope lots Of People that are reading get this when you sign a Contract an pay any Money I would suggest paying the Title Company or Attorney.

Ouch!  That sucks! I'm sorry you got screwed by a shady guy.

So sorry to hear what happened to you. Thanks for sharing so that new investors like me know what to watch out for. Hope you fare better next time! 

This sounds like a outright fraud and criminal case best pursued thru the DA and Bureau of real estate as @Andy Cross said the 3 most important words in a real estate transaction is escrow, escrow, escrow .

Originally posted by @Waylon Themer :

First of all, I'm not a rookie, but I behaved like one, and I write this post as more of a cautionary tale rather than an attempt to seek advice.  I know I should have done more due diligence, and I know what my options are to attempt to remedy the issue.  Giving non-refundable deposits to wholesalers to "lock up a deal" whereby the check is written to the wholesaler has become customary in the wholesaling world of real estate in the Houston, TX market (I can't speak for other markets).  In May of 2015, I gave Troy Joyner or FPM Houston Homes and FPM Development a $3,000 check to lock up a $85,000 house located at 2710 Wheeler Street Houston, TX.  As the closing date approached, Troy had excuse after excuse as to why the closing was being delayed.  Then he went silent.  I later learned that he entered into multiple contracts on the same property, and he did this with other properties at the same time. Multiple investors are now attempting to locate him in an attempt to retrieve their money.   Though I had met Troy in person on a couple of occasions at networking events, I did not know him that well.  At the end of the day, giving a wholesaler a deposit is the same as giving him or her a short term unsecured loan only you have a contract instead of a promissory note.  I learned that I need to a) do more due diligence on the title of the property and b) do more due diligence on the wholesaler prior to writing a check to the wholesaler for any kind of deposit.   I am embarrassed that I let this happen to me, but, even more so, I don't want it to continue to happen to others. Be careful out there; don't let my $3k mistake be your own. 

Wow, how disgusting of a person he is! As a wholesaler I'm embarrassed, apologetic and irritated by reading this thread. I've seen these type of offers from other wholesalers and not that its bad practice to ask for EMD from the end buyer but it warrants a title company, lawyer or agent(one that you trust/know) to handle the funds to avoid this - for those actual rookies reading this thread. As you stated even though you're not a rookie, mistakes happen. You figure you want to move on it fast and get it under contract then close a.s.a.p. I know I've made haste moves even after writing a plan. Human error - this particular time a costly one. Since this vile individual decided to rip-off probably the only buyers he ever will have, I hope it was worth it to him. Karma is a mother.....

Kudos,

Mary

Thanks for posting your experience, as embarrassing as it is it helps everyone else.

Your post prolly just paid for my subscription. Invaluable information.

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