Can a " Wholesaler" be a crook with a contract?
Investor · Jacksonville, FL · Member since 2015 · 504 posts · 217 votes
Should a wholesaler be considered shady if they are buying cheap off of mls and then doing a mark up to sell to another investor? What is reputable course of action for a wholesaler to earn and maintain trust of investor colleagues? I feel like a wholesaler who has done the leg work to acquire an off market property at a deep discount should make a decent amount of money for the time spent , but I have a problem with them paying Penny's on the dollar for an off market property and then trying to sell tt for near market value..
Any thoughts on the subject?
The only thing that should matter to you is - is it a great deal for you? How much the wholesaler makes is irrelevant. If someone has negotiated a great deal on a listed property and your price is still a great deal for you, why do you care where the deal came from?
What if someone inherits a property for free. Should they be limited on how much they make on it? Let's say it is worth $500K but they got it for free. Are you saying they should only make a "reasonable" profit of $5000 or $10,000 or some other random number you come up with, because they got it for free?
Why Should it be any different for a wholesaler?
PS to answer the question in the subject line, absolutely a wholesaler can be a crook. Many are, arguably most are. Although my belief the bigger problem is newbies that have been led down the rosy path by Gurus and have unrealistic expectations. They also don't know how to really evaluate a deal.
Can a wholesaler be a cook with a contract?
Sure, why not?
Even if the highly regulated world of real estate, if you become a Broker or Realtor, you only get paid if you successfully bring a deal to the closing table. You may spend a lot of blood, sweat and tears getting there and the transaction still doesn't close.
To answer your other question, is it fair that someone buys a property for $5 and sells it for $5k? Of course that doesn't seem fair... but life isn't fair.
Are there no regulations or credentials required for wholesalers?
Is it accurate to say that realtors and brokers work very hard to bring deals to the table that still may not get closed bit yet wholesalens still get paid from conservative to rediculously large amoiunts of equity with less work than a realtor or broker? Can a Wholesaler Trump the need for realtors? ,I mean are wholesalers competition to realtors?
As a REALTOR and wholesaler, I can promise you that I do more work wholesaling a deal than I do when I'm a REALTOR on a deal. As REALTORs, we say that we sell houses, but we really just market houses on the MLS and then try to help through the closing process. When I'm acting as a wholesaler, I'm a construction estimator, REALTOR, buyer, negotiator, closing agent, etc., etc., etc. Oh, and I actually go find a buyer and actively sell the house.
Can you explain what has you so upset about re-marketing an MLS deal? How about buying a house for pennies on the dollar? I'd bet dollars to donuts that you buy your houses as cheaply as possible and don't tell the seller the absolute maximum that the house is worth today.
Sean Cole, your bet is wrong. i was involved in building our first house via barter system amoongst other contractors with my then husband who was an electrician. Every home i have bought since then has either been forclosure or short sale. i prefer land, eespecially commerciall property.
And the homes I wholesale are things that make zero sense to list with a realtor: vacant houses with lots of rehab, old estate houses that haven't been updated in 50 years, Half-done rebabs; expired listings that couldn't get what the realtor thought listing. I'm not finding a nice house and getting it for pennies to sell retail.
I agree. This is what you should be considering. While some wholesalers may be crooked and will try to wholesale other people's deals without having a contract, the legitimate wholesaler can get a good bargain on the MLS from a seller if the conditions are right. A good and legitimate wholesaler provides a discounted deal to the end buyer where they will make money off it. Your job as a wholesaler is to provide awesome deals. You get an awesome deal from the MLS at discount and offer that to investors BELOW MARKET. That's the point and the only way you should offer a wholesale deal. Wholetailing is a different story.
I have yet to experience a "Wholesaler" bring me an MLS deal at a discount. I've had ont bring me a deal at $10 over the listed price and another at $14K over. What work exactly am I expected to compensate them for? Does not foster trust.
I totally agree with those who say the wholesaler finds great deals, calculate the rehab cost, ARV, mark up and still present them at good value to the investor.
I'm waiting for THAT wholesaler!
What some consider "wholesaling" is actually illegal in some states. How long has this term been used in RE markets? Better yet, The term ," Wholetaling" is a modern word made up to try to validate resales from a person with no no credentials and no regulations. I think there should be regulations and credentials required to "wholesale or wholetail"
What some consider "wholesaling" is actually illegal in some states. How long has this term been used in RE markets? Better yet, The term ," Wholetaling" is a modern word made up to try to validate resales from a person with no no credentials and no regulations. I think there should be regulations and credentials required to "wholesale or wholetail"
Why? If someone is a principal in the transaction, they should have every right to sell their own property. You don't have to buy it. And if nobody's buying, then it doesn't fit the market they're trying to connect with.
But to say that nobody should be allowed to sell their own houses plays right into the pocket of real estate agents, who don't want investors to cut them out.
Sure there are crooks, just like in every industry, but how fair is it to say that nobody should be able to do something, because some misuse their rights?
What some consider "wholesaling" is actually illegal in some states. How long has this term been used in RE markets? Better yet, The term ," Wholetaling" is a modern word made up to try to validate resales from a person with no no credentials and no regulations. I think there should be regulations and credentials required to "wholesale or wholetail"
If you want regulations and credentials placed on people who wholesale or wholetail- you'll need these same regulations on all cash transactions. What I do with a property after I close on it is my business. When I sell my car on CL, do I need credentials? I know more about houses, inspections, rehab, the markets I work in, mortgage inspections, and such than most realtors. It doesn't take much to look up some comps, estimate a listing price, and tie up a property for up to 6 months hoping someone will stop by to view it and make an offer. Sure it's easy on a move-in ready house in a good community but anyone can do that and those aren't the properties I wholesale.
Here are some pictures of a property I viewed today. Is a realtor listing it in this condition or going to recommend they make some repairs to get it's best possible market value? This family lives 4 hours south and just needs out of this property.
https://www.flickr.com/photos/135660726@N02/albums/72157664221566681
What some consider "wholesaling" is actually illegal in some states. How long has this term been used in RE markets? Better yet, The term ," Wholetaling" is a modern word made up to try to validate resales from a person with no no credentials and no regulations. I think there should be regulations and credentials required to "wholesale or wholetail"
Why? If someone is a principal in the transaction, they should have every right to sell their own property. You don't have to buy it. And if nobody's buying, then it doesn't fit the market they're trying to connect with.
But to say that nobody should be allowed to sell their own houses plays right into the pocket of real estate agents, who don't want investors to cut them out.
Sure there are crooks, just like in every industry, but how fair is it to say that nobody should be able to do something, because some misuse their rights?
That is fair enough. I just have not yet encountered a reputable wholesaler in action.
To put someone's property on contract for months and tie it up and not actually buy and close on it, Is not really owning the property. To remarket from mls is shady in my opinion, while that mls listing now says "pending" is because a so called wholesaler is now marketing to his REI local meet up as a wholesale property. Is this what we should expect of a reputable wholesaler?
I agree. This is what you should be considering. While some wholesalers may be crooked and will try to wholesale other people's deals without having a contract, the legitimate wholesaler can get a good bargain on the MLS from a seller if the conditions are right. A good and legitimate wholesaler provides a discounted deal to the end buyer where they will make money off it. Your job as a wholesaler is to provide awesome deals. You get an awesome deal from the MLS at discount and offer that to investors BELOW MARKET. That's the point and the only way you should offer a wholesale deal. Wholetailing is a different story.
I have yet to experience a "Wholesaler" bring me an MLS deal at a discount. I've had ont bring me a deal at $10 over the listed price and another at $14K over. What work exactly am I expected to compensate them for? Does not foster trust.
I totally agree with those who say the wholesaler finds great deals, calculate the rehab cost, ARV, mark up and still present them at good value to the investor.
I'm waiting for THAT wholesaler!
I'm not sure where you're located but here in Houston we've got plenty of both reputable and both crooked wholesalers. However, my last couple o deals never made it to blast out to my buyer's list or people I don't know well because I have networked with dependable buyers who know I will give them a good deal and who have gotten over how much I might make on it. They don't care if I make $5000 or $36,000 if they're making $100,000. I use conservative numbers which benefit the end buyer.
I will not, however, hold a buyer's hand through doing their own due diligence. I'll accommodate them but I'm not going to do it for them.
My sellers love me because they have great customer experiences where I treat them as king/queen and will do what it takes to solve THEIR problem first. I'm honest with them in letting them know what their property could sell for if they put all the repairs in and listed it with an agent. I will even suggest agents who will help them. But often repairs are beyond them and I will help them close within 30 days unless they have title issues. (One deal took us 6 months because of their title). I let them know up front it's likely I will sell their property to another investor. I don't want to be rehabber/flipper but if there is a deal that I can't resist I might become one for it.
This all results in a great, discounted deal for the end buyer.
I understand your frustrations though, I see the bad wholesale listings come through to me.
What some consider "wholesaling" is actually illegal in some states. How long has this term been used in RE markets? Better yet, The term ," Wholetaling" is a modern word made up to try to validate resales from a person with no no credentials and no regulations. I think there should be regulations and credentials required to "wholesale or wholetail"
Why? If someone is a principal in the transaction, they should have every right to sell their own property. You don't have to buy it. And if nobody's buying, then it doesn't fit the market they're trying to connect with.
But to say that nobody should be allowed to sell their own houses plays right into the pocket of real estate agents, who don't want investors to cut them out.
Sure there are crooks, just like in every industry, but how fair is it to say that nobody should be able to do something, because some misuse their rights?
That is fair enough. I just have not yet encountered a reputable wholesaler in action.
To put someone's property on contract for months and tie it up and not actually buy and close on it, Is not really owning the property. To remarket from mls is shady in my opinion, while that mls listing now says "pending" is because a so called wholesaler is now marketing to his REI local meet up as a wholesale property. Is this what we should expect of a reputable wholesaler?
What difference does it make to you if a seller decides to sell the property to a wholesaler and the wholesaler goes to market it? If it's a good deal it won't be pending for months. If they've represented the deal to the seller as such where the seller understands the wholesaler is seeking a new buyer why would you insist that the seller not behave as they want? In my opinion a reputable wholesaler could get a property under contract at significant discount and sell it to the right investor at a discount from market. This works well with properties that are not selling for distress or poor real estate agency. Often they are represented by crooked agents who don't have their interests at heart. I've seen agents fend off full price buyers so they could capture the deal from their client at a discount.
wholesaler's inheritance is a very different category that deserves full market value.. I have a problem with a so called wholesaler putting very little EM down on a low mls property to get it under contract without closing, and then remarked to their local REI meet up at 20k more than originally listed on mls. Is this reputable? I have a problem with them tying up properties with very little skin in the game under contract doing double closings. There is a reason some title companies will not do double closings.
Now if a reputable wholesaler actually closes and remarkets the property as his own, and does nhis own leg work searching out off market properties, that is different and a bit more reputable......in my opinion...
What some consider "wholesaling" is actually illegal in some states. How long has this term been used in RE markets? Better yet, The term ," Wholetaling" is a modern word made up to try to validate resales from a person with no no credentials and no regulations. I think there should be regulations and credentials required to "wholesale or wholetail"
Why? If someone is a principal in the transaction, they should have every right to sell their own property. You don't have to buy it. And if nobody's buying, then it doesn't fit the market they're trying to connect with.
But to say that nobody should be allowed to sell their own houses plays right into the pocket of real estate agents, who don't want investors to cut them out.
Sure there are crooks, just like in every industry, but how fair is it to say that nobody should be able to do something, because some misuse their rights?
That is fair enough. I just have not yet encountered a reputable wholesaler in action.
To put someone's property on contract for months and tie it up and not actually buy and close on it, Is not really owning the property. To remarket from mls is shady in my opinion, while that mls listing now says "pending" is because a so called wholesaler is now marketing to his REI local meet up as a wholesale property. Is this what we should expect of a reputable wholesaler?
What difference does it make to you if a seller decides to sell the property to a wholesaler and the wholesaler goes to market it? If it's a good deal it won't be pending for months. If they've represented the deal to the seller as such where the seller understands the wholesaler is seeking a new buyer why would you insist that the seller not behave as they want? In my opinion a reputable wholesaler could get a property under contract at significant discount and sell it to the right investor at a discount from market. This works well with properties that are not selling for distress or poor real estate agency. Often they are represented by crooked agents who don't have their interests at heart. I've seen agents fend off full price buyers so they could capture the deal from their client at a discount..
Still there is a reason some title companies will not do double closings and a reason. Wholsalkig in this manner is illegal in some states..
What some consider "wholesaling" is actually illegal in some states. How long has this term been used in RE markets? Better yet, The term ," Wholetaling" is a modern word made up to try to validate resales from a person with no no credentials and no regulations. I think there should be regulations and credentials required to "wholesale or wholetail"
Why? If someone is a principal in the transaction, they should have every right to sell their own property. You don't have to buy it. And if nobody's buying, then it doesn't fit the market they're trying to connect with.
But to say that nobody should be allowed to sell their own houses plays right into the pocket of real estate agents, who don't want investors to cut them out.
Sure there are crooks, just like in every industry, but how fair is it to say that nobody should be able to do something, because some misuse their rights?
That is fair enough. I just have not yet encountered a reputable wholesaler in action.
To put someone's property on contract for months and tie it up and not actually buy and close on it, Is not really owning the property. To remarket from mls is shady in my opinion, while that mls listing now says "pending" is because a so called wholesaler is now marketing to his REI local meet up as a wholesale property. Is this what we should expect of a reputable wholesaler?
What difference does it make to you if a seller decides to sell the property to a wholesaler and the wholesaler goes to market it? If it's a good deal it won't be pending for months. If they've represented the deal to the seller as such where the seller understands the wholesaler is seeking a new buyer why would you insist that the seller not behave as they want? In my opinion a reputable wholesaler could get a property under contract at significant discount and sell it to the right investor at a discount from market. This works well with properties that are not selling for distress or poor real estate agency. Often they are represented by crooked agents who don't have their interests at heart. I've seen agents fend off full price buyers so they could capture the deal from their client at a discount..
Still there is a reason some title companies will not do double closings and a reason. Wholsalkig in this manner is illegal in some states..
If it's illegal, then yes they should not be doing it that way. However, in many states it's not illegal and therefore legitimate. That's like saying in some states it's illegal to
http://justsomething.co/the-22-most-ridiculous-us-laws-still-in-effect-today-2/2/
Got a call from a "wholesaler" yesterday. He forgot to mention he didn't have the contract and was trying to make 27K on a property he didn't have title to nor any legal interest in. I haven't found anyone of these fraudsters I want to deal with nor one that I would trust. As much I see the positive aspects of BP, I do believe a lot of these operators find misguided, misleading, and often times illegal activities promoted on this site (though they may not realize the illegal aspect). If you want to see if someone has been tagged in Florida, go to www.myfloridalicense.com. You can access public records of complaints against individuals as well as licensees.
Why do they have to close first? Why not just close both at the same time? What's the difference if it happens in less than 30days and everyone is happy?
That makes the wholesaler a middleman laying claim to some equity in a property that he never owned. Like a pirate or a vulture or a lion lying in wait to pounce on equity he has not earned. NOT ALL wholesalers. But I have yet to encounter any reputable wholesalers in action.
Still there is a reason it is illegal in some states and some title companies will not do double closings.
Why do they have to close first? Why not just close both at the same time? What's the difference if it happens in less than 30days and everyone is happy?
That makes the wholesaler a middleman laying claim to some equity in a property that he never owned. Like a pirate or a vulture or a lion lying in wait to pounce on equity he has not earned. NOT ALL wholesalers. But I have yet to encounter any reputable wholesalers in action.
Still there is a reason it is illegal in some states and some title companies will not do double closings.
By that logic an agent is a middleman that making money on a deal they have no equity in.
I doubt double closing is illegal in any state. Using an end buyers funds to fund the first transaction may be illegal in many states. But it certainly has nothing to do with Wholesaling.
Why do they have to close first? Why not just close both at the same time? What's the difference if it happens in less than 30days and everyone is happy?
That makes the wholesaler a middleman laying claim to some equity in a property that he never owned. Like a pirate or a vulture or a lion lying in wait to pounce on equity he has not earned. NOT ALL wholesalers. But I have yet to encounter any reputable wholesalers in action.
Still there is a reason it is illegal in some states and some title companies will not do double closings.
I've searched and searched and can find no evidence that a double closing is illegal in ANY state. What any reputable title company WILL refuse to do is allow you to use the funds from the 2nd transaction to fund the 1st.
If an investor is willing to pay $50,000 for a house in as-is condition, does it matter if it's listed on the MLS for $10,000 or 100,000? Any logical person would know that multiple offers would come in under the $10,000 scenario. If a wholesaler gets the property before that happens, why is that a problem for you?
It seems that there's something that happened to you or someone you know that's got you upset about wholesalers. It sounds like someone tied up a house with someone you know and then didn't close. That's unfortunate and there's a guy local to me that's notorious for doing that on off-market deals. I've bought more than 1 where he didn't perform and then went phone dead.
Why do they have to close first? Why not just close both at the same time? What's the difference if it happens in less than 30days and everyone is happy?
That makes the wholesaler a middleman laying claim to some equity in a property that he never owned. Like a pirate or a vulture or a lion lying in wait to pounce on equity he has not earned. NOT ALL wholesalers. But I have yet to encounter any reputable wholesalers in action.
Still there is a reason it is illegal in some states and some title companies will not do double closings.
I've searched and searched and can find no evidence that a double closing is illegal in ANY state. What any reputable title company WILL refuse to do is allow you to use the funds from the 2nd transaction to fund the 1st.
If an investor is willing to pay $50,000 for a house in as-is condition, does it matter if it's listed on the MLS for $10,000 or 100,000? Any logical person would know that multiple offers would come in under the $10,000 scenario. If a wholesaler gets the property before that happens, why is that a problem for you?
It seems that there's something that happened to you or someone you know that's got you upset about wholesalers. It sounds like someone tied up a house with someone you know and then didn't close. That's unfortunate and there's a guy local to me that's notorious for doing that on off-market deals. I've bought more than 1 where he didn't perform and then went phone dead.
Agreed. Some people will just have a stuck mindset when it comes to certain things like this. I personally am not as interested in the increased risk brought on by needing to close first then closing with the end buyer. A wholesaler is always a middleman with equity gained only by negotiation and solving the seller's problem. This is similar to a real estate agent who makes a commission. A real estate agent's commission increases the higher the deal sells for and so it is in their best interest to encourage the seller to sell over priced and the buyer to buy over priced. If you ask me, that really opens the doors to scammy middlemen. How many houses have you seen sit on market, costing the seller money to hold when they could have sold immediately if priced at what the market actually wants? And yet this is perfectly legal in states and regulated.
Tim Shin, Sean Cole,
Let me clarify.I do not mean it is illegal to do a double closing.. But wholesaling RE is illegal in some states and some title companies will not do double closings, not because double closings are illegal; but because the title companies have experienced too many unscrupulous scenarios with a double closiing and a wholesaler. I am only guessing why.
I feel like we just need a running thread for people who want to complain about wholesalers.
Yes.... I wholesale. Yes I close (often prior to advertising). Yes I am a licensed Broker. Yes I've bought deals from wholesalers.
Use the search function if you want to discuss the legalities, intricacies, or opinions on the subject. This horse has been beat to death and resurrected way too many times.
Rod Yarger, Ryan D,
I am proud to admit I am new to BP and I am still learning and I am encouraged by admin to ask questions. However as a part time invester since 1986 since I was 21 years old, I am also proud of my day job. I along with my ex built a 3600 sq ft 2 story house on 4 acres via the barter system amongst other contractors for 60 k. At age 22. I have done 7 RE transactions that I owner financed to buyers.including land and commercial property and an SFR. I am frugal and have made smart investments without listing all my assets here because It is not required. I am very confident in my future as an RE investor based on my goals, Rod Yarger, since you are an expert here. May I respectfully ask why wholesaling is Illegal in some states?
Rod Yarger, You didn't read enough to understand I am not talking about wholesalers who are realtors and brokers as yourself. I had never heard the term wholesaler in RE circles. With what I have seen of wholesaling locally, It didn't have much integrity and there were holes all in it. Can you Rod Yarger, say that every single person you have encountered that titles themselves a wholesaler, has the utmost integrity, the same integrity as you do as a realtor and broker who wholesales RE? Rod Yarger, Realtor, Broker and expert. Thank-you for your quick inspiration!
You are implying that wholesaling be regulated and hold them to certain ethics. There is a name for that, and its called real estate broker/Realtor.
Wholesaling is considered illegal in some states because it dances on a fine line of BROKERING a deal.
You are implying that wholesaling be regulated and hold them to certain ethics. There is a name for that, and its called real estate broker/Realtor.
Wholesaling is considered illegal in some states because it dances on a fine line of BROKERING a deal.
How can it be considered 'brokering a deal' , if I'm a principal in the transaction and am fully able and willing to close? I should be able to buy anything I want and if I then decide to sell it to someone else, there shouldn't be a law against that.
I also see that you're a broker and thus you're not having an objective opinion, because brokers would like for us investors to get out of the game, so there'll be more listings for agents and brokers.
Rod Yarger, I am doing just fine! Thanks again for your quick inspiration !
The reason it's unfortunately considered illegal in some states is that people like you and the various Real Estate Agent associations are so strong in those states, that they forced those laws, even though they didn't make sense. Just because some laws exist does not mean that they're just.
It's not because there's something wrong with wholesaling, but it's all about money: Agents want to force real estate investors out, so that they can make more money, by forcing that all sales go through them. They try to keep it a monopoly.
Not good!