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.
You definitely need a good grasp of all numbers. I have found many wholesalers inflate ARV and do not quote rehab correctly. I interviewed a wholesaler and asked if he did any rehab himsel . He said no..so naturally I was leary. I have yet to buy anything from him.
I don't buy from wholesalers and I refuse to get onto any of their lists.
But, I'm in favor of the free market place and if someone doesn't do their due diligence, then it's on them.
Just like I'm in favor of free speech. I may not like what someone's saying, but I will defend his right to say it. Muzzling people will only be negative for this country.
Same thing with wholesaling. Those wholesalers that are using unrealistic numbers will only survive as long as they will find suckers. Once there are only people left that are educated enough, they will have to be more realistic with their numbers or find another business.
There are plenty of wholesalers that are doing a good and ethical job. Why should they get punished because of the ones that aren't?
@Michaela G. I definitely don't think wholesalers are my competition- there is plenty of business to go around.
The problem with wholesaling is that it does a disservice to the seller unless the wholesaler is educating the seller to their options. I know there are instances where it makes sense to sell a property off market to an investor, but not all sellers are aware of how it all works, and 99% of buyers (including investors) are looking on the MLS. What that means, is that listing a property on the MLS will get the best sales price for the seller.
Selling homes is not like selling pencils wholesale to staples. You are talking about someones lively hood and I think there are some ethical standards to adhere to.
@Michaela G. I definitely don't think wholesalers are my competition- there is plenty of business to go around.
The problem with wholesaling is that it does a disservice to the seller unless the wholesaler is educating the seller to their options. I know there are instances where it makes sense to sell a property off market to an investor, but not all sellers are aware of how it all works, and 99% of buyers (including investors) are looking on the MLS. What that means, is that listing a property on the MLS will get the best sales price for the seller.
Selling homes is not like selling pencils wholesale to staples. You are talking about someones lively hood and I think there are some ethical standards to adhere to.
The reason I and other immigrants were drawn to this country is that it was seen as 'The land of opportunity' , which allowed those who worked hard or smart to potentially succeed beyond their wildest dreams. But it's up to us. We are personally responsible for us succeeding or failing. That's capitalism.
For people to be able to win, there will have to be some that lose. If you want to catch everyone from falling, then that would be socialism.
Would you prefer to save everyone and have America become a socialist country? The government controls everything. Nobody can lose and nobody can win. Everybody is on the same level and has no way to climb the ladder or improve in some way.
Are you in favor or stopping the sale of alcohol, because some people become alcoholics?
Are you against casinos, because some people get addicted to gambling?
Do I hate lies and fraud and deceit? Hell, yeah! But I believe in personal responsibility and believe that I'm responsible for my own mistakes. I don't walk around and cry that someone should have saved me from making certain mistakes. I own my mistakes. And if someone screws me over, then I'll hate his guts, but I'll also take a close look and see where I should have paid more attention.
So, I believe that a seller that sells to a wholesaler has a reason why he/she thinks that this is a win/win situation for everyone. And it's up to them to do their research and make that decision, instead of government holding their hand and cutting down their choices.
There is an old person saying:
One who knows that he knows is wise and should be heeded.
One who knows that he doesn't know is eager and should be taught.
One who doesn't know that he knows is asleep and should be awakened.
One who doesn't know that she doesn't know is a fool and should be shunned.
ROD YARGER, Someone said WHOLESALING is illegal OHIO
Are we suppose to ask questions and give answers to and from RE professionals and investors with more experience who want to pay it forward. Some investors who think they are better than anyone else would rather spend their day poking insults instead of educating. I don't think BP began for this purpose. These investor ads proclaiming they want to help people become a success is self serving. I had nothing handed to me and wasn't born with a silver spoon in my mouth. I, we have done it all with integrity and hard work and will continue to do so.
@Michaela G. I definitely don't think wholesalers are my competition- there is plenty of business to go around.
The problem with wholesaling is that it does a disservice to the seller unless the wholesaler is educating the seller to their options. I know there are instances where it makes sense to sell a property off market to an investor, but not all sellers are aware of how it all works, and 99% of buyers (including investors) are looking on the MLS. What that means, is that listing a property on the MLS will get the best sales price for the seller.
Selling homes is not like selling pencils wholesale to staples. You are talking about someones lively hood and I think there are some ethical standards to adhere to.
As REALTORS, we definitely pay a lot of money to the NAR to convince folks that selling their house on the MLS will result in the highest sales price, don't we?! Unfortunately, there are many factors in play, even for a house listed on the MLS. When a house is initially priced too high, it can wind up not selling and becoming stale. A desperate owner can wind up taking my below market offer in this case, just as easily as they could if I went to them directly.
In addition, not all sellers are looking for the most money they can get. Many of my off-market purchases have been more about avoiding showings, avoiding the cleanup required for showings, being able to leave items they don't want to take/throw away, etc.
We also haven't considered real estate commissions, which can certainly change the net to the seller such that selling off-market is a better deal for the property owner.
My point is only that listing on the MLS isn't the right course of action for everyone all the time. As a licensed agent in Ohio, I wind up talking to some owners about whether or not they should list on the MLS vs. sell to me. I lay out the pros and cons of each scenario and let them decide. Typically, however, they have an unrealistic opinion of the value of the house and I can't help them as a REALTOR or wholesaler/investor.
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?
NO
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?
Thankyou everyone for helping me to understand the concept of "wholesaling".i am still learning to navigate this site and didnt know i could actually search the diffeerent topics in prior forums.