What is the process for working with Wholesalers?

Question

How do you establish a relationship with a wholesaler? I recently responded to a post on here from a wholesaler requesting information on properties in NJ that meet my criteria. In response I got a request for POFs and a contract sent to me, so I'd like to know if that is the normal way of initiating these type of relationships. Personally, I'd prefer the old-fashioned way of working with someone from the area that I can actually meet with in person but I have not seen anyone posting from the Garden State.

Are folks comfortable sending POF and entering into non-disclosure agreements with people they've never met? Anyone have a fruitful relationship with a wholesaler they've never met before?

Derek Lamonde · Answer

Are you aware of any of the good ones, Percy?

Percy N. · Answer

@Derek Lamonde, when dealing with wholesalers, get ready to encounter a few legit players and MANY wanna-bes.

You do need to go through a few duds to find good ones. Typically the legit wholesalers have references, a professional presence (physical office), web presence and will want to meet you in person at the property. They will understand that you need to walk through the property with your contractor.

Since they will already have the property under contract, no NDA will be required. They will request a $5k-$10k (typically their assignment fees) non-refundable check to go to escrow.

Derek Lamonde · Answer

I like your pragmatism Jay. On my end, I don't want to waste my time or put my information out there if the wholesaler doesn't have a queue of properties that meet my criteria. So do the wholesalers have the property under contract? Is the seller bound to them as they would be a realtor? If so, then why require a NDA?

Jay Dewberry · Answer

Hi Derek. Many times wholesalers want to "vet" potential buyers to make sure they are capable of closing when the time comes. At times they are up against the clock to match a deal to a buyers criteria and go to closing. That being said, I don't see a problem with establishing rapport as it's a fundamental way of building a long term working relationship between buyer and wholesaler.  There are times that wholesalers run into buyers that are tire-kickers and are unable to close and this makes for a difficult and time consuming situation. Personally, if the deal works and the numbers are good, I'll know a buyer is serious when I receive his non-refundable deposit. It's not necessary for me to require a  Non Disclosure...but that's just me.  I don't know many buyers that are willing to give away thousands and not want to make good at closing. Just my thoughts.