Going around a wholesaler?

Going around a wholesaler?

Real Estate Investor 路 Rossville, GA 路 Member since 2014 路 218 posts 路 96 votes

I was recently contacted by a new wholesaler about a property in an area that I love to buy in.  On the surface it was a great deal based on the pics(very few), the price, and the area.  I arranged to meet with him that afternoon and was met by the homeowner instead as the wholesaler was not on time.  He told me to take a look through the property and boy was I surprised.  I've looked at hundreds if not thousands of homes and this was the worst I'd ever seen.  As I came back out I was greeted by the wholesaler and the homeowner who were outside talking.  The wholesaler was asking $45,000 for the property.  I pulled him to the side and discussed the property.  I told him I wasn't interested but felt he was high on the price and based on the repairs should be priced at 20k.  He advised that was what he had it under contract for.  I try to help the new guys so I encouraged him to renegotiate for 15k and sell at 20k.  I won't go around him nor would I even consider it...especially on this house.  I would like to hear some other opinions though.  What would you do?

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Jay HinrichsBusiness Member
Real Estate Consultant 路 Summerlin, NV 路 Member since 2014 路 45k+ posts 路 66k+ votes
9y

would go around them in a heart beat... if he has a ligit contract then he can close and you can buy it.. other wise give you card to the home owner tell him if for some reason it does not close you will buy it.. there is no moral or ethical issue when it comes to wholesalers.. IF they have a contract on the property that's fine close it.. then resell to you.  this is just someone being totally greedy and thinking some dummy is going to pay 45k for a 20k house.. I can tell you when you move up the food chain into bigger deals this is how it works and how it should work.

you try to flip a plat ( I do this ) to lennar or Horton or any other big builder.. you better have the powder to close.. they can walk from 100k EM in  a heart beat.. sit there and watch you die on the vine then have their land Ack guy come right back to the seller and buy it... I feel the risk is soley on the wholesaler...

and of course I am sure I am in the minority... but that's how I feel about it.. there is no code for wholesaling there is no licesne for wholesaling there is no code of ethics.. and it comes down to contractual law... if a contract expires you buy it.. simple as that.

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  • Investor 路 Philadelphia, PA 路 Member since 2015 路 3k+ posts 路 3k+ votes
    9y
    Sounds like this dude is trying to make 25k on an assignment fee.... offer him 25k so he gets to make 5k instead.
  • Real Estate Investor 路 Rossville, GA 路 Member since 2014 路 218 posts 路 96 votes
    9y

    Yeah, I don't mind him making the 25k where the 25k is due.  I don't know that I'd even take this deal at 20k.  Just curious what others are doing when a wholesaler is off on their numbers and the deal could be worked out without them...

  • Toronto, Ontario 路 Member since 2014 路 615 posts 路 172 votes
    9y

    Am not sure it is ethical to side-track the wholesaler.  If you dont have an agreement with him on the price, I will walk away from the deal; No point to burn bridges; deals are everywhere.

    My one cent!

  • Investor 路 Miami, FL 路 Member since 2015 路 379 posts 路 330 votes
    9y
    You sir, are a nice guy. Here in Miami I've lost 2 deals to date because of a partner not getting to the property before the buyer. That number could easily be a lot higher if my properties were not valued at a discount. On another note, down here there are a lot of what they call "daisy chain" wholesale deals. I will get 3 different wholesalers send me the same property at 3 different prices. I've even gotten some of my own wholesale deals advertised back to myself lol. With this in mind it is very customary to go around the wholesaler who brought you the property if I can just google the address and find the guy who has direct contact with the seller or even find the seller themselves. This guy put the plate right in front of your face. I'd like to hear someone argue the morals behind speaking to the seller and negotiating a better price. A wholesaler is not an agent and so there are no legal repercussions *that I know of* that does not allow this. Just my two cents.
  • Real Estate Broker 路 Naples, FL 路 Member since 2013 路 9k+ posts 路 6k+ votes
    9y

    Many operate illegally. I don't feel any duty is owed to anyone operating in that manner.

  • Jay HinrichsBusiness Member
    Real Estate Consultant 路 Summerlin, NV 路 Member since 2014 路 45k+ posts 路 66k+ votes
    9y

    would go around them in a heart beat... if he has a ligit contract then he can close and you can buy it.. other wise give you card to the home owner tell him if for some reason it does not close you will buy it.. there is no moral or ethical issue when it comes to wholesalers.. IF they have a contract on the property that's fine close it.. then resell to you.  this is just someone being totally greedy and thinking some dummy is going to pay 45k for a 20k house.. I can tell you when you move up the food chain into bigger deals this is how it works and how it should work.

    you try to flip a plat ( I do this ) to lennar or Horton or any other big builder.. you better have the powder to close.. they can walk from 100k EM in  a heart beat.. sit there and watch you die on the vine then have their land Ack guy come right back to the seller and buy it... I feel the risk is soley on the wholesaler...

    and of course I am sure I am in the minority... but that's how I feel about it.. there is no code for wholesaling there is no licesne for wholesaling there is no code of ethics.. and it comes down to contractual law... if a contract expires you buy it.. simple as that.

  • Jay HinrichsBusiness Member
    Real Estate Consultant 路 Summerlin, NV 路 Member since 2014 路 45k+ posts 路 66k+ votes
    9y

    @Gabriel Amedee  there is tortious interference of contract.... but your average low end wholesaler hardly knows anything about real estate much less contract law...

    this is a big boy game it should be played that way.. when your selling real estate without a license you take the risk @John Thedford  this guy is clearly doing that he wants to SHOW you the house and meet you there and walk through it that is not just assigning a contract.. its what an agent does.

    NOw if he was an agent and had a bonafide listing they would have the listing agreement to rely and those are tried and tested in court.

    Nope go around the guy wholesalers are a dime a dozen really... and they create so much havoc ... Jut like you said daisy chain of wholesaling that's just ametur hour and one reason I will not personally deal with a wholesaler just too much wasted time.. my Vendors do but that's there business I see plenty of little 3 to 5k wholesale fee's on the huds on the deals I fund so I know it happens.. maybe 1 in 10 deals and I fund about 20 to 25 per month..

  • Johnson City, TN 路 Member since 2014 路 586 posts 路 705 votes
    9y

    Pigs get fed. Hogs get slaughtered.

  • Investor 路 Miami, FL 路 Member since 2015 路 379 posts 路 330 votes
    9y
    Jay Hinrichs you think tortious interference would hold in court for someone borderline brokering without a license? As rough as it sounds I think you can easily bulldoze over many wholesalers because one, most of us don't have the capital to go to court and two none of us want to be in front of a judge and defend an occupation sitting on a very thin line between legal and illegal. Wholesalers are treated like a joke down here and it's for that reason I'm getting my license next month and will just stick to assigning within a small subgroup of investors.
  • Wholesaler 路 Plantation, FL 路 Member since 2014 路 194 posts 路 121 votes
    9y

    @Gabriel Amedee I'm not sure what kind of buyers you are dealing with, I'm in the South Florida market and have a great relationship with my buyers.  If you treat your wholesaling business "like a business" and conduct yourself like a professional you won't be treated like a joke.  At this point in my career I'm pretty sure I'm making more money than most fix and flippers. Six figures in Jan and the month isn't even over yet.

  • Investor 路 Miami, FL 路 Member since 2015 路 379 posts 路 330 votes
    9y
    Carlos Coppin Jr 2 months ago I visited your property in Pinecrest and you were driving a Volkswagen.. I think you should treat yourself better if you're making over a million dollars annually, seriously you deserve it.
  • Wholesaler 路 Plantation, FL 路 Member since 2014 路 194 posts 路 121 votes
    9y

    @Gabriel Amedee

    LOL your response says it all no wonder you can't get any respect.  I'm sorry my 2016 CC doesn't meet your approval.  All I'm saying is step your game up and be a professional you'll have a better experience.  

    P.s. I made six figures on that pine crest deal as well.  The buyers with real money showed up as soon as you left. #NotBragging #JustStatingFacts #CheckTheRecords

  • Jay HinrichsBusiness Member
    Real Estate Consultant 路 Summerlin, NV 路 Member since 2014 路 45k+ posts 路 66k+ votes
    9y

    @Carlos Coppin Jr all the reason more for those with the dollars to go AROUND those that try to middle man LOL.. like I said its caveat emptor ..    you can do it great.. but if I can snake the deal from you  then I get to drive a nice care. or in my case fly a nice airplane of which I have two.

  • Wholesaler 路 Plantation, FL 路 Member since 2014 路 194 posts 路 121 votes
    9y

    @Jay Hinrichs It's a part of the game and it is what it is.  I got 99 problems and a buyer going around me to snake one of my deals is not one LOL 馃槈

  • Real Estate Broker 路 Naples, FL 路 Member since 2013 路 9k+ posts 路 6k+ votes
    9y

    Gabriel i saw your house under contract on Marco. Saw the contract. $20 earnest money on a 400K house. Seller told me you walked when you could not assign. Now you talk about "no respect". Seller also stated the "inspector" that came to visit the property was not an inspector at all. The games people play earns them a reputation! 

  • Wholesaler 路 Plantation, FL 路 Member since 2014 路 194 posts 路 121 votes
    9y

    Not surprised one bit by what @John Thedford just said.  And the kid wonders why he can't get any respect 馃.  

  • William BrownPro Member
    Wholesaler 路 Los Angeles, CA 路 Member since 2016 路 276 posts 路 181 votes
    9y
    Carlos Coppin Jr Jay Hinrichs You guys are who I aspire to be. The world needs more cut-throat businessmen. Keep it up!!
  • Wholesaler 路 Plantation, FL 路 Member since 2014 路 194 posts 路 121 votes
    9y

    LOL just following in the foot steps of our POTUS 馃槆

  • Jay HinrichsBusiness Member
    Real Estate Consultant 路 Summerlin, NV 路 Member since 2014 路 45k+ posts 路 66k+ votes
    9y

    @William Brown  ONE big difference William  is that I close with my OWN Company money anything I put into escrow unless it fails for real on due diligence.. the phoney BS crap that wholesalers pull on homeowners  is really BS and not anything to be proud of Frankly.

    If Carlos was in my area and he did that to a client of mine I would file a complaint with the real estate commission if he is not licensed and if he is file complaint with the board..

    there is just no reason to have these folks do what they do... puny EM deposits fake inspectors then walk and totally fubar a seller.. some may think its fine.. I personally do not.

  • Wholesaler 路 Plantation, FL 路 Member since 2014 路 194 posts 路 121 votes
    9y

    @Jay Hinrichs You are confusing me with @Gabriel Amedee I'm not the one running around town doing that.  Please go back and read this thread carefully.  PLEASE & THANK YOU!

  • Real Estate Broker 路 Naples, FL 路 Member since 2013 路 9k+ posts 路 6k+ votes
    9y

    I have little to no respect for these unlicensed brokers. If they wanted respect they would at least get a license! They are fringe operators working AGAINST sellers. I would like to hear even licensed agents give an honest take on how working against a seller is any benefit. I would love to see our laws changed to put an end to this garbage. I turned in two frauds about 2 weeks ago. One is posting on BP and the other put a property under contract with -0- earnest money. The seller stated the unlicensed broker "is selling the house for them". BP would not permit more choice words for these people than frauds or scammers! I just helped a seller get every dime of value for their property. They were in a BIG bind (BK). I made a commission, they got cash, and everyone was pleased. This is what being an agent is about: helping people. Agents putting properties under contract and giving away properties is NOT a service. They are one step above the frauds without licenses.

  • William BrownPro Member
    Wholesaler 路 Los Angeles, CA 路 Member since 2016 路 276 posts 路 181 votes
    9y

    @Jay Hinrichs I would love to learn more. Colleague request sent. I am just starting out, and the biggest piece of information in all the books and all the podcasts for a successful enterprise is: reputation is everything. Which I believe is 100% true. I want to run my $10 business like I will run my $10 billion dollar business.

    Would love to talk more about it. And to anyone else with a nugget to share, shoot me a colleague request. I'm all ears.

  • Rental Property Investor 路 Broken Arrow, OK 路 Member since 2016 路 1k+ posts 路 1k+ votes
    9y

    I'm probably in the minority who agree with @Jay Hinrichs points, if you can't close on a property, and are trying to be greedy, you shouldn't be upset if an educated investor goes around you on the deal.

    There are way too many wholesalers out there thinking investors are dumb enough to pay crazy mark up. I get pitched properties daily that are laughable pricing 80-90% ARV. I always try to educate the wholesalers of why they are pricing it too high. If its because they're being too greedy, I wouldn't feel sorry for them if someone went around them, if its because they contracted it for too much, I try to help them understand how to price properties and negotiate better deals.

    I'm fine with wholesalers making a quick reasonable markup between $2K-10K depending on the size of the deal, but if you want to be successful wholesaling, you have to leave plenty of "meat on the bone". You should be negotiating deals where you can offer it to an end buyer at 50-70% ARV minus any repairs. If you can't find deals that fit those numbers, its not a good deal. Occasionally, a turnkey occupied rental deal that needs no repairs, may be able to work with a little tighter numbers.

  • Real Estate Broker 路 Naples, FL 路 Member since 2013 路 9k+ posts 路 6k+ votes
    9y

    That 400K home was put under contract by Gold Coast homes for 587K LOL! Another fraud posted it in the BP markeplace for I believe 675K. Nobody good fooled EXCEPT the homeowner. I spent an hour educating them about frauds and scammers. 

  • Temple Hills, MD 路 Member since 2016 路 20 posts 路 5 votes
    9y

    @Jay Hinrichs

    This is an interesting point.

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