Working with wholesalers

28 Replies

Hello Everyone. I am looking at working with my first wholesaler to acquire a property (by way of a tip sent to me by a friend on fb). The wholesaler's page is general directed towards RE. The wholesaler is requesting pof as a way to prove that I'm serious. I've never acquired property this way, so is this normal procedure for wholesalers? Is there anyway to verify the wholesalers credentials? I believe I read somewhere that they do not have to be licensed real estate agents, so before I get caught up, is there a way to determine that they are on the up and up? 

Thanks in advance.

@Misty James . Wholesalers have no licenses or governing body like real estate agents. Verify all their numbers on their own, that’s really all you can do.
@Misty James asking for proof of funds is normal. They may be assuming that you are paying cash, so if not you may want to let them know and you can get a proof of funds from a hard money lender. The next step is that they'll likely ask for a substantial non-refundable deposit, so make sure you are serious about the property.
Originally posted by @Caleb Heimsoth :
@Misty James. Wholesalers have no licenses or governing body like real estate agents.

Verify all their numbers on their own, that’s really all you can do.

Having a license is not required to wholesale, however, some wholesalers do have real estate licenses. For example, I work at a nationwide wholesale brokerage and we are all required to have real estate licenses and loan originator licenses. 

Originally posted by @Misty James :

Hello Everyone. I am looking at working with my first wholesaler to acquire a property (by way of a tip sent to me by a friend on fb). The wholesaler's page is general directed towards RE. The wholesaler is requesting pof as a way to prove that I'm serious. I've never acquired property this way, so is this normal procedure for wholesalers? Is there anyway to verify the wholesalers credentials? I believe I read somewhere that they do not have to be licensed real estate agents, so before I get caught up, is there a way to determine that they are on the up and up? 

Thanks in advance.

 Asking for proof of funds is standard. It is just a quick way to measure if someone is a qualified buyer. For you to qualify the wholesaler, you could always ask for example of deals they have done in the past or for references. As a wholesaler, I would never turn down someone's request to look at my past deals. Good luck to you!

@Misty James

Asking for pof is very normal and as mentioned already, you can reach out to a hard money lender for one. Your main concern should be to verify the wholesaler's figures they've presented to you in their packet and to do your own due diligence since sometimes they provide inflated ARV's and deflated rehab costs. Expect that their numbers aren't 100% accurate, do your own research, and make sure you feel 100% comfortable moving forward before providing the non-refundable deposit that will be asked for next.

Originally posted by @Caleb Heimsoth :
@Misty James. Wholesalers have no licenses or governing body like real estate agents.

Verify all their numbers on their own, that’s really all you can do.

its kind of funny all those yellow letters and calls I get.. I ask for a POF from the wholesaler and its crickets.. yet they expect them from their buyers.. I find this amusing..

Originally posted by @Jay Hinrichs :
Originally posted by @Caleb Heimsoth:
@Misty James. Wholesalers have no licenses or governing body like real estate agents.

Verify all their numbers on their own, that’s really all you can do.

its kind of funny all those yellow letters and calls I get.. I ask for a POF from the wholesaler and its crickets.. yet they expect them from their buyers.. I find this amusing..

I actually called my first wholesaler today off a yellow letter.  They actually picked up so I told them to make me an offer.  I just wanted to see what it would actually be.  I’m supposed to hear back on Monday.  I’m guessing it’ll be very low, which I don’t  really understand seeing as you can look up purchase and sale prices.  

Yes @Jay Hinrichs it is very amusing indeed. So much for turnabout being fair play huh?

I am sure there are some up and up wholesalers out there, but when I feel like there's not full transparency I usually become suspicious and back away. I was hoping I guess for a full-proof way to protect myself and though I have heard some really helpful ideas on how to do some vetting, I'm still not sure if I'm comfortable enough to take such a risk. Guess I'll keep doing my homework. 

Thanks

Originally posted by @Caleb Heimsoth :
Originally posted by @Jay Hinrichs:
Originally posted by @Caleb Heimsoth:
@Misty James. Wholesalers have no licenses or governing body like real estate agents.

Verify all their numbers on their own, that’s really all you can do.

its kind of funny all those yellow letters and calls I get.. I ask for a POF from the wholesaler and its crickets.. yet they expect them from their buyers.. I find this amusing..

I actually called my first wholesaler today off a yellow letter.  They actually picked up so I told them to make me an offer.  I just wanted to see what it would actually be.  I’m supposed to hear back on Monday.  I’m guessing it’ll be very low, which I don’t  really understand seeing as you can look up purchase and sale prices. 

Yes Caleb I bet your right that offer will be low-balled. Just for giggles keep us posted.

@Misty James Wholesaling is just a strategy to make money on a "good deal"..however you want to define that. There won't be any kind of credentials just like you won't have credentials to flip a house. 

My advice: Don't work with just one, contact all of them and get on their buyers list. Provide POF or HML pre-approval if they ask so they know you're serious. When they send you a property, don't rely on their numbers and run your own. There isn't much to protect yourself from. Just make sure your numbers are right, do a walk through of the property to confirm its condition and place your EMD in escrow.

@Misty James

Great questions and really good answers here.

I am a full-time wholesaler. We always have proof-of-funds available because we always have funds and, when a seller wants proof that we can make the purchase, we're more than willing (and able) to provide it. 

We also want proof-of-funds from anyone making us an offer (if we haven't worked with them in the past) because that's the only way we know they're able to buy and we don't want to take our property off the market if they are not qualified.

I would add that your questions are part of the reason we always need to be networking with local investors. They can tell you if this seller is legit and also help you qualify the property. Every market is different and you need to be networking locally as well as here on BiggerPockets. Find local groups through MeetUp.com and NationalREIA.org

Know your own numbers, don't trust - verify ALWAYS, no matter who the seller is.

Good luck!

Originally posted by @Tirzo Quintero :
@Jay Hinrichs my question to you is. How a wholesaler can show POF when they are just assigning contracts? I ask because I recently saw a property that I like and I was ask for POF. I am new in the business.

 Well the issue is simple really.

those wholesalers that are truthful with the seller up front.. and tell them they have no intention of closing or any ability to close the only reason your going into contract is to assign said contract.. in that scenario EM would probably not be a problem.

now lets flip the script to reality..

Reality is owner gets some sort of direct mail piece or bandit sign that says said wholesaler IS a cash buyer.. no mention of assigning no mention of anything but this person buying the home all cash at a time of the sellers choosing.. which is pretty much verbatim most direct mail..

So seller has no clue what's going on they have no clue that this wholesaler really has no intention of buying or ability to buy. and that the only way they will close on the property is if someone else purchases it. ( cash buyer like me).. 

So you take a seller who is not unsophisticated and the first thing out of their mouth is they want Proof that you the one who told them your a cash buyer can actually close.. or at that point you have to fess up that you are just brokering the deal.. and the seller may go for that or they may not.. but its going to be apparent to many sellers ( myself included) that your marketing piece was not truthful you not a cash buyer your a broker.. which for some that is OK... 

Thanks for the great advice @Pratik P.  I currently bird dog to find properties and that is tedious to say the least. I think getting on mail list of multiple wholesaler's is a great idea and may save me a lot of time.

Originally posted by @Karen Rittenhouse :

@Misty James

Great questions and really good answers here.

I am a full-time wholesaler. We always have proof-of-funds available because we always have funds and, when a seller wants proof that we can make the purchase, we're more than willing (and able) to provide it. 

We also want proof-of-funds from anyone making us an offer (if we haven't worked with them in the past) because that's the only way we know they're able to buy and we don't want to take our property off the market if they are not qualified.

I would add that your questions are part of the reason we always need to be networking with local investors. They can tell you if this seller is legit and also help you qualify the property. Every market is different and you need to be networking locally as well as here on BiggerPockets. Find local groups through MeetUp.com and NationalREIA.org

Know your own numbers, don't trust - verify ALWAYS, no matter who the seller is.

Good luck!

Hello @Karen Rittenhouse thanks for the feedback. Again some good insight into how the relationship between buyers and wholesalers work and what I should expect. 

I can see the significance of finding support on BP and locally to network and find resources. I do plan on attending a meet up in my area real soon. 

Karen, another member @Pratik mentioned getting on multiple wholesaler mailing lists. Outside of you/your company finding them, (such as you did for me today, and I'm thankful), how would buyers finds you or other wholesalers to get placed on their mailing lists? I only seem to get invites for realtor agent listings.

@Misty James

At local investor meetings. There is no secret - it's all about networking. You'll learn who buys wholesales and who sells them. You can never know too many local investors.

Also, call all the "we buy houses" signs you see. Share contact info. 

Network, network, network.

Originally posted by @Tirzo Quintero :
@Jay Hinrichs my question to you is. How a wholesaler can show POF when they are just assigning contracts? I ask because I recently saw a property that I like and I was ask for POF. I am new in the business.

 @Tirzo Quintero:

This is what so many here on BiggerPockets get wrong. Wholesaling is a sales technique, not a buying technique. When buying, wholesalers absolutely DO close on the purchase. They then own the property and resell it - usually quickly and for a mark-up that is still well below ARV.

When you assign contracts, that is called an assignment. Assignments and wholesales are NOT the same process or technique at all. 

Wholesaling = you buy, close, then resell a property. You go on title.

Assignment = you get a property under contract and assign the contract only, never owning the property, never being on title.

there is nothing wrong with buying contracted wholesale ..

but only if you have a definite end buyer that will close with u immediately..if you do find a reassign i wud think its best to have one that you know is going to immediately present it to an end buyer for sure. i would never portray to be the original owner while only holding a contract

a good way to juggle contract is to simply let the buyer know your contracted terms and the original owners contracted terms  people like honest ethical people at the end of the day...if ur contract isnt a clean quick end buyer off tops be prepared for sum extra stress 😣