Struggles with the Stigma Against Wholesalers

Buying & Selling Real Estate
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Struggles with the Stigma Against Wholesalers

Jimmy O'Connor
Real Estate Agent · Philadelphia, PA · Member since 2018 · 428 posts · 484 votes

Hey BP Community!

I work in Philadelphia and Delaware County as a Licensed agent that specializes in wholesale for REI opportunities. As I have been reaching out to potential investors and doing the cold call grind (like many of you are probably all too familiar with), I keep getting pushback when I say "wholesaler." Over the phone I find it difficult to differentiate me from the people only looking to make a quick buck because some Youtube Personality says they can do it with 5 simple steps. I personally have, and continue to thrive off of repeat investors but I am always looking to grow my network of relationships.

So for all of my wholesalers and investors out there~

Legitimate Wholesalers- have any of you experienced this dilemma and what has your solution been to establish legitimacy in a time where our profession is being too loosely equated to the "get rich quick" mentality rather than

Investors-

What are some of the pain points that you have run into with wholesalers? What can I focus on with my quick pitch to establish value that differentiates me from the wholesalers that have left a bad taste in your mouth?

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James MasottiPro Member
Rental Property Investor · Washington Township, NJ · Member since 2015 · 1k+ posts · 976 votes
7y

@Jimmy O'Connor - Wholesaling is perhaps the hardest job in real estate investing and it's where most newbies think they can get started. Unfortunately the majority of them are completely wrong. It is hard for the following reasons.

  1. You need to know what the ARV is for your target market and how to actually comp properties appropriately
  2. You need to know what rehab costs are in order to estimate the amount of work needed for a property
  3. You need to be good at marketing in order to be able to find the off market deals
  4. You need to be good at negotiating in order to be able to win investors and sellers alike

So...why do most investors get annoyed at wholesalers? Because they bring me a deal and claim it's worth $150,000 when in reality it's only worth $120,000. They tell me it needs light rehab of about $15,000...when in reality in needs $30,000. They do all this and tell me I can "steal" the property from the seller for only $90,000 plus of course their $10,000 fee. 

It's a waste of my time and the sellers. So how do you improve your "quick pitch"...the simple answer is you don't. The deal is what we're interested in. All the newbie wholesalers who are like "I'm trying to build my buyers list give me your email!" That's just spam at that point. Your system isn't any different than anyone else.

 The deal is what sells us on you as a wholesaler. Most of the "good" wholesalers have only a handful of investors they work with because if you bring me a deal that meets my criteria, I'm going to close. You don't need to shop it around...and that's the mutually beneficial relationship everyone is looking for, that very few people are actually able to deliver on.

I will listen to any wholesaler who comes to me on the first deal. When they prove they know their stuff, I'll listen and keep listening...when they are clueless though I know not to bother wasting any more of anyone else's time because they'll eventually run out of marketing dollars and disappear.

::steps down from soap box. ::

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  • Jimmy O'Connor
    OP
    Real Estate Agent · Philadelphia, PA · Member since 2018 · 428 posts · 484 votes
    7y
    @Lynnette E. I’m sorry I feel like I misspoke somewhere along the line because the picture you painted is not at all I how conduct myself! Thanks for the detailed response though
    0Reply
  • Jimmy O'Connor
    OP
    Real Estate Agent · Philadelphia, PA · Member since 2018 · 428 posts · 484 votes
    7y
    @Ned Carey out of the 90 properties we send our Aquisitions team to check out, we only purchase 20-30 quality properties because we know they are solid deals. Not worth wasting your time otherwise!
    0Reply
  • Jimmy O'Connor
    OP
    Real Estate Agent · Philadelphia, PA · Member since 2018 · 428 posts · 484 votes
    7y
    @Jay Hinrichs thank you! We also close before putting on market
    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Jimmy O'Connor:
    @Jay Hinrichs thank you! We also close before putting on market

    Yup  that's a solid business ..  when I was active in courthouse I bought maybe 70 to 100 props a year.. 

    again PDX props so 150 to 400k per.. so dollars were large. 

    not sure what price points your working 

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    1Reply
  • Jimmy O'Connor
    OP
    Real Estate Agent · Philadelphia, PA · Member since 2018 · 428 posts · 484 votes
    7y
    @Matthew Perry I respect the integrity In how you do business and unfortunately it doesn’t surprise me that commentary practices are being oversatursated with EXCATLY what you are talking about. My background was actually in physics, which I taught for several years so I understand the importance on making data driven instructions. I like to know exactly to the Finiest detail why my ARV is a conservative reflectIon of useful and competent comps and that my rehab is a liberal figure because I find it better for the customer even though the prices may not be as sexy for me to market
    0Reply
  • Matthew Perry
    Developer · Boston, MA · Member since 2017 · 125 posts · 137 votes
    7y

    My personal soapbox is when you see these programs that advertise teaching real estate investing or come to my seminar and learn my ten tricks to real estate investing as if it is something you can just buy at Target or Wal-Mart. I wish there was an easier way, if there was I'd want to sell it, but I am not naive enough to know that there is no easy way in this thing we all love called investing. Instead it is simple as 1) knowing who you are and standing for that, 2) knowing your respective markets and knowing enough to know that is someone out there who knows more than you do and it is important to find and know that person. 3) trusting yourself when the time does come that you trust in your self and the processes you have created to make the deal. 

    1Reply
  • Kate J.
    Rental Property Investor · Austin, TX · Member since 2016 · 294 posts · 104 votes
    7y
    Originally posted by @Jimmy O'Connor:

    @Kate J. Let me correct that one really quick before it spirals. I am a licensed agent under a certified brokerage and we buy the home and then sell the homes to the flippers/renters and take care of the transaction,  clear and marketable title transfer. When we sell them, I get a small percentage of the fee from our service. THIS IS NOT a way for me to skimp more money or violet my fiduciary responsibilities.. 

    not sure why you would call yourself wholesaler and not flipper then. In case you do an assigned contract, you should still consult with an attorney before you do that, as I've heard people getting in a serious trouble doing that. I know couples can manage such things, i.e., say a husband is an agent and a wife is a wholesaler or vice versa. This way there is no legal issues involved. All I am saying is there is a law behind. However, if you really BUY the property and keep it for couple months on your name, then you can call yourself buyer and later a seller. I did similar thing, I've bought a property (paid for it) dropped it to MLS and an investor purchased it. I don't think I could pull out more money for it if I would advertise it elsewhere. So technically during the selling process you don't need to care what the buyer thinks of you. I don't know how to simplify the transaction with the seller, I guess the only thing you can do is to say that you are a buyer and actually buy the property.

    2Reply
  • Jonathan Bowen
    Real Estate Broker · Stoughton, MA · Member since 2012 · 109 posts · 96 votes
    7y
    @Jimmy O'Connor I’m a Realtor who sometImes acts as a wholesaler, I guess, but I’ve only taken a traditional commission as my fee... I’ve never considered myself a wholesaler until I read your post. I’m a wholesaler with a real estate license... but I also have ethics and morals so I guess I’m not a wholesaler after all.
    1Reply
  • Jeff Licciardi
    Real Estate Investor · Bedford, NH · Member since 2008 · 45 posts · 3 votes
    7y
    @Jimmy O'Connor I like you
    1Reply
  • Yelitza Mora
    Flipper/Rehabber · Dallas, TX · Member since 2016 · 8 posts · 2 votes
    7y

    @Jimmy O'Connor Make sure the numbers make sense, we get deals from wholesalers where the ARV is not accurate, the rehab costs are super low, and the comps are for properties that have nothing to do with the one they are trying to sell. That's where a lot of new real estate investors are losing money, and that's the reason why the "wholesaler" term is getting such a terrible rep.

    Brand yourself as a solutions integrator real estate agent! Investors will buy from you as long as the numbers are right. 

    1Reply
  • Mike G.
    Real Estate Agent · Las Vegas, NV · Member since 2016 · 589 posts · 275 votes
    7y
    @Jimmy O'Connor you touched on a sensitive nerve here in the BP community. It’s the fire that won’t ever be put out in these forums. There are 4 things your should never discuss at the dinner table... politics, religion, racial viewpoints and wholesaling. I’m making light of it but in all seriousness I get a lot of push back as well. Just have to power thru. You can’t please everyone all the time.
    2Reply
  • Pratik P.
    Flipper/Rehabber · Sacramento, CA · Member since 2016 · 807 posts · 815 votes
    7y

    I wholesale/wholetail full time....If some people are too high minded to hear you out and look at your deals, then you should find others. Trust me, there's no shortage of buyers. I always welcome people to send me deals they come across. If it's not a deal, I'll just tell them what price I need to be at. Real estate is a business where you look at 20 properties before buying 1.

    That being said, if your numbers are accurate, word will get around and people will start calling you to get on your buyers list. 

    Also, I'm a bit confused by your model. Are you actually wholesaling or representing the seller as a broker? You can't do both at the same time because that would be a conflict of interest and violate your fiduciary duty. 

    1Reply
  • Abraham Kromah
    Rental Property Investor · Washington, DC · Member since 2018 · 9 posts · 1 vote
    7y
    @Jay Hinrichs Great tip, Thanks!
    1Reply
  • James Ma
    Burnaby, BC · Member since 2017 · 283 posts · 268 votes
    7y

    I think cold calling is going to be a difficult route to go since people are typically a lot less trusting than it used to be. Someone pitching to me on the phone who I've never met has about a 0% chance to get any of my money.

    I would focus on trying to get into REI events, conferences, workshops etc. to meet someone in person and start a conversation and build a network that way. Set up a followup meeting to showcase why you're a good wholesale agent. As an investor, that's what would make me feel comfortable working with someone. From there you can get referrals and grow your business.

    1Reply
  • Jimmy O'Connor
    OP
    Real Estate Agent · Philadelphia, PA · Member since 2018 · 428 posts · 484 votes
    7y
    @Jonathan Bowen my man, I think we’ve traveled down anrabbitnholenof semantics
    1Reply
  • Jimmy O'Connor
    OP
    Real Estate Agent · Philadelphia, PA · Member since 2018 · 428 posts · 484 votes
    7y
    @James Ma I 100% agree with that style, I guess it’s just the company norm or expectation to do the cold call grind. But again if it’s a “norm” than I’ll never achieve anything extraordinary
    0Reply
  • Jimmy O'Connor
    OP
    Real Estate Agent · Philadelphia, PA · Member since 2018 · 428 posts · 484 votes
    7y
    @Yelitza Mora I completely agree and we sniff that out On our Aquisitions half of my team. Especially in philly or any Other densly populated area that changes from lofts to ghetto just by crossing one road, zoomIng out behond anything on that block Is pointless.
    0Reply
  • Jimmy O'Connor
    OP
    Real Estate Agent · Philadelphia, PA · Member since 2018 · 428 posts · 484 votes
    7y
    @Mike G. I think I learned a valuable lesson today and couldn’t agree with you more haha but every bit of it is important because any honest “wholesaler” (which I’m now no longer sure the meaning of the word) can see the pain points and strive to be the opposite of the apparently stereotypical wholesaler mold and just are there to acquire and move solid deals with realistic numbers
    0Reply
  • James MasottiPro Member
    Rental Property Investor · Washington Township, NJ · Member since 2015 · 1k+ posts · 976 votes
    7y
    Originally posted by @Mike G.:
    @Jimmy O'Connor you touched on a sensitive nerve here in the BP community. It’s the fire that won’t ever be put out in these forums. There are 4 things your should never discuss at the dinner table... politics, religion, racial viewpoints and wholesaling. I’m making light of it but in all seriousness I get a lot of push back as well. Just have to power thru. You can’t please everyone all the time.

     The bad rap on BP for wholesaling is tied to the guru/late night TV crowd. It also comes from those in states where wholesaling is actually illegal because it's considered brokering without a license. I know very few investors on BP who are against wholesalers 100% on principle. It's the same way that landlord in the general populous have a stigma of all being stingy slumlords. I'd venture to say most of the buy and hold people on BP don't fit that stereotype. 

    Sadly though wholesalers have that same stereotype within the investor community here on BP for all the reasons I already outlined in my first post in this thread. If you check all the boxes, know your stuff,  have a deal in my market, give me a call or drop me an email. I think most on BP will agree with this. 

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    1Reply
  • Alex Franks
    Rock Hill, SC · Member since 2015 · 1k+ posts · 597 votes
    7y
    @Jay Hinrichs Wow lol


    Originally posted by @Jay Hinrichs:
    Originally posted by @Dennis Dahlberg:

    What left  a bad tase in my mouth?       you asked

    The answer is...  that every wholesaler I meet  .......  is a lying, cheatIng, POS...  scum of the earth....

    Remember you asked the question..

    One question what do you really Think !!!  :) 

    1Reply
  • Jimmy O'Connor
    OP
    Real Estate Agent · Philadelphia, PA · Member since 2018 · 428 posts · 484 votes
    7y
    @Alex Franks I’m getting a lot of love for my question haha
    0Reply
  • Alex Franks
    Rock Hill, SC · Member since 2015 · 1k+ posts · 597 votes
    7y

    Wholesalers like realtors are needed in this business. I love when newer folks in this area find me. Send me deals. I also find the need to help educate them and teach them numbers and what to do and how to do things. Like getting a real estate lic is a better investment. 

    Yet to this day I still love wholesaling a good deal or two. I picked up the package of 10 rentals. My thought process was keeping 4 sells 4 and rehab two to make retail sales. 

    Again it's not wholesaling that folks make mistakes. Well, one not knowing the local laws and not knowing the numbers is the problem in most areas. 

    Just my two cents 

    Alex

    1Reply
  • John Thedford
    Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    7y

    Many have no money and less knowledge. Many operate illegally. ARV stands for ABSURD RESALE VALUE in many deals. I won't deal with people skirting the laws and trying to broker without a license. There is a difference between licensed agents that operate within the laws the the outlaws. Promote yourself as a LICENSED agent first.

    1Reply
  • Alex Franks
    Rock Hill, SC · Member since 2015 · 1k+ posts · 597 votes
    7y
    @Jimmy O'connor 

    2001 -2004 I would sneak out during my lunch break and flip ( wholesale houses) I had one mentor who said Alex I buy over in this area of Rock Hill for $32k. Unlike most, I was determined to make money. So I would put on my rollerblades and hand out flyers.( I could fly on roller blades back then) Found out don't stick things in mailboxes. They frown upon that. Don't skate around the hood unless your 6 ft 230bs on skates.I was more like 6'3 230. They thought this white boy is crazy. Yet my very first month I made $22k and I never looked back. It was the start of this journey. Having the buyer first helped more than anything. Also, double closing or getting funded was a lot easier back than. I still wholesale deals in this same area. Trying to get a duplex right now and already have the buyer. Just waiting on a deal to come available. Been in this area for over 18 years and still playing in that area. 

    So the key points know the numbers and skating is fast way to hand out flyers. LOL 

    Alex








    Originally posted by @Jimmy O'Connor:
    @Alex Franks I’m getting a lot of love for my question haha
    1Reply
  • Jimmy O'Connor
    OP
    Real Estate Agent · Philadelphia, PA · Member since 2018 · 428 posts · 484 votes
    7y
    @Alex Franks appreciate the two cents. I’ll make sure to drill down the fact we use MLS and highly discriminate homes based on sq. ft and close proximity to the home in question. Tips for Concepts like that are helpful because I have plenty of Information but what emphasize and what to not waste time with the salesmen tap dance is what I’m always looking to improve
    0Reply
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