Ethics of wholesaling

21 Replies

I'm needing some wisdom on a possible deal. I am a roofer by trade and was contacted by an insurance agent friend of mine who asked me to take a look at a roof for him that was currently needing to sell.

I won't go into the the story because it's long, but basically there's not a claim to be made due to a warranty issue with the shingles and the manufacturer refuses to pay the claim. Here's where I need help.

This house can not pass an inspection because of the roof and the home will go into foreclosure soon if it doesn't sell. The real estate agent is not a good one and is currently not doing the homeowner any favors.

I was curious if anyone would feel it would be eithically wrong if I made a cash offer to the homeowner? I don't want to include the real estate agent on this, but should I?

Any wisdom would be appreciated. Thank you in advance.

if its listed on MLS then you go through the agent.. if its not listed then you can go direct.. you may bruze your agent friend. morals and ethics I think your OK>

@Logan Merrick You mentioned wholesaling in your title but not in your question. If you are trying to wholesale, leave them alone! The LAST thing someone facing a foreclosure needs is some yahoo wannabe wholesaler tying up their property, hoping to selling it, then walking away when they can't, leaving the owners no time to find a Real buyer before the auction.

You are not a yahoo wannabe wholesaler, but you are trying to cut the agent out of a deal and trying to wholesale a deal on the MLS? Why would your "list of multiple buyers" want a wholesale deal from you that they all already know is sitting on the MLS?

I may try to get a non-exclusive option from the seller.  Agree on a price within a certain time, but allow the seller to continue to try to solve their problem with no consequence or obligation to you. 

Then make sure your buyers know about the mortgage default and deadline. Just don't hurt the seller👍

Just remember that if the house is that marketable (you have multiple buyers lined up) you may hurt the seller by not encouraging them to list on the open market. Houses dont need to pass inspection to be on the MLS. And clearly the seller needs to get the most they can. I dont mind wholesalers buying and selling amongst the investor crowd, but skimming equity really sucks.

Originally posted by @Steve Vaughan :

I may try to get a non-exclusive option from the seller.  Agree on a price within a certain time, but allow the seller to continue to try to solve their problem with no consequence or obligation to you. 

Then make sure your buyers know about the mortgage default and deadline.  Just don't hurt the seller👍

YUP about 2 to 4 times a year when I would buy a court house steps and knock on the door.. the person who lost it was just shocked..

Wait Wait I have this investor who wrote me a contract..  who never closed and the house was lost.. 

I like the Option route.. put up some ACTUAL real risk money ..  But if the wholesale crowd just starts doing options with no money changing hands that is NON refundable then it goes right back to brokering without a license . 

 

@Logan Merrick you said it was not on the MLS, but you mentioned the real estate agent twice:

"The real estate agent is not a good one and is currently not doing the homeowner any favors.

I was curious if anyone would feel it would be eithically wrong if I made a cash offer to the homeowner? I don't want to include the real estate agent on this, but should I?"

It feels like Facebook because you only want to hear things that you want to hear. That's plaguing the forums and everything in real estate. If you don't give enough info, you can't then also claim we didn't have all the info when responding. When you talk about the agent twice, we will think it is listed. What you are doing is asking questions and then separating answers only based on who wants to pat you on the head and who doesn't.

@Logan Merrick , you wrote "The real estate agent is not a good one..." and "it's not on the MLS..." - Are you sure it is not on the MLS? Either way, IMO (I'm not an agent or lawyer), make the owner an offer, and of course they can say "sounds good, let's talk to my agent" or "my agent has not even put the house on the MLS yet, I'll fire them and you and I can work something out." I'm interested to see other's opinions on this, and to know why a real estate agent would not use the MLS? I want to find a property (or two) which is (are) not on the MLS and make offers. I'm hoping to find somebody who has not yet put any effort into selling (due to being busy or not highly interested in the property) but would accept an offer, so this conversation caught my attention.



Originally posted by @Michael McDowell :

@Steve Morris our business model is to provide a SERVICE as wholesalers to DISTRESSED customers. 

Mr Distressed Owner - I can sell your property at 50% of FMV to someone you don't know and I keep anything above the 50% FMV I get.

If by "service" you mean self-serving - No disagreement here.

 

I'm not sure where the confusion lies here, but brother Steve here sure is negative. Wholesalers are LEAD GENERATORS. We are NOT scam artists & we practice with ethics. I'm not sure how much experience you have with wholesaling, but over here - we provide a SERVICE to people who CAN'T list their home & want or NEED it gone fast AND provide a service to our buyers. We eliminate many hurdles for our clients & come correct with an intelligent exit strategy OF THEIR CHOOSING. They thank us. 


Service.