Do Wholesalers Hurt Us?

Question

I have always wondered if wholesalers hurt us buy and hold guys when dealing with banks.  I am sure there are some good wholesalers our there, but the majority that I have had contact with are useless noobs or slick characters.  It would seem to me that when a bank sees me write an offer Jeff Koenig and/or assigns, that it might hurt my chances because of all of the bums that have burned them in the past trying these complicated closings or other tactics.

James Hiddle · Answer

A good wholesaler will bring a great deal to another investor. To be a good wholesaler though you need to know the markets,negotiate well with sellers and buyers and spot a good deal from a mile away. Problem is as Jeff stated there are those who don't bring anything to the table.

To be a good wholesaler you need to:

1.Do due diligence. You need to do as much due diligence as possible.

2.Evaluate the deal as thorough as possible. Which means finding out what the market is like,what the ARV is and what the estimated repairs are. This separates the men from the boys.

3.Negotiate with sellers and buyers. Your negotiation skills need to be spot on if you want to not only get a good deal going but to sell a good deal to buyers as well.

4.Be a good marketer. Which mean not only marketing your deals online but offline as possible. Combine online and offline marketing is key to be a successful wholesaler.

If you can master those aspects than you can succeed in wholesaling and you can build a reputation that will help you your business in the long run.

And that's what separates good wholesalers from bad ones.

David Sirmons · Answer

Buy and hold/and or assigns?
What exactly are you approaching banks in order to acquire? REO?
I've never heard of any financial institution allowing 'and or assigns' on any contract, and they typically enforce the use of theirs, yes?

Will Barnard · Answer

Most people on this board know I am an experienced investor and REO's is a strong point for me. I NEVER write and/or assigns and have my entity already to go to make my offer in.
I have written a few offers in the commercial world with my personal name and/or an entity to be named later and then stipulated inside the contract that I was to be a majority owner of the entity to let the bank knwo I was not attempting to assign the contract. If you do want to assign it (wholesale it) just double clsoe and use transactional funding. So much cleaner and easier than all the garbage inside of contracts.

Jesse Ramirez · Answer

Looks like this thread has gone into a completely different direction than it was originally intended to go.

Finding a good wholesaler is like finding a good realtor. The type of realtor that always submits your offers immediately, keeps you up to date, and returns your calls. Once you find that person make sure you make them part of your circle immediately. 
Their are tons of shady individuals in the real estate game. Most are run out of the business in a short amount of time. It's just something that we have to live with.

Steve L. · Answer

Do they use escrow companies in Wisconsin.  Typically, I just write offers in my name and get escrow to do a "courtesy amendment" transferring the property to the entity of my choice.

Most of it don't take issues with it, they ask my operating agreement though.

The other option is just write the offer in the entities name and attach your own Proof of Funds, I bet most people wouldn't have issues with it.

To answer your other question, I do think beginner wholesalers and investors hurt the industry (aka give investors a bad name to sellers), but everyone was a beginner once.

Thinks beginners should remember:
 - Don't put a deal in escrow if you are not 99% sure you are going to close
 - Be careful with the weasel clauses (I know many gurus advocate for this, but I think it's bad practice)
 - Use a real earnest money deposit, $1 doesn't work for banks
 - Look at most properties before you blast an offer, unless you really know your market
 - Remember this business is about hard work, many new investors think making the big bucks in real estate happens quickly and easily (I wish)

Mark Brian · Answer

Whether you are an investor, agent or whatever-if someone is operating in an unprofessional manner it can hurt all of us in this industry.

It takes a lifetime to build a reputation and only a moment to ruin it.

Socorro Garcia · Answer

Thank you for the Response.   :D  Especially to Mr_Investor for giving me pointers.  It is much appreciated.

Jeffrey K. · Answer

We dont seem to have anyone answering my question in the REO section.  It is not about wholesaling in general, but I will answer your question Ms. Garcia.

Wholesaling is often thought of as one of the least expensive ways to make money in real estate without having to be licensed.  Because anyone can call themselves a wholesaler, there are tons of noobs, flakes, and bad guys.  I have never seen a quality deal from a wholesaler and they often make real estate investors look bad.

I have seen wholesalers string along homeowners, back out of contract after contract, cause people to be skeptical of real estate investors, and many other things.

I have never called myself a wholesaler, but from what I understand, it is very hard to do it well.

Jeffrey K. · Answer

They let me assign to an LLC every time.  I am also closing on Tuesday on a package of six multi-familys and it was okay to assign to an LLC that I was not a member of.

My question is about all of the noobs and slick guys not playing by the rules who make the rest of us look bad.

Eddie Ziv · Answer

Jeff, back to your original question, The short answer is probably not. If you're talking about wholesalers who buy bulk, they usually get discount that, we the buy-n-hold don't get. Obviously, they don't get to pick and choose and many times they end up getting stuck with junk. However, having said that, twice I had properties snatched right off my hand only to go to a bulk sale. 
In Yiddish, there is a term called "Luftgesheft" (Air Busiess). Meaning selling something you don't own for a price that it dosn't worth... kinda wholesaling ... no offence... :wink:

Do Wholesalers Hurt Us?

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