Wholesaler Misrepresented himself

196 Replies

I am in the midst of dealing with a wholesaler that has left a bad taste in my mouth for the wholesaling business, and am wondering if this is common practice.

A little background:  So, I'm trying to sell my house and move to Central Florida for a job opportunity for my husband. The plan is for us to began a real estate business, with me focusing on it fulltime, and him eventually joining me once we are successful enough to afford it.  

The key to doing all of this is selling my home. It is an inherited home that needs updating.  We initially were selling it to a family friend so that it could stay within the family in a way, but that didn't work.  At this point, we are just interested in selling it quickly, and willing to leave a substantial amount of money on the table to do so, if necessary.  I had started filling out some of the "we buy houses" forms online to see if any investors would make it worthwhile for us.  I got several hits, and chose to go with someone who established themselves as a cash buyer who could close within 2 weeks.  I informed him of the comps in the area, and my knowledge of the property, and we haggled a price that my husband and I felt comfortable with.  I researched him a bit, seeing that he was a flipper and wholesaler.  At the time I was not too familiar with how wholesaling worked, and he had never mentioned wholesaling.  We signed an offer, sight unseen, with a 7 day inspection period.  He said he would be scheduling an inspector the next day.  The next day, he said he would schedule the inspector for early in the week because he wanted to come with him and was stuck in Broward (we are in Miami).  The following day(Saturday), he said his partner was in the area and wanted to take a look at the property. We obliged. On Monday(labor day), I asked when I should expect him and the inspector. He told me he would let me know Tuesday morning.  Tuesday morning, he asked if the inspector could come by at 7pm. I said yes and asked if he was coming also. He informed me he would not be.  Later in the day, he told me another "partner" was in the area and would like to visit the property. Again, we obliged, but I started to become more suspicious. I had already did some digging into his social media presence to see if he had listed our property with his wholesales over the weekend, and found nothing.  The next partner showed up at 5:30pm, and had another woman with her.  We chatted, and they took pictures, and left.  At 7pm, there was a knock on the door, and I assumed it to be the inspector, but it was someone different, someone who I had not been informed to expect.  I asked him if he was "blank", the inspector. He was not. He was another "partner", and mentioned "xyz" wasn't going to make it, but didn't "xyz" tell me that he was coming? No, also, I have no idea who that is. I spoke with "insert cash buyer name". "Oh, yeah. "Xyz" and "cash buyer" work in the same office." We go ahead and let this person view the property, and I check in with "cash buyer" to straighten if and when inspector is coming and who this guy was. He apologizes for his slip up, and not notifying me of the other "partner", says he will check in with the inspector and get back to me.  Inspector shows up. Now, I'm expecting and prepared for a full official home inspection.  This guy looks around the property for less than 10 minutes. He does no more than any of the "partners" do and leaves.  At this point, I'm very nervous about the whole situation, so I start digging again, and find that he has listed the property with his wholesales.  I do a bit of research on wholesaling and find out that there is a practice of putting a property under contract by identifying yourself as a cash buyer, trying to flip it to an end buyer, and then using the inspection period to back out if you can't flip it to an end buyer.  I confront the "cash buyer" with the knowledge that he has listed my property as a wholesale property.  I ask him if he intends to terminate the contract if he can't flip it to an end buyer. I don't want the property tied up unnecessarily as I am looking to move quickly.  His exact response: "Yes I either close on the property myself first or flip to an end buyer. I will know by the end of today so no worries about dragging it any further.  I knew your situation from the beginning that's why I kept the inspection to seven days only.  It's normally 15 days."  I wait until the end day and ask him what the plan is. He says that he has two cash buyers that would like to view the property tomorrow, and then will decide from there.(At least he us finally honest about who these people are)  I ask him if this means he intends to terminate the contract if he can't find an end buyer? His response: "Please give me till tomorrow afternoon I am doing absolutely everything I can to make this work. I know how important it is to you and your family"

I'm wondering if there is any recourse I have at this point.  I will wait and see what he says tomorrow, and maybe we will get lucky, and one of these investors will want the property. However, I don't have faith in that. The deal I made with him is great for an investor.  The money he has tacked on to wholesale it, makes it a little too expensive for an investment opportunity, I feel.  The whole situation has taught me some big lessons, and I'm trying hard to keep my cool.  Is this how it always works? 

typical with an unlicensed un regulated quasi industry.. but an unpopular stance on BP because many on BP are trying to get into the business as wholesaler and have no clue 

@Nikki Harmon I almost/did get screwed out from a wholesaler out of Miami in a deal in Broward. I really wonder if it's the same guy... What I did was take screen shots of his website stating he's involved with real estate, screen shots of his Facebook page saying he's involved with real estate, and all emails. I reported him to DBPR with a formal complaint.. I know they opened a case but no news yet.. This was three week ago. I own a brokerage now in Lauderdale and I will love to help in any way..

If it doesn't work out with this guy, bump the price up a couple grand (from your agreement) and put it on craigslist.  Sell quick for cash.  Proof of funds needed to see it!

Originally posted by @Steve Vaughan :

If it doesn't work out with this guy, bump the price up a couple grand (from your agreement) and put it on craigslist.  Sell quick for cash.  Proof of funds needed to see it!

Good idea. 

@Nikki Harmon

If you plan to get into real estate, your first objective should be to get as much education as possible, including contracts and contract law.  Asking folks here what options you have when no one here has seen your contract is of little use to you.  

I suspect the wholesaler has protected himself well and will walk away if he doesn't find a buyer.  You will have learned a valuable lesson at that point. 

Your contract is what protects you as a buyer or seller, so understanding it is critical. 

On a side note, I get these pseudo-investors calling me frequently about my properties too. The first think I tell them is I won't entertain any offer without a bank statement with the wholesaler's name or company name that shows they have the purchase funds on deposit.  Oddly enough, they seem to lose interest in my property rather quickly.

Originally posted by @Nick Britton :

@Nikki Harmon I almost/did get screwed out from a wholesaler out of Miami in a deal in Broward. I really wonder if it's the same guy... What I did was take screen shots of his website stating he's involved with real estate, screen shots of his Facebook page saying he's involved with real estate, and all emails. I reported him to DBPR with a formal complaint.. I know they opened a case but no news yet.. This was three week ago. I own a brokerage now in Lauderdale and I will love to help in any way..

I don't think so.  He is located in Broward and I am in Miami.  I do intend to file a formal complaint.  I've kept record of everything. Other than our initial conversation, I have communicated via text message, including his initial offer before the contract was drawn up.

Do you invest in properties?

Originally posted by @Guy Gimenez :

@Nikki Harmon

If you plan to get into real estate, your first objective should be to get as much education as possible, including contracts and contract law.  Asking folks here what options you have when no one here has seen your contract is of little use to you.  

I suspect the wholesaler has protected himself well and will walk away if he doesn't find a buyer.  You will have learned a valuable lesson at that point. 

Your contract is what protects you as a buyer or seller, so understanding it is critical. 

On a side note, I get these pseudo-investors calling me frequently about my properties too. The first think I tell them is I won't entertain any offer without a bank statement with the wholesaler's name or company name that shows they have the purchase funds on deposit.  Oddly enough, they seem to lose interest in my property rather quickly.

 I understood very clearly two things from my contract. One was that, yes, he had the ability to assign it, but was still liable if he didn't. Two, that he could walk away during due diligence if he did not find the property avceptable, as that is standard.  I did not realize that this would add up to him falsely claiming to be a cash buyer, and walking away because he couldn't assign it.  I'm pretty sure that is not the same as "not finding it acceptable".  I've definitely learned a big lesson here. 

Also, that is a smart idea, and definitely something I should have done to ensure this was a legitimate deal. I had researched him, and he had good reviews and a strong online presence, so I put in a little too much trust.  Luckily, it's a good and big lesson to learn in under a week. 

Originally posted by @Jay Hinrichs :

typical with an unlicensed un regulated quasi industry.. but an unpopular stance on BP because many on BP are trying to get into the business as wholesaler and have no clue 

 Opened my eyes really quick. I had already been suspicious of the wholesaling industry a little bit, but didn't know much about it yet.  Lesson learned really quick. 

Originally posted by @Nikki Harmon :

I am in the midst of dealing with a wholesaler that has left a bad taste in my mouth for the wholesaling business, and am wondering if this is common practice.

A little background:  So, I'm trying to sell my house and move to Central Florida for a job opportunity for my husband. The plan is for us to began a real estate business, with me focusing on it fulltime, and him eventually joining me once we are successful enough to afford it.  

The key to doing all of this is selling my home. It is an inherited home that needs updating.  We initially were selling it to a family friend so that it could stay within the family in a way, but that didn't work.  At this point, we are just interested in selling it quickly, and willing to leave a substantial amount of money on the table to do so, if necessary.  I had started filling out some of the "we buy houses" forms online to see if any investors would make it worthwhile for us.  I got several hits, and chose to go with someone who established themselves as a cash buyer who could close within 2 weeks.  I informed him of the comps in the area, and my knowledge of the property, and we haggled a price that my husband and I felt comfortable with.  I researched him a bit, seeing that he was a flipper and wholesaler.  At the time I was not too familiar with how wholesaling worked, and he had never mentioned wholesaling.  We signed an offer, sight unseen, with a 7 day inspection period.  He said he would be scheduling an inspector the next day.  The next day, he said he would schedule the inspector for early in the week because he wanted to come with him and was stuck in Broward (we are in Miami).  The following day(Saturday), he said his partner was in the area and wanted to take a look at the property. We obliged. On Monday(labor day), I asked when I should expect him and the inspector. He told me he would let me know Tuesday morning.  Tuesday morning, he asked if the inspector could come by at 7pm. I said yes and asked if he was coming also. He informed me he would not be.  Later in the day, he told me another "partner" was in the area and would like to visit the property. Again, we obliged, but I started to become more suspicious. I had already did some digging into his social media presence to see if he had listed our property with his wholesales over the weekend, and found nothing.  The next partner showed up at 5:30pm, and had another woman with her.  We chatted, and they took pictures, and left.  At 7pm, there was a knock on the door, and I assumed it to be the inspector, but it was someone different, someone who I had not been informed to expect.  I asked him if he was "blank", the inspector. He was not. He was another "partner", and mentioned "xyz" wasn't going to make it, but didn't "xyz" tell me that he was coming? No, also, I have no idea who that is. I spoke with "insert cash buyer name". "Oh, yeah. "Xyz" and "cash buyer" work in the same office." We go ahead and let this person view the property, and I check in with "cash buyer" to straighten if and when inspector is coming and who this guy was. He apologizes for his slip up, and not notifying me of the other "partner", says he will check in with the inspector and get back to me.  Inspector shows up. Now, I'm expecting and prepared for a full official home inspection.  This guy looks around the property for less than 10 minutes. He does no more than any of the "partners" do and leaves.  At this point, I'm very nervous about the whole situation, so I start digging again, and find that he has listed the property with his wholesales.  I do a bit of research on wholesaling and find out that there is a practice of putting a property under contract by identifying yourself as a cash buyer, trying to flip it to an end buyer, and then using the inspection period to back out if you can't flip it to an end buyer.  I confront the "cash buyer" with the knowledge that he has listed my property as a wholesale property.  I ask him if he intends to terminate the contract if he can't flip it to an end buyer. I don't want the property tied up unnecessarily as I am looking to move quickly.  His exact response: "Yes I either close on the property myself first or flip to an end buyer. I will know by the end of today so no worries about dragging it any further.  I knew your situation from the beginning that's why I kept the inspection to seven days only.  It's normally 15 days."  I wait until the end day and ask him what the plan is. He says that he has two cash buyers that would like to view the property tomorrow, and then will decide from there.(At least he us finally honest about who these people are)  I ask him if this means he intends to terminate the contract if he can't find an end buyer? His response: "Please give me till tomorrow afternoon I am doing absolutely everything I can to make this work. I know how important it is to you and your family"

I'm wondering if there is any recourse I have at this point.  I will wait and see what he says tomorrow, and maybe we will get lucky, and one of these investors will want the property. However, I don't have faith in that. The deal I made with him is great for an investor.  The money he has tacked on to wholesale it, makes it a little too expensive for an investment opportunity, I feel.  The whole situation has taught me some big lessons, and I'm trying hard to keep my cool.  Is this how it always works? 

You got conned by another shyster trying to make a fast buck, lying to you, and playing games. REPORT THIS JERK to the state immediately. Go to www.myfloridalicense.com and click on the link "unlicensed activity". This may or may not do any good. Fortunately, you didn't get one of the bigger crooks that tie up your property for 60 days for "inspection period" or some other LIE. Go read a few of the posts here on BP in the "wholesaling" forum and read how they boast about lying to sellers and using nothing but LIES AND BULLONEY to mislead sellers. The sad part is: they don't see anything wrong with this! In the future, get a 3-5 day inspection period and make sure the contract is NOT assignable. Better yet, hire an agent after you have done some research on them. When I get calls from "seller" with a property one of the first question I ask is: do you have title to the property. If they say no, I tell them I am not interested.

@Nikki Harmon be sure and post review if possible, and you might consider a BBB complaint as well. No bad deed should go unpunished!

Originally posted by @John Thedford :

@Nikki Harmonbe sure and post review if possible, and you might consider a BBB complaint as well. No bad deed should go unpunished!

 I'm definitely going forward with all of the above, but I want to wait until we are out of contract.  I actually searched high and low, including BBB, to see if any complaints had been made previously. I can't imagine I'm the first, but maybe I'm the first to catch on. 

@Nikki Harmon , you will know very soon whether he is as good as his word: "Yes I either close on the property myself first or flip to an end buyer". As for reneging due to finding the property unsatisfactory during the inspection period, isn't that a possibility for ANY sale of property Contract - equivalent to a cooling off period? Many wholesalers do use that clause unscrupulously when they can't find an ACTUAL cash Buyer, but if you REALLY want give discounts in exchange for quick sales - create Contracts that have NO contingency! Cheers...

I don't see the problem, he told you he would close the property lets see if he does.

At the end of the day you signed a contract, go by what it says. If you don't like a contract don't sign.

@Nikki Harmon

Before going through the bureaucratic headache of filing anything formal with DBPR or even FREC, I would consult with a real estate attorney (maybe you know someone, a friend of a friend, etc...) and see if these boards would find any merit if a complaint was filed.  And even if this person did act illegally to the "letter of the law," it may not even be in these organizations interests to pursue something...especially if he's not a "big fish" where he would be seen as an example.  Unfortunately, this is common practice among wholesalers.  What he should have done was been forthright initially, and probably shown you credentials to back up whether his method of operation has proved prosperous for his sellers, wherein he ends up finding end users.  That way, at least you could have made an informed decision.  Overall, this is a lesson learned, and coming on these forums to get an education and course of action is the best thing you could have done!  I would probably say it's not in your best interests to go the bureaucratic route, it will be long and tormenting and you may not even get the solution you're seeking.  Expressing your displeasure about this person via social media and other forums is a quicker and more direct route to making sure wholesalers like this are more open and honest with their intentions.

"Wholesaler misrepresented himself."

"Water turned out to be wet."

Originally posted by @Richard C. :

"Wholesaler misrepresented himself."

"Water turned out to be wet."

😂 😂 😂 

Well now I know.

Originally posted by @Gregory Emmer :

@Nikki Harmon

Before going through the bureaucratic headache of filing anything formal with DBPR or even FREC, I would consult with a real estate attorney (maybe you know someone, a friend of a friend, etc...) and see if these boards would find any merit if a complaint was filed.  And even if this person did act illegally to the "letter of the law," it may not even be in these organizations interests to pursue something...especially if he's not a "big fish" where he would be seen as an example.  Unfortunately, this is common practice among wholesalers.  What he should have done was been forthright initially, and probably shown you credentials to back up whether his method of operation has proved prosperous for his sellers, wherein he ends up finding end users.  That way, at least you could have made an informed decision.  Overall, this is a lesson learned, and coming on these forums to get an education and course of action is the best thing you could have done!  I would probably say it's not in your best interests to go the bureaucratic route, it will be long and tormenting and you may not even get the solution you're seeking.  Expressing your displeasure about this person via social media and other forums is a quicker and more direct route to making sure wholesalers like this are more open and honest with their intentions.

 I think you are very right. At this point, I just want him to terminate the contract sooner rather than later if he can't deliver, so I can move on.  He is supposedly going to let me know today.  We will see how that goes.  He was not too happy when I confronted him directly about what is going on.  

Liars and thieves are seldom happy when caught. 

The "bureaucratic headache" of filing a FERC complaint is basically non-existent.  You have to fill out an online form.  There is certainly no reason to engage a real estate lawyer at your own expense in order to determine whether your complaint will be favorably received.

File the FERC complaint.  This guy may already be on their radar, in which case the complaint may be effective.  Worst case, you can help put him on their radar, and when others complain in the future, they'll come down on him.

@Nikki Harmon Not just because I'm an agent, but I've never seen a case where a property listed on the MLS didn't Net more to the owner, than a wholesaler's offer. Just did one recently, best "we buy houses" offer, $112k (which also may have just been a wholesaler). Sold on MLS for $137k in 4 days. One thing many don't think of is that's it's very easy to see if a "buyer" has actually bought any properties, and how many recently. I can recommend a couple of agents in Miami if you're interested.

Originally posted by @Brent Coombs :

@Nikki Harmon, you will know very soon whether he is as good as his word: "Yes I either close on the property myself first or flip to an end buyer". As for reneging due to finding the property unsatisfactory during the inspection period, isn't that a possibility for ANY sale of property Contract - equivalent to a cooling off period? Many wholesalers do use that clause unscrupulously when they can't find an ACTUAL cash Buyer, but if you REALLY want give discounts in exchange for quick sales - create Contracts that have NO contingency! Cheers...

 I knew he had the option of walking away due to not finding the property avceptable. That is standard and I am fine with that.  However, since he did not let me know he was wholesaling the property, I did not expect he would be walking away for the sole reason of not finding a true buyer.  Next time, I will be very careful to ensure that I know what the actual intentions are, and that I'm covered better.

Originally posted by @Wayne Brooks :

@Nikki Harmon Not just because I'm an agent, but I've never seen a case where a property listed on the MLS didn't Net more to the owner, than a wholesaler's offer. Just did one recently, best "we buy houses" offer, $112k (which also may have just been a wholesaler). Sold on MLS for $137k in 4 days. One thing many think of is that's it's very easy to see if a "buyer" has actually bought any properties, and how many recently.

Yes, I know. Our intention was to list the property on the following Monday, but I was made the offer I wanted for the property in my researching. 

Originally posted by @Nikki Harmon:
Originally posted by @Wayne Brooks:

@Nikki Harmon Not just because I'm an agent, but I've never seen a case where a property listed on the MLS didn't Net more to the owner, than a wholesaler's offer. Just did one recently, best "we buy houses" offer, $112k (which also may have just been a wholesaler). Sold on MLS for $137k in 4 days. One thing many think of is that's it's very easy to see if a "buyer" has actually bought any properties, and how many recently.

Yes, I know. Our intention was to list the property on the following Monday, but I was made the offer I wanted for the property in my researching. 

 Also, he has bought quite a few properties himself, so I expected that to be what he was doing. And, maybe it will turn out that way.  But I doubt it, as he has been very dodge when I've asked if he will terminate the contract if he can't find an end buyer.  Initially he told me yes. Then it turned it to a lot of "give me more time to make this work". 

I really don't see anything wrong because he's trying to close the deal..if he can't close then it's a problem..I don't see nothing wrong with what he's trying to do..if it's a good deal that property will be sold..

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