Wholesaling - what a bunch of scammers

Flipper/Rehabber · Los Angeles, CA · Member since 2019 · 7 posts · 6 votes

I recently got turned on to the concept of real estate wholesaling- and wow never have a encountered a bigger bunch of scoundrels. Everyone person in this so called business is a self proclaimed ‘guru’ trying to sell you their snake oil system of how to steal people’s houses out from under them. Disgusting and sad.

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Erik W.

Real Estate Investor · Springfield, MO · Member since 2017 · 1k+ posts · 2k+ votes

Define "stealing". If a willing buyer and a willing seller agree on the price, and no one misrepresents that facts of the deal, and everyone is of sound mental capacity and not acting under duress, is that stealing even if the price is below what the Buyer can sell it for?

I don't do much wholesaling (actually "wholetaling" because I actually close the deal vs. flip a contract) these days, but when I did, I typically bought for 30-40% below what I could turn around and sell it for in a week or two. The reason I was able to do this is I had cash in hand to close that day and I was willing to go thru the effort to develop a list of buyers. Had the owner of the property been willing and able to develop a list of buyers, maybe they could have sold for the same price I did. But they were not willing or able to do that.

I agree that most wholesalers don't know what they're doing and/or use high pressure tactics, and those should not be allowed. But for the legit ones who make a genuine offer and are able to close the deal or flip the contract on time, I see no problem as long as no one is taken advance of, as defined in my first paragraph.

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Ann Shanley
Investor · Lake County, OH · Member since 2016 · 124 posts · 55 votes
6y
There are some out there for sure! Always do your due diligence before making a decision. Hopefully, you will find the right fit!
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JD MartinBusiness Member
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Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
6y
😂 Wholesaling will evoke a lot of emotions.
Not all wholesalers are gurus or scammers. There are a lot of successful investors on this site that have worked with wholesalers on deals. I've never bought from a wholesaler - most of the deals I see from them are either not in my area or not really deals - but I can see certain situations in which they could provide value.
Unfortunately, a good percentage of them are really just acting as unlicensed real estate agents, and an even bigger percentage have no ability/means to close on a property even though they assert as much when they sign the contract.
But not all of them are stealing someone's home. Some homes that wholesalers send out are so rough that even licensed agents/agencies don't want to be bothered with it. Or it may have title issues that an agency doesn't want to get involved with, but the right investor might. ETC.
Look for the signal in the noise.
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Charles Carillo
Rental Property Investor · North Palm Beach, FL · Member since 2018 · 2k+ posts · 1k+ votes
6y
@Danny Greene
There are a number of real estate "gurus" out there that focus on all different types of investment strategies; multifamily to wholesaling. The issue I feel with wholesaling, in general, is there is a low barrier to entry, with most new wholesalers being unlicensed and they are looking only for quick cash. Pile this onto the fact that you have unsophisticated homeowners who find themselves in financial distress and it is a recipe for disaster. On the other hand, there are also very legitimate home buyers and wholesalers out there that get a bad name because of these fly-by-night wholesalers. It is only a matter of time until states start cracking down on this.
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Danny Greene
OP
Flipper/Rehabber · Los Angeles, CA · Member since 2019 · 7 posts · 6 votes
6y
@Danny Greene
I’m going to petition my local and state association of realtors to see if we can get this made illegal here in California.
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Steve Vaughan
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
6y
Originally posted by @Danny Greene:
I recently got turned on to the concept of real estate wholesaling

I guess its like getting swamped with shady lenders if you go online looking for funding. We need to be careful about how and where we ask for information and what contact info we share.
Wholesalers don't bother me except to say 'Hey, I saw you bought x address. Can I add you to my buyers list?' But I've never gone online and queried the subject.
What virtual hornets' nest did you kick to get this type of snake oil salesmen mass response? Maybe others can avoid the same mistake.

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JD MartinBusiness Member
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Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
6y
Originally posted by @Danny Greene:
@Danny Greene
I’m going to petition my local and state association of realtors to see if we can get this made illegal here in California.

A lot of wholesaling is already illegal; it's called "practicing RE without a license". You can simply report the individual to your state's RE board if you have their info, and they will probably get a letter. That doesn't mean another one doesn't just pop up to fill the void.

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Erik W.
Real Estate Investor · Springfield, MO · Member since 2017 · 1k+ posts · 2k+ votes
6y
Define "stealing". If a willing buyer and a willing seller agree on the price, and no one misrepresents that facts of the deal, and everyone is of sound mental capacity and not acting under duress, is that stealing even if the price is below what the Buyer can sell it for?
I don't do much wholesaling (actually "wholetaling" because I actually close the deal vs. flip a contract) these days, but when I did, I typically bought for 30-40% below what I could turn around and sell it for in a week or two. The reason I was able to do this is I had cash in hand to close that day and I was willing to go thru the effort to develop a list of buyers. Had the owner of the property been willing and able to develop a list of buyers, maybe they could have sold for the same price I did. But they were not willing or able to do that.
I agree that most wholesalers don't know what they're doing and/or use high pressure tactics, and those should not be allowed. But for the legit ones who make a genuine offer and are able to close the deal or flip the contract on time, I see no problem as long as no one is taken advance of, as defined in my first paragraph.
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Lauren B.
Asheville, NC · Member since 2017 · 170 posts · 242 votes
6y
I’ve bought two flips from wholesalers. One guy ... shady AF. The other guy, one of the most ethical and nicest investors I’ve met who’s given me a good chunk of his time and advice as an experienced investor.
I just had a convo with a young lady who was trying to wholesale mls properties for over list price by listing them on Facebook marketplace. The LA received a copy of her attempt. It made me realize she’s probably not even closed on any properties and has really no idea ... I’m surprised (should I be?) how many people are trying to wholesale mls properties.
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Danny Greene
OP
Flipper/Rehabber · Los Angeles, CA · Member since 2019 · 7 posts · 6 votes
6y
@Lauren B.
All wholesalers should be in prison.
1 Reply
Joe Cassandra
Rental Property Investor · Woodstock, GA · Member since 2017 · 517 posts · 772 votes
6y
All wholesalers fall into categories:
60% of them know nothing...will never do a deal...suck
30% are shady and will rip you off
5% are legit investors who went under contract with too many properties and needs to unload one
5% are legit wholesalers who actually have deals
---
Finding those 10% are tough.
Saying "all wholesalers should be in prison" is a bit of a stretch. You CAN buy a house from a distressed seller without lying to them and using high pressure sales tactics.
7 Reply
Bonnie Jones
New to Real Estate · Southwest · Member since 2019 · 23 posts · 28 votes
6y
There are flippers/investors who will only pay 40% to 60% of the ARV for a property "because they can." What do you call that? They won't buy a property from a wholesaler OR a seller unless they can get that percentage. Nobody wants to pay full price for a property. That's called making a "profit" and "doing business." Who do you buy them from? Wholesalers or distressed sellers who want to unload their properties fast. "I just want to get it off my hands." Or do you pay full price on the MLS? If you don't make a profit, you don't stay in business. Is that a bad thing? Let me ask . . . what is the profit margin that is worth YOUR time? 10% 20%? 30%? 40% or 50%? You all have that magic number or you won't do business with a seller OR a wholesaler. No, I do not like a lot of those gurus out there who teach bad wholesale tactics or try to sell their mentorship programs. There should be full disclosure to the seller. A lot of sellers believe they can get a higher price than they actually can. You have to explain to them the actual price they might make on the market with a real estate agent and all the time and costs involved with that, and explain WHY you are making a lower offer and your timeline, that you have investors who are in business to make a profit, that is their business, that they have to do a LOT of work to fix it up. Then they have to market it to try to get full price, pay realtor fees, holding costs, ALL those costs involved. Give the seller all your options, including seller financing, etc. Give the seller time to make the final decision. If they accept the lower cash offer, then you are sure they have thought it through and have a valid reason for it. Then you buy it yourself or assign it to another investor. If the seller wants to put it on the market, refer them to a good real estate agent.
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Andrew SyriosPro Member
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Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
6y
It sounds more like you're talking about gurus selling their secret "marketing technique" or something like that. Most wholesalers I see that aren't any good, at least from where I stand as an end-buyer, just don't have good deals, are horrible at estimating rehab costs and oversell what they have.
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Ryan Proffit
Saint Joseph, MO · Member since 2018 · 401 posts · 244 votes
6y
@Danny Greene
Why don’t you give us a little context? The one liners aren’t telling much of a story.
1 Reply
Kyler Cook
Rental Property Investor · Kalamazoo, MI · Member since 2018 · 117 posts · 235 votes
6y
@Danny Greene
I lived in a solid B+ neighborhood. Very nice properties and some properties that need some love. Yesterday, one of my neighbors was telling me she and her husband feel stuck in their house and it needs to much work to get it market ready. I asked if she’d ever considered just selling for what it’s worth and moving on. She said, not really, because no one would want to buy it. I said, disagree. I know a few investors in this town looking for properties exactly like yours. Would you consider letting me help you? She said yes, and smiled and said she’d talk wi Her husband. Granted, I’ve never put a house under contract before, but I could very easily pass this property on to four of my friends and take a 5k finders fee. It is VERY hard to find off market properties here.
Just like anything, there are people looking to snake oil, and there are people that are just good at hunting down the right thing and knowing where to look.
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Kyler Cook
Rental Property Investor · Kalamazoo, MI · Member since 2018 · 117 posts · 235 votes
6y
@Bonnie Jones
There are investors that do the same thing. I have a friend that just bought a 10k house on the east side that was condemned and he’s going to put 20k in and sell for 100k. Buying a house at discount isn’t shady or theft. It’s the whole aim of real estate.
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Kerry Noble JrPro Member
Investor · Indianapolis, IN · Member since 2018 · 2k+ posts · 1k+ votes
6y
There are a lot of wholesalers that start out with no guidance and have never learned how to do business.....on the flipside there are GCs......realtors......and other investors on the same page.....
just gotta work with the right people seek those with good energy. Most larger sfh investors have wholesaling as 1 small portion to their business....
1 Reply
Caleb Heimsoth
Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
6y
@Danny Greene if you buy my super secret wholesaling system about how to make millions, with no income, no credit and no time, I’ll show you how it’s done.
It only costs 9,999 payments of 1 dollar. (Per month, cancel anytime!)
2 Reply
Mike ReynoldsPro Member
construction · Nacogdoches, TX · Member since 2011 · 2k+ posts · 1k+ votes
6y
Originally posted by @Danny Greene:
I recently got turned on to the concept of real estate wholesaling- and wow never have a encountered a bigger bunch of scoundrels. Everyone person in this so called business is a self proclaimed ‘guru’ trying to sell you their snake oil system of how to steal people’s houses out from under them. Disgusting and sad.

As a flipper, do you pay full price for a house or do you steal it away from a distressed homeowner?

3 Reply
Danny Greene
OP
Flipper/Rehabber · Los Angeles, CA · Member since 2019 · 7 posts · 6 votes
6y
@Caleb Heimsoth lol exactly.
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Account Closed
Investor · Columbus, OH · Member since 2017 · 861 posts · 1k+ votes
6y
Wait till you get a bunch of rentals together and then these nickle farmers start nonstop spamming you with voicemail, SMS and robodialed recordings, and fill your mailbox up with postcards they're too shady to even put their last name on.
Shows how clueless they are that they're targeting me as a distressed seller and not an active and easily found buyer and rehabber....

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Michael King
Rental Property Investor · Navarre, FL · Member since 2019 · 913 posts · 640 votes
6y
@Danny Greene I recall listening to a BP podcast where they interviewed this young guy and he was skyting about how low he'd gotten the price of a place from some old lady and made a fortune on the deal. He knew exactly what he was doing by screwing her over and I was disgusted by him. Wish I could remember his name or the podcast number. But then again, I wish I could forget, too.
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Account Closed
Investor · Columbus, OH · Member since 2017 · 861 posts · 1k+ votes
6y
Originally posted by @Michael King:
@Danny Greene I recall listening to a BP podcast where they interviewed this young guy and he was skyting about how low he'd gotten the price of a place from some old lady and made a fortune on the deal. He knew exactly what he was doing by screwing her over and I was disgusted by him. Wish I could remember his name or the podcast number. But then again, I wish I could forget, too.

I know the episode but forgot the details. It was this weird meandering story about how the old lady was holding out for some specific price, saying something about she was going to get an appraisal, and the guy was about to let it go but his wife told him to call her back one more time? I dont remember exactly how he screwed her but it was really obvious he knew what he was doing. I was pretty disgusted as well and it kind of killed the enjoyment of the whole podcast series a bit for me.

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Account Closed
Investor · Singapore · Member since 2013 · 1k+ posts · 3k+ votes
6y
Have you ever got a yellow card or text or other communication from a wholesaler saying they want to put your house under contract for a fraction of what its worth so they can MAYBE flip the contract to an investor? Or do you get one saying "We will BUY your house". The word BUY means an exchange of money for the property. Money they don't have. And have no intention of actually buying anything. So the whole transaction begins with a LIE. It is a shady crappy business and needs to be stopped.
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Dan Travieso
Investor · Fayetteville, NC · Member since 2018 · 263 posts · 216 votes
6y
As a seller what does it matter whether or not the wholesaler is the one who actually buys the property or if he/she assigns it? As long as it closes on the date listed on the contract. Yes, there are certainly some unethical wholesalers but the same is said about flippers who cut corners during rehabs and agents who hide disclosures. True, the mailers and phone calls get old but I also get mailers from Walmart, phone calls because my auto warranty is expiring, and emails from that prince in Africa who is sending me millions. Point is, all businesses have to market and all have some unethical entities.
4 Reply
Nick Rutkowski
Rental Property Investor · Ithaca, NY · Member since 2015 · 1k+ posts · 1k+ votes
6y
@Danny Greene
There are better ways to wheel and deal in real estate. That’s for sure.
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