what do you hate about wholesalers?
Investor 路 Atlanta, GA 路 Member since 2018 路 104 posts 路 116 votes
what do you hate about wholesalers?
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Jonathan GreeneBusiness Member
Real Estate Consultant 路 Madison, NJ 路 Member since 2016 路 6k+ posts 路 7k+ votesLet's say 10 percent of wholesalers are good at their job. Those ones I absolutely love. The other 90 percent? Here are my gripes:
- Every single time ARV way too high and using the wrong comps AND reno budget way too low
- Blasting every deal out to everyone so you show up and it is a cattle call of unverified investors muddying the waters
- Not informing the seller about the assignment
- Wholesaling without money of their own or money backing making only an assignment viable for the seller to have success
- Telling you about a property they don't yet have under contract, but say they do
- Not providing full photos of the things wrong with the property, good wholesalers take pics of the worst things so we know
- Offering you a deal, then it's gone. Then two days later, they want you to do the deal again, but only in the next hour. YAWN.
48 Replies
I don't hate wholesalers. I've actually had a couple of wholesalers JV to sell a couple of my properties when I was overloaded on projects. Now I guess the main reason many people dislike wholesalers is that they have a way of Clouding the water in a lot of ways. With that being said, so do other investors and competition in general have a way of muddying in the water. Even though I have kept a large portion of the properties I have prospected and paid big bucks to locate I plan on doing more wholesaling going forward simply , because I cannot keep all the properties myself due to the overflow and the magnitude of the marketing I have done. I guess the original poster was looking for a lively topic other than throwing Dave Ramsey back under the bus again LOL.
I think the real issue is people dislike competition in general. Wholesalers That are incompetent can get In the way, but Investor straight out of seminar school or guru land can get in the way too. Bottom line is us humans can have a very selfish & Territorial nature. It is what it is.- Investor 路 Sugar Land, TX 路 Member since 2012 路 554 posts 路 232 votes6y
Over time more states will start requiring a license "wholesale".
When you boil it down, most wholesalers are engaging in brokerage. They operate purely with the intent to assign their interest in the contract to another buyer AND do not disclose that to the seller.Many wholesalers do not have the means (or desire) to close on the properties they are contracting. That in itself can be a legal issue in many states.
Wholesaling is not bad (IMO). It's the shady individuals and operations behind the strategy that causes harm to the public and will prompt regulators to address the issue.
- Investor 路 Atlanta, GA 路 Member since 2018 路 104 posts 路 116 votes6y
@Ray Danishyar wholeheartedly agree its a phenomenal pleasure as an investor to sit back and have amazing deal flow when you find that wholesaler that you can trust and that provides actually value.
- 6yBonnie LowPro MemberLender 路 Asheville, NC 路 Member since 2016 路 1k+ posts 路 1k+ votesI actually really, really appreciate wholesalers. They basically do the work I don't want to do. I don't have the time or the desire to search out off market deals and I know the successful wholesalers invest quite a lot into developing the personal relationships it often takes to get their foot in the door with a potential seller. Since we invest both locally and out of state, one of the first relationships we seek to establish when looking OOS is to find a good wholesaler who knows the market and can be the boots on the ground.
- Investor 路 Houston, TX 路 Member since 2017 路 1k+ posts 路 871 votes6y
Originally posted by @Matt Lewis:
@Kalim Kalla - I hate how they鈥檙e in the trenches every day doing all the hard work most investors aren鈥檛 willing to do.
And see that's the rub - there is a role for good wholesalers. It is hard freaking work, running marketing, staying consistent, talking to sellers, doing all that follow up... on and on. But to do it right, you really need experience. This is why so many of them fail.
You want a mentor? Great, partner up with an actual buyer. Get them to help you with some cost of your marketing, in return for some privileges and discounts on the leads when they come in. Involve them because they have experience. You got time, energy and skills, and they are busy... First, figure out what you are good at and focus on that, but try to run in teams as much as you can.
- Investor 路 Baltimore, MD 路 Member since 2008 路 17k+ posts 路 13k+ votes6y
@Kalim Kalla I don't hate them at all. I do laugh at some for their Naivete.
i have had wholesalers send me deals using my exact ad that I have used including the graphics. they only changed the property address and price.
One wholesaler sent me an ad for a property I owned and was selling myself.
- Member since 2019 路 4 posts 路 0 votes6y
@Kalim Kalla
How do you find your deals? I am sort of new to this wholesaling and fixing and flipping. I had 4 houses of my own, Built one, rented, property managed, helped to fix and flip for someone else. When I listen to bp and someone an investor says it's 100 bucks for a new tub, they don't say how much for the faucet and cost to install and wow 100 buck for a tub, good for them.. I am so glad I see these post. But real-estate is how much someone is willing to pay. I have not assigned anything because I never want someone buyer or seller to feel ripped off. Do you always get your deals at 75% off? I am up for the learning curve. Where do you buy?
- Investor 路 Philadelphia, PA 路 Member since 2010 路 739 posts 路 372 votes6y
Originally posted by @Chris Bounds:
Over time more states will start requiring a license "wholesale".
When you boil it down, most wholesalers are engaging in brokerage. They operate purely with the intent to assign their interest in the contract to another buyer AND do not disclose that to the seller.Many wholesalers do not have the means (or desire) to close on the properties they are contracting. That in itself can be a legal issue in many states.
Wholesaling is not bad (IMO). It's the shady individuals and operations behind the strategy that causes harm to the public and will prompt regulators to address the issue.
The only way to regulate it is through title companies - anybody other than the seller getting $ on the HUD must prove a license or something.
I personally would welcome it .. thin the herd
- Member since 2020 路 122 posts 路 62 votes6y
Originally posted by @Steve Morris:
"There are legitimate gripes about wholesalers, however most of them hinge on working with inexperienced people."
And lack of disclosure and expecting a fee for arranging the sale of real estate without having a RE license.
They aren't brokering the sale of real estate. That is a very specific thing, putting a property under contract is taking an ownership position in the property at X price and you then sell your ownership position to another person. That is not brokering, the transaction has zero overlap in process to a brokerage agreement even if the outcome is similar.
I would put a lack of education just as much on investors who do not understand the role wholesalers play in the market. There is a reason why some investors scale rapidly while others seem to spend inordinate amouts of time and energy for a tiny fraction of the deal flow in their market.
- Member since 2020 路 122 posts 路 62 votes6y
Originally posted by @Chris Purcell:
Originally posted by @Chris Bounds:
Over time more states will start requiring a license "wholesale".
When you boil it down, most wholesalers are engaging in brokerage. They operate purely with the intent to assign their interest in the contract to another buyer AND do not disclose that to the seller.Many wholesalers do not have the means (or desire) to close on the properties they are contracting. That in itself can be a legal issue in many states.
Wholesaling is not bad (IMO). It's the shady individuals and operations behind the strategy that causes harm to the public and will prompt regulators to address the issue.
The only way to regulate it is through title companies - anybody other than the seller getting $ on the HUD must prove a license or something.
I personally would welcome it .. thin the herd
I love hearing this from agents who enjoy selling properties that their flip investors have finished not realizing that the property they are selling today likely came from a wholesaler first. It is almost a cut off your nose to spite your face situation.
- China, ME 路 Member since 2014 路 3k+ posts 路 4k+ votes6y
@Kalim Kalla I hate that wholesalers...
Lie to owners about their intention to close on a property when they have neither the intent or the means to do so. Which by the way is a tort (civil violation) called "fraud in the inducement. https://legal-dictionary.thefr...
Lie to owners about the actual market value of their home.
Make their money by marketing a home for sale when they don't own it. In the two states where I'm licensed (Massachusetts and Maine), that is a license-required activity. I believe it is most other states as well.
Come up with flimsy excuses about "equitable interest" making it OK to operate illegally. Again, in Mass and Maine, that does not satisfy the law. And yes, I've run this by the real estate commissions in both states.
Make their money by stealing equity from sellers who are either not educated on the market or are so desperate that they will take a bad deal to solve whatever bad situation they are in. Failing health, gambling debt, legal troubles, divorce, etc. About a year ago, I helped a naive young couple to slam the brakes on a wholesalers offer. This dirtbag convinced them that their home was a disaster (it wasn't) and that his offer was the best they would ever get. I ran the numbers and sold it for $121,000 more than his offer. Their mistake was that they believed him.
Brokering real estate without a license.
Operate outside the law so that the normal regulations that provide protections for the public don't apply. If a Realtor took advantage of the desperate or uneducated seller the same way a wholesaler does, we'd be fined out of existence and would have our licenses suspended or revoked.
I especially hate that wholesaling gurus run seminars that take advantage of naive wanna-be investors and convince them that wholesaling is legal. They rake in money hand over fist from the gullible and send them out to operate illegally, screwing over grandma.
Thannk you for not saying "all" wholesalers. I'm in Real Estate courses now trying to get my agent's and appraiser's licenses. So far, I've heard a ton of bad case studies involving shady agents but I have not thrown the whole industry away based on the large number of shady agents out there. I feel that when wholesaling is spoken of, the majority of the time, it's in a negative context. I appreciate your voice of reason and balance. Just the facts.
Originally posted by @Chris Bounds:Over time more states will start requiring a license "wholesale".
When you boil it down, most wholesalers are engaging in brokerage. They operate purely with the intent to assign their interest in the contract to another buyer AND do not disclose that to the seller.Many wholesalers do not have the means (or desire) to close on the properties they are contracting. That in itself can be a legal issue in many states.
Wholesaling is not bad (IMO). It's the shady individuals and operations behind the strategy that causes harm to the public and will prompt regulators to address the issue.
Well-articulated and very true!
Originally posted by @Michael Heisterkamp:Originally posted by @Steve Morris:
"There are legitimate gripes about wholesalers, however most of them hinge on working with inexperienced people."
And lack of disclosure and expecting a fee for arranging the sale of real estate without having a RE license.
They aren't brokering the sale of real estate. That is a very specific thing, putting a property under contract is taking an ownership position in the property at X price and you then sell your ownership position to another person. That is not brokering, the transaction has zero overlap in process to a brokerage agreement even if the outcome is similar.
I would put a lack of education just as much on investors who do not understand the role wholesalers play in the market. There is a reason why some investors scale rapidly while others seem to spend inordinate amouts of time and energy for a tiny fraction of the deal flow in their market.
Fascinating!
I'm a total newbie at RE and I have tried my hand at comping properties from a wholesaler's perspective and I am so paranoid about not getting the rehab number correct that I've been building in a lot of room for those costs. I wish there was a straightforward resource where I could get a completely accurate number that didn't come from my brain.
Finding the good properties has been extremely easy but I am very intimidated by the comps and ARV part of the process.
Originally posted by @Kris L.:@Kalim Kalla
I don't hate them. I would prefer they not try to tell me that a $10k margin on a flip is a good deal, when I know they are at least 10k over on their purported ARV, while shorting the rehab cost another $10k.
- Investor 路 Sugar Land, TX 路 Member since 2012 路 554 posts 路 232 votes5y
Originally posted by @T M.:
Thannk you for not saying "all" wholesalers. I'm in Real Estate courses now trying to get my agent's and appraiser's licenses. So far, I've heard a ton of bad case studies involving shady agents but I have not thrown the whole industry away based on the large number of shady agents out there. I feel that when wholesaling is spoken of, the majority of the time, it's in a negative context. I appreciate your voice of reason and balance. Just the facts.
Originally posted by @Chris Bounds:Over time more states will start requiring a license "wholesale".
When you boil it down, most wholesalers are engaging in brokerage. They operate purely with the intent to assign their interest in the contract to another buyer AND do not disclose that to the seller.Many wholesalers do not have the means (or desire) to close on the properties they are contracting. That in itself can be a legal issue in many states.
Wholesaling is not bad (IMO). It's the shady individuals and operations behind the strategy that causes harm to the public and will prompt regulators to address the issue.
Bad actors that ruin it for everyone else. Oklahoma recently passed HB 1148 requiring wholesalers to get a license.
Good luck with your license and real estate business. IMO a license can only benefit a person looking to make real estate a long term profession. Feel free to reach out.
Not providing the property address until you sign some form. Shows they a bush league and don鈥檛 trust their original contract with the seller but expect whatever they want you to sign will prevent you from stealing the deal.
- 5yJay HinrichsBusiness MemberReal Estate Consultant 路 Summerlin, NV 路 Member since 2014 路 45k+ posts 路 66k+ votes
Originally posted by @Chris Bounds:
Originally posted by @T M.:
Thannk you for not saying "all" wholesalers. I'm in Real Estate courses now trying to get my agent's and appraiser's licenses. So far, I've heard a ton of bad case studies involving shady agents but I have not thrown the whole industry away based on the large number of shady agents out there. I feel that when wholesaling is spoken of, the majority of the time, it's in a negative context. I appreciate your voice of reason and balance. Just the facts.
Originally posted by @Chris Bounds:Over time more states will start requiring a license "wholesale".
When you boil it down, most wholesalers are engaging in brokerage. They operate purely with the intent to assign their interest in the contract to another buyer AND do not disclose that to the seller.Many wholesalers do not have the means (or desire) to close on the properties they are contracting. That in itself can be a legal issue in many states.
Wholesaling is not bad (IMO). It's the shady individuals and operations behind the strategy that causes harm to the public and will prompt regulators to address the issue.
Bad actors that ruin it for everyone else. Oklahoma recently passed HB 1148 requiring wholesalers to get a license.
Good luck with your license and real estate business. IMO a license can only benefit a person looking to make real estate a long term profession. Feel free to reach out.
did not read the law but this seems to be catching on.. IL did the same thing.. Texas as you know has very specific rules one must follow but its allowed under those rules.
IN Oregon if your turned in marketing a contract or property you dont own your going to get a love letter and investigated and a cease and desist..
Every state the laws are clear on this.. its just an enforcement issue .. some states could give a rip.. and some markets wholesaling absolutely dominates the low value assets changing hands..
I generally wont deal with a wholesaler personally .. but i have used them to sell ghetto dogs for me.. Although I have now found some auction services on the east coast that do a pretty great job all legally and get higher prices than any wholesaler trying to sang deals.
The difference is the properties are exposed to the open market and your getting what a willing buy and willing seller will pay IE ..
the main issue when the wholesalers call me is they could give a rip about me and my situation other than the BS talk you see on BP.
I can have a 100k property and they will ask what will you take.. I will say 25k.. then they say OK let me get back to you.. then they try to low ball from there.. It just is what it is with these people.. its real estate Narcissism at its finest.. its all about them..
Now from a lenders perspective.. I see a ton of wholesalers on my huds.. but I am just providing the capital and not getting into the deal. Although I know other HML that will refuse to fund a deal if the profit is to high to the wholesaler.. and I have done the same..
wholesaler rips a 100k profit and then brags about it.. some seller just got royally screwed LOL who is right ??
- 5yTheresa HarrisPro MemberMember since 2019 路 15k+ posts 路 11k+ votes
The fact that they are pretending to buy someone's house only to sell it to someone else and make a small amount of money in the process. They buy it at a discount and the home owner could have got a much better price listing it with a realtor. to me that is predatory.
- Real Estate Broker 路 Coppell, TX 路 Member since 2011 路 5k+ posts 路 4k+ votes5y
Ones that can't close if they can't find a buyer. If the seller doesn't understand that 100% or it was never disclosed to the seller, then the people doing that are chumps and will ruin it for everyone.
- Flipper/Rehabber 路 East Coast, Beast Coast 路 Member since 2021 路 37 posts 路 15 votes5y
No one works harder on or at finding deals than wholesalers does ? As well as the investment behind the ones who scale more. Comments like "they lie to sellers" are kind of crazy tp say, coming from an agent.. when agents lie to sellers knowing their properties are worth exactly what the wholesalers are paying for them. Yet they tell sellers they can get top dollar for their homes in its current condition, hence ( A lie ) . Or when someone puts an offer in a below market deal, and because the Agents does not like the offer, they lie and say the seller rejected the offer. Or when an agent creates a bidding war trying to drive up the cost of the home , Only to benefit on a higher commission. Or when they pocket deals for their own benefit, dragging their feet to list because they have their own buyer ( themselves or friends or cash buyers) through another party. Look .. it is known facts, that agents JV with wholesalers. Many agents, are wholesaling themselves. A lot of agents and brokers alike with portfolios, did not buy any of their deals at market value. I would rather you just say...you hate the fact that most wholesalers did not take a RE course and they are out there making more money than you. I can care less what the next guy does...too much money out there to be worried about that. Put in the work and find the deals.
- Investor 路 Corpus Christi, TX 路 Member since 2012 路 2k+ posts 路 1k+ votes5y
They don't bother me at all. I get texts, emails and calls all the time and I just block them. In 21 years, I've only had one assignment deal with numbers that made sense. It was from a guy I knew well. Time is my most valuable asset and I won't waste it on people who want to "pick my brain" or assignors who don't know contracts, property values or how to estimate repairs. I would rather sit on the beach with a cheap cigar and cold beer than waste my time with fictional "great deals" delivered from those who don't yet know how to spell "real estate."
Originally posted by @Chris Bounds:
Bad actors that ruin it for everyone else. Oklahoma recently passed HB 1148 requiring wholesalers to get a license.
Good luck with your license and real estate business. IMO a license can only benefit a person looking to make real estate a long term profession. Feel free to reach out.
Exactly right, bad actors. Anyhoo. I'll be sure to reach out- maybe we can do a deal together if you're interested in CA RE, etc. Take good care!
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