Wholesale to the 3rd, 4th, 5th Power!

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Wholesale to the 3rd, 4th, 5th Power!

Marty True
Rental Property Investor · Miami Beach, FL · Member since 2015 · 227 posts · 106 votes

As a "cash buyer" I am (or was) on many wholesalers' buyers lists. There is a fairly recent trend where real estate agents/brokers are getting on the "re-wholesale" bandwagon and basically adding on an additional $5k-$30k to the original wholesaler's contract+assignment price.

So a $100k property (which already includes the contracted wholesaler's fee) comes in on one list as $106k and then on another list as $114k and yet another list for $120k (or more). And because they are licensed real estate agents/brokers, they can legally advertise these off-market deals and basically put as much on top of the "connection" that they got it from, as they want.

This basically is making wholesalers worth a lot less when it comes to ranking where our deal flow comes from. If wholesalers are going to "get into bed" with so many other wholesalers and/or real estate agents and the property gets tagged with 2, 3 or 4 levels of "fees" then why waste time with wholesalers as a viable source of "good deals"?

I literally got a deal this morning, from a wholesaler, for $90k on a house. Then about 3 hours later, I got the same property emailed to me, by a real estate broker (that also wholesales) for $105k.

I'm sorry but as a licensed real estate agent/broker, unless you are somehow adding value to the deal, how are you putting a $15k fee on a deal that you will do absolutely nothing for??

I believe this is contributing heavily to why it is so hard to find good or great deals here in Florida and specifically in South Florida.

I'd love to hear everyone's thoughts and opinions on this...

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James Green
Wholesaler · Waldorf, MD · Member since 2015 · 459 posts · 245 votes
9y

@Marty True, I agree with @Pratik P. just simply ask if they are direct to the seller. I myself don't do daisy chains because as you've discovered you will find people daisy chaining properties and adding absolutely ridiculous fees on top of the original price, which no longer makes the property a wholesale deal. There are times that I do ask for a "finders/bird dog fee" if a buyer of mine buys a property that I've sent to them that I don't have under contract. I always get permission from the original wholesaler, this way it keeps the original price of the property.

@John Thedford you read Marty's post & could only focus in on those "unlicensed broker's" that steal all the equity, when it was plainly stated that it was the LICENSED BROKERS that were marking up deals they don't have under contract. You may be able to post properties to over 800 websites, but I can post properties to over 800 buyers that actually chose to opt-in to my buyer's list via my one & only lonely website. Plus if I wanted to I could post my deals on other sites such as Craigslist, Facebook, Zillow, etc....

I know you have a beef with wholesalers in FL & possibly wholesalers in general, but all of us aren't out there ripping off & lying to sellers.

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  • Josh Malenfant
    Real Estate Professional · Miami, FL · Member since 2016 · 58 posts · 12 votes
    9y

    @Marty True 

    Wholesalers really don't have deals to look at. The stuff you see is the garbage that everyone has left for you to take a loss on. I have sorted through listings every week, and do not find anything even remotely viable when you take into considerations most of the costs. I would try marketing, I have some leads for investors in the area. I just need your criteria, and I believe we could work together on getting some deal flow into your business. 

    Much of the wholesale stuff you can find on the MLS, realtor.com, zillow, etc. Nothing lucrative about wholesalers. I can literally search up the property and see it on every list out there, if nobody has bitten yet, it's because there's no deal. Miami is cut-throat to the max, you have to find these deals yourself.

    For South Florida, the deals will not be there. You have to have a strong network and change up your strategy. Being different keeps the deals coming in. If your like everyone else looking at the same list that pops in your inbox every monday morning, you will not get deals.  Contact me and will get you something to work on. 

    0Reply
  • Mike Snyder
    Seminole, FL · Member since 2017 · 86 posts · 39 votes
    9y

    @Adam Schooley

    @Marty True

    and others about multiple offers from wholesalers about the same property:

    From my green newbie perspective, isn't a little more like a start-up problem? Once you are going with multiple deals per month or week, wouldn't a VA be the one to filter out these things for you? My whole career has been in engineering and I've always said I can only accept/reject an idea that comes up. If I never hear about it I can't make any decision about it. If you are starting up in a business (like I am) then this type of thing would drive me mad but once really rolling, doesn't it make sense to give that job to a VA? Of course you have to find a reliable and trustworthy one but that's the same as finding reliable and trustworthy employees for your business. It seems like that's part of the game right? And if there are three deals sent on the same property, wouldn't you want to be sure to get the best one?

    On that note: Us newbies get tons of conflicting advise about how to approach wholesaling (bandit signs or not? bird-doggers or not? Blast buyers with deals or not?). There seems to be a good deal of "situational ethics" out there for wholesalers but, it's either right or it's not. I may be new to the game but I'm definitely not a spring chick; my morals are already set and some guru's advice does not change that just because they know more about operating in this space. I intend to work on building up a buyers which is selective about who I market to. And I would rather deal with a buyer who is also selective about who they want to buy from. 

    That said, I am deeply appreciative for the advice and discussions here. You guys are amazing!

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  • Mike Snyder
    Seminole, FL · Member since 2017 · 86 posts · 39 votes
    9y

    @Marty True

       blasted with thousands of offers because the listing agent made a $200k error in the asking price.

    Are there penalties for the agent making a mistake like this (aside from not getting a sale)? Yes people make mistakes, but when you are given privileges and allowed to operate at higher level than those who have not gone through any given training, certification, etc., then you should also be held to a higher standard. Not trying to blast the agent industry, but shouldn't higher authority should be accompanied by higher accountability?

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  • Marty True
    OP
    Rental Property Investor · Miami Beach, FL · Member since 2015 · 227 posts · 106 votes
    9y

    @Josh Malenfant been a couple months since I contacted you and gave you my criteria - still haven't seen anything come in from you. I agree with everything you wrote above. You sounded like you had deals outside of the so-called "wholesale" deals in South Florida - would love to hear back from you to see how your deals are different.

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  • Marty True
    OP
    Rental Property Investor · Miami Beach, FL · Member since 2015 · 227 posts · 106 votes
    9y

    @Mike Snyder there are a lot of tasks that I have a VA do in my businesses however, vetting real estate deals is definitely not one that I would give them. Having someone in another country, that is not in the real estate business, determine what are good or bad deals is not something I feel would be successful. Especially South Florida real estate investing. It has taken me 6 months to really get acclimated to the areas down here, since moving here back in December, so I would never give that task to a VA.

    To your second question - yes there are some things that agents can be reported for but unfortunately all that happens in cases like this are mere "hand slaps" so it's not worth the time/effort.

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    9y

    @Marty True  while I did not read this whole thread... Very Bill Gulley like.... if your having problems with daisy chains.. ( me personally if I get a hint of a daisy chain last time I ever interact with that person).

    There are no ethics in wholesaling and no rules... for me if I wanted a property and you think its being shopped by numerous people licensed or not..

    I would go direct to the owner.. and let them know your interested but that their property is being shopped by numerous people and let them know whats going on.. many won't know they will cancel their deals with who ever tied it up and you can simply buy direct.

    Or you send them an offer just say there is funny business going on with your property with too many middlemen if you tire of it here is my offer and I am the buyer period.. send proof of funds via either a copy of a cashiers check made out to them.. or bank account.. this works for me.

    Then my absolute favorite if I really want something.. I have my lower priced attorney simply write the seller a letter expressing my desire to buy the property..  this letter WILL get opened ( who would not open a letter from an attorney)... I have had people do this to me and I sold that way and I liked it so much I started using it myself..

    If the Seller has a legit listing with a listing agent then that agent is entitled to a commish paid by seller.

    I am quite active in Orlando and the biggest wholesalers ( licensed company) have closed their wholesale side as there just are not many deals anymore in that market.. not like it was 5 to 8 years ago.. last thing I would do is go into wholesaling .. tough road.

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  • John Thedford
    Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    9y

    To "wholesale" legally one MUST own the property and be on title or be a licensee. Those using purchase contracts to circumvent licensing are violating the law. Furthermore, their contracts are NOT enforceable. I would never have any qualms about approaching an owner that was being scammed and that signed a contract through fraud by inducement to purchase their property. 

    475.43:

    475.43 Presumptions.—In all criminal cases, contempt cases, and other cases filed pursuant to this chapter, if a party has sold, leased, or let real estate, the title to which was not in the party when it was offered for sale, lease, or letting, or such party has maintained an office bearing signs that real estate is for sale, lease, or rental thereat, or has advertised real estate for sale, lease, or rental, generally, or describing property, the title to which was not in such party at the time, it shall be a presumption that such party was acting or attempting to act as a real estate broker, and the burden of proof shall be upon him or her to show that he or she was not acting or attempting to act as a broker or sales associate. All contracts, options, or other devices not based upon a substantial consideration, or that are otherwise employed to permit an unlicensed person to sell, lease, or let real estate, the beneficial title to which has not, in good faith, passed to such party for a substantial consideration, are hereby declared void and ineffective in all cases, suits, or proceedings had or taken under this chapter; however, this section shall not apply to irrevocable gifts, to unconditional contracts to purchase, or to options based upon a substantial consideration actually paid and not subject to any agreements to return or right of return reserved.

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  • John Thedford
    Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    9y

    @Jay Hinrichs

    LOL "very Bill Gulley like"
    I love Bill. He never pulls punches:)...and is quite knowledgeable as you are. I consider you and Bill to be two of the most important contributors to BP and both of you have taught me a LOT!

    1Reply
  • Josh Malenfant
    Real Estate Professional · Miami, FL · Member since 2016 · 58 posts · 12 votes
    9y

    @Marty True i apologize for the time lapse. I actually am currently tied up in a flip along with retrieving my real estate license. The deal came with a 200k spread but required lots of leg work (liens, violations, 7 benficiaries on will). Pretty much has eaten up most of my time recently. I have not forgotten about you and look forward to working with you once all the ducks are aligned on my current project. 

    0Reply
  • William C.
    Real Estate Agent · Souderton, PA · Member since 2016 · 591 posts · 414 votes
    9y
    Respond to the email with the lowest price, no?
    1Reply
  • Rob Gillespie
    Specialist · Cleveland, OH · Member since 2011 · 1k+ posts · 852 votes
    9y

    You are singing my tune! I get so irritated with the daisy chain deals. 

    I have been in the middle of a lot of them, but too many cooks spoil the pot. 

    I like simple deals. I tell my wholesalers to keep it simple and bring it to me first to stop the chain.

    The worst is when you go on Craigslist and see a property you own offered out  for more than you want for it by someone that does not have a contract on it!

    Ok, so nothing constructive to ad, just wanted to complain! LOL

    1Reply
  • Shawn AckermanPro Member
    Real Estate Entrepreneur · Mid West, East Coast · Member since 2015 · 3k+ posts · 1k+ votes
    9y

    @Marty True If you've received the deal at $90K from the wholesaler why would you be concerned with what the agent/broker sends you?  If the wholesaler who has the property under contract directly with the seller sends you the deal, he/she will simply assign it to you at that price.  Now if the wholesaler assigned the contract to another party then that changes everything.  Not seeing this in my market but can see how this can convoluted things.  Best of luck to you.

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  • Marty True
    OP
    Rental Property Investor · Miami Beach, FL · Member since 2015 · 227 posts · 106 votes
    9y

    @Shawn Ackerman to clarify... I made the point of receiving deals from wholesalers (who have the property under contract) and then later started receiving those same deals from other wholesalers/agents, after multiple inflated prices, to demonstrate how I found that this "daisy-chaining" was happening. Obviously I would not opt to do business with one of the higher deals than what I had already gotten from the original wholesaler.

    My concern and point in posting this original post is to say that I don't always get the deals coming from the original wholesaler who has a deal under contract and it is not easy sometimes, to find out which wholesaler has it under contract. So these "re-wholesalers" are sending me deals that they do not have under contract but are "re-marketing" the deals to their own lists of buyers. If you read through this thread, you will see that many people concur that this is happening, throughout many markets in the US. I simply wanted to bring it to the power of the BP forums, to have the discussion about it and see if there's a way to stop it. It has pretty much caused me to stop using wholesalers at all, for deal sourcing. I have one wholesale company, that is doing things completely legit, that I will consider deals from...

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  • Shawn AckermanPro Member
    Real Estate Entrepreneur · Mid West, East Coast · Member since 2015 · 3k+ posts · 1k+ votes
    9y

    @Marty True Thanks for taking the time to explain what your position.  Also thanks for the clarification.  This thread I guess is directed to those who have done less than 10 deals as investors who are actively buying and have half a brain would know that this sort of thing occurs.  Perhaps you should invest your time in directly finding the deals on your own.  You know, working directly with the seller.  It's not difficult.  If you need mentoring to that effect We're here to assist you.

    1Reply
  • Marty True
    OP
    Rental Property Investor · Miami Beach, FL · Member since 2015 · 227 posts · 106 votes
    9y

    @Shawn Ackerman again, if you take time to read through the thread you would see that I do find deals on my own and I market plenty. This thread is not directed at anyone, it is to bring an issue to light and have an adult discussion about it, which for the most part has been the case. If all you bring to the thread is condescending remarks then that is a pretty poor way to market your "real estate investing consulting". These forums/posts are about having discussions about what is going on in real estate investing. And this issue is clearly happening across the country so if you can't contribute without insulting, then kindly refrain.

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  • Shawn AckermanPro Member
    Real Estate Entrepreneur · Mid West, East Coast · Member since 2015 · 3k+ posts · 1k+ votes
    9y

    @Marty True Great. Best of luck to you in your REI business.

    0Reply
  • Marty True
    OP
    Rental Property Investor · Miami Beach, FL · Member since 2015 · 227 posts · 106 votes
    9y

    Looks like this thread has struck a few nerves by those wholesalers and agents that are likely engaged in this "daisy-chain" strategy... Thanks to everyone that has contributed - both constructive and "otherwise". Feel free to keep it going and give your insight or experiences with this issue.

    3Reply
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