Help! My 1st wholesale deal under contract hasn't sold.

38 Replies

@Joan Soto All of the above are great advice! If I may add my 2 cents from an investor perspective who looks at wholesale deals regularly.

1) I absolutely hate the "non-refundable deposit" rule from wholesalers. There's just so many possible hidden surprise in a real estate transaction, so  for you to have this rule, you must be darn sure that this property will close with absolutely no hidden surprise from your side such as clean title. As a buyer who enter into contract with you, I have no recourse to get my money back if something should go wrong on your side and we can't close.

2) Your comps will be double and triple check by me as well as a real estate agent/broker with access to MLS before I make an offer. Reputable wholesalers will err on the conservative comp number. This is one of the quickest ways for emails from wholesalers who tend to be liberal with their comps to go to my junk email folder or I just unsubscribe from their mailing list.

3) If you're trying to assign the contract and do not have ownership rights to the property. I will want to look at the contract you're assigning to make sure I know what I'm buying because you're selling a contract not a property. If you have taken the property in your name or you will be doing a double closing then you are selling the property so I don't need to look at the contract you have with seller. I don't care how much money you make off the property as long as the numbers work for me. 

4) Hard-money or cash only rule. It cost me more money to obtain hard-money/private money financing versus conventional financing, so know that I will deduct this financing cost from my offer. 

It's my 2 cents, but due to the above reasons I've yet to buy anything from a wholesaler I've met because once I run my numbers, I might as well just buy a property using conventional lending and put 20% down. I have better COC return and more protection as a buyer from the law. Good wholesalers are hard to find cause they already have buyers knocking on their door begging for their deals.

@Jason V.

Misleading sellers, who are trying to sell what is probably one of the single most important assets they have, something that may carry strong memories, etc...and then walking away is terrible business. Regardless of state laws, screwing someone over like this is rotten! BP has hundreds if not thousands of people that promote this type of operation. 

@Joan Soto

From your post 
"I have found many people on BP who are successful, partly for being transparent with the sellers, and helping them figure out if this is the right option for them, and if not, being completely honest with them in letting them know their situation calls for other exits, maybe the seller is better off with a realtor. Maybe they're better off holding it for longer. Maybe they need a shortsale, or foreclose. But I also believe there are cases where, for different reasons, a wholesaler winds up being the best way out for a seller.:

What you are saying is what agents do. Why does everyone come up with the same reasoning, trying to validate these actions, when this is EXACTLY what an agent does? Sellers don't need "wholesalers". They can call any agency, list their property, and get wide exposure. No games. No promises to close and then walking away. How much do you pay for E&O? What is you get sued? Agents get sued all the time.

You refer to being transparent? Agents are.
You refer to helping sellers find an exit? Agents do.
Short sales? Agents list those?
And if an agent fails to operate honestly, ethically, and in the best interest of the seller, they can lose their license, be fined, etc. What does an unlicensed person have to lose? Nothing.

So, please tell me exactly WHAT an unlicensed person acting as a broker can bring to a seller? From your post "HELP"...haven't found a buyer? You certainly appear to be brokering real estate, appear to have mislead the owner, and now ask what to do. I can find dozens more posts just like yours asking what to do. 

Originally posted by @John Thedford :

@Jason V.

Misleading sellers, who are trying to sell what is probably one of the single most important assets they have, something that may carry strong memories, etc...and then walking away is terrible business. Regardless of state laws, screwing someone over like this is rotten! BP has hundreds if not thousands of people that promote this type of operation. 

 Agreed - but in my experience, both shady wholesalers and shady agents are equally capable of screwing people over. I understand that the licensing process is supposed to weed out the unethical people, and that it is possible to have a license revoked for ethics violations, but that's true of many professions where you still have some sketchy operators (i.e. contractors.) Almost as bad as the questionable behavior of both wholesalers and agents might be the level of ignorance. Seems to be the turnover rate in both these jobs is about the same. The ones that have been around for a while are a whole different story.

I've also met people who lost their homes to foreclosure while it sat on the MLS because an agent told them they could get it sold and closed in an unrealistic time. Or lost it during a 6-9 month short sale process, or had it tied up while waiting on a buyer with FDA financing. A good wholesaler (licensed agent or not) might have been able to get them out of that situation. At that point what they needed was someone who had cash buyers in their pocket, or the ability to buy it themselves.

Sometimes people have legitimate reasons for not wanting to list their property on the MLS (embarrassment, etc.) or need to get out of it quickly for other reasons. It's just as easy for them to get burned by an agent as a wholesaler in the latter scenario.

All that said: Yep - whole lotta shady wholesalers out there. I think mostly because it's the flavor of the day get rich quick deal. 'Make a Billion dollars without having a penny!' Blech. 

@John Thedford I appreciate your time. I hope we can all get along and I can continue to grow and learn without others making allegations and taking shots at me. I won't be a part of it. Thanks again for the advice, as well as the insults. Good day :)

@Joan Soto

Take the posts as you wish. I won't be the one to turn you in and no doubt DBPR won't be coming knocking at your door. I do feel quite strongly about people putting contracts on property with no intention of closing. Your post stating "help-1st wholesale deal under contract hasnt sold" invites people to post opinions.  How are readers to interpret YOUR post? We never see agents posting "help---listing hasn't sold". Operate legally or illegally. Operate honestly or dishonestly. There are a lot of scammers playing games and I don't give them the time of day when they approach me! You posted asking for "help" and then don't like the conversation! Close on the deal or use your escape clause to walk. Whatever any or us do reflects on our values and ethics.  I don't make promises I don't intend to keep. I don't sign contracts with no intention of closing. Others operate with a different mindset.

@Joan Soto

Welcome here to B/P. There is very little information you are providing here for anyone experienced to give you specific answers. Is this your first wholesale deal? Is it a true wholesale deal? How are you marketing and to whom. There are so many questions. I am in the land business and always know my numbers and what is true wholesale. Surround yourself with experienced real estate investors, go to your local meetups, I have lots of success there. You will find help on B/P need to be more specific when you are asking.

Good Luck Here

Here is another post from BP this morning:
"Hi BPers. I am new to the wholesaling game and am still trying to learn all I can. I live in NY so I have to deal directly with attorneys for closings vs title companies so I can't write a contract. My question is if I make an offer and it's accepted, what sorts of contingencies can I put in my purchase offer that can allow me to back out if needed an not lose any deposit/earnest money? My fear is that I may not be able to find a buyer but don't want to let the seller know that so I can back out gracefully."

One poster was kind enough to suggest long inspection periods. Does ANYONE see anything wrong with this? I politely call them scammer or frauds. 

@John Vo Thank you for your input. I understand it is crucial to know what each investor wants and looks for in a deal. I believe I get the best education in these real-world interactions, which is why I came to this forum and asked for help. Your input is invaluable to me.

@Joan Soto when you apply @Account Closed 's advice, remember something that almost all real estate investors forget.  When you start contacting people on this list, remember that they are people.  

My point is, don't get discouraged if you call 100 people on this list and basically their overall response is "great good for you that you have a deal"  I think a lot of investors miss this part that they are actually communicating with human beings and PS they don't know you.

You should approach these people with a very humble message.  "Hi, I am sorry I am reaching out like this but I saw that you were buying in the area.  I have a property that might be of interest to since you are in this area already. I'm investing in the area and it would be great to meet like minded people.  If you are interested in the property or just to meet up to talk about real estate that would be great."  humility.  Respect of people's time.  Don't go for the gross sale right away.  They don't know you.  They don't trust you yet.

If you approach it like this and meet people for coffee and have a human to human conversation you will basically be in the 1% of real estate investors out there.  And guess what... most likely they are not going to buy your deal...... ooooof that's reality.  But guess what, you just looked someone in the eye and connected with them.  Who knows could a cash investing in your area become a funder 8 months down the road that you keep in touch with? oooh.. I let the goods out. ;)

Meet for coffee. Real estate is about People. People looking to buy a house, people looking to rent, people looking to make money, people looking to build wealth for their future, people looking to find other people like them, people looking to drink a cup of coffee with someone that took the time to meet them and find out what makes them tick. 

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