Are you wholesalers asking too much?

Investor · Mesa, AZ · Member since 2013 · 25 posts · 6 votes

I'm seeing wholesalers here in AZ asking 80% ARV flat (no reduction for repairs). Even a light cleaning would take at least 1 month of holding + closing costs on both sides. Almost every "deal" that's hit my Inbox needed $45K to $60K in repairs. I've started asking myself, "Who's training these folks?!?!".

Anyone in the Phoenix area have similar experiences? What is everyone else seeing in your markets?

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Andrew Rodgers

Real Estate Agent · Phoenix, AZ · Member since 2023 · 14 posts · 9 votes

LIke @Will Barnard mentioned, a lot of wholesalers don't know how to property evaluate a rehab and are getting properties under contract way too high.

As a wholesaler myself, I really appreciate when a flipper spends the extra 5 minutes to build a relationship and educate me on why a deal does or doesn't work. It ends up being a win-win for both of us because now I can more accurately find deals that fit their buy box and for me I know I'll have a reliable buyer on my hands in the future to send deals to.

[Solicitation Removed by Moderators]

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Eliott Elias
Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
3y
It’s been a long time since I’ve seen a good deal from a wholesaler. Nothing unexpected.
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Brett Tvenge
Flipper/Rehabber · Phoenix, AZ · Member since 2018 · 269 posts · 152 votes
3y
Quote from @Michelle Masters:

I'm seeing wholesalers here in AZ asking 80% ARV flat (no reduction for repairs). Even a light cleaning would take at least 1 month of holding + closing costs on both sides. Almost every "deal" that's hit my Inbox needed $45K to $60K in repairs. I've started asking myself, "Who's training these folks?!?!".
Anyone in the Phoenix area have similar experiences? What is everyone else seeing in your markets?

Hate to say it but you might not have the right wholesalers in your pocket… we are still buying around 60% true market arv
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Brett Tvenge
Flipper/Rehabber · Phoenix, AZ · Member since 2018 · 269 posts · 152 votes
3y
Quote from @Michelle Masters:

I'm seeing wholesalers here in AZ asking 80% ARV flat (no reduction for repairs). Even a light cleaning would take at least 1 month of holding + closing costs on both sides. Almost every "deal" that's hit my Inbox needed $45K to $60K in repairs. I've started asking myself, "Who's training these folks?!?!".
Anyone in the Phoenix area have similar experiences? What is everyone else seeing in your markets?

We’ve done 8 flips ytd will do 20-25 by year end . Right now it’s split 50/50 buying on market and wholesalers
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Joe S.Pro Member
Investor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes
3y
Quote from @Michelle Masters:

I'm seeing wholesalers here in AZ asking 80% ARV flat (no reduction for repairs). Even a light cleaning would take at least 1 month of holding + closing costs on both sides. Almost every "deal" that's hit my Inbox needed $45K to $60K in repairs. I've started asking myself, "Who's training these folks?!?!".
Anyone in the Phoenix area have similar experiences? What is everyone else seeing in your markets?

I unsubscribed in the last couple of days from multiple whole selling list. Either they are not getting their contracts at the right price or they are trained to push the envelope at stripping all the equity before they let the next investor have the product. Their ARV is consistently higher than reality. I had an argument with one just yesterday.
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Linda Garcia
Member since 2022 · 14 posts · 11 votes
3y
Quote from @Brett Tvenge:

Quote from @Michelle Masters:

I'm seeing wholesalers here in AZ asking 80% ARV flat (no reduction for repairs). Even a light cleaning would take at least 1 month of holding + closing costs on both sides. Almost every "deal" that's hit my Inbox needed $45K to $60K in repairs. I've started asking myself, "Who's training these folks?!?!".

Anyone in the Phoenix area have similar experiences? What is everyone else seeing in your markets?

Hate to say it but you might not have the right wholesalers in your pocket… we are still buying around 60% true market arv

Do you mind messaging me your favorite wholesalers? I was having the same feeling as the OP but I chalked it up to inexperience. I really want to do another house but everything right now is making me weary.
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Will BarnardPro Member
Moderator
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
3y
This issue is not a one off occurrence, it is very common place. Many wholesalers just do not have the skills to properly evaluate rehab costs or exit values and many inflate the ARV to make the deal look better. Like with any industry, you have to weed out the wannabies and keep the small few that actually can provide real deals.
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Andrew Rodgers
Real Estate Agent · Phoenix, AZ · Member since 2023 · 14 posts · 9 votes
3y
LIke @Will Barnard mentioned, a lot of wholesalers don't know how to property evaluate a rehab and are getting properties under contract way too high.

As a wholesaler myself, I really appreciate when a flipper spends the extra 5 minutes to build a relationship and educate me on why a deal does or doesn't work. It ends up being a win-win for both of us because now I can more accurately find deals that fit their buy box and for me I know I'll have a reliable buyer on my hands in the future to send deals to.

[Solicitation Removed by Moderators]

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Rob BeemanPro Member
Specialist · Philadelphia, PA · Member since 2010 · 301 posts · 118 votes
3y
@Michelle Masters I agree with @Andrew Rodgers that if you can locate a wholesaler that you meld with, take the time to help them understand the costs involved on the deal that they do not see or understand (rehab costs, carry costs, interest costs, etc.). You can essentially train them to bring you what you want at the price that makes sense to you. In doing so they will get more aggressive on their price negotiations and if you do not buy it, when someone does, they will make more $'s However if they follow your lead and bring you the right deal at the right price, you better be ready to buy (keep up your end). Working with wholesalers can be like working with contractors, make each deal be a win-win and keep them busy and they become part of the team.
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Ron Hollingsworth
Investor · Phoenix, AZ · Member since 2017 · 108 posts · 30 votes
2y
Quote from @Brett Tvenge:

We’ve done 8 flips ytd will do 20-25 by year end . Right now it’s split 50/50 buying on market and wholesalers
Would love to collaborate with you on wholesalers here in the valley. I get probably 20 deals per day coming in but that's just it, they aren't deals. They are 80+% of ARV. Would love to hear about who you are using? Reach out
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Ron Hollingsworth
Investor · Phoenix, AZ · Member since 2017 · 108 posts · 30 votes
2y
Quote from @Michelle Masters:

I'm seeing wholesalers here in AZ asking 80% ARV flat (no reduction for repairs). Even a light cleaning would take at least 1 month of holding + closing costs on both sides. Almost every "deal" that's hit my Inbox needed $45K to $60K in repairs. I've started asking myself, "Who's training these folks?!?!".
Anyone in the Phoenix area have similar experiences? What is everyone else seeing in your markets?

yes, this has definitely been my experience. it's funny that I NEVER see a deal come to my email that is below 70% of ARV. Funny isn't it! I mean in reality, there would be deals that they secure that are 65%, 60% or less off of ARV. They just never make it to me and I get 20-30 a day. So they are either flipping them themselves or they are stripping a ton of equity out of the deal. Very frustrating to say the least.
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Jose JacobPro Member
Investor · 11040 · Member since 2019 · 188 posts · 111 votes
2y
Quote from @Michelle Masters:

I'm seeing wholesalers here in AZ asking 80% ARV flat (no reduction for repairs). Even a light cleaning would take at least 1 month of holding + closing costs on both sides. Almost every "deal" that's hit my Inbox needed $45K to $60K in repairs. I've started asking myself, "Who's training these folks?!?!".
Anyone in the Phoenix area have similar experiences? What is everyone else seeing in your markets?

Its not only where you are. Its all over the country. I get the same. Their ARV is way higher than mine. Doesn't make any sense. These so called wholesalers are putting some new investors out of business. Very sad,
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James McGovern
Flipper/Rehabber · Bloomfield CT · Member since 2020 · 1k+ posts · 409 votes
2y
Quote from @Michelle Masters:

I'm seeing wholesalers here in AZ asking 80% ARV flat (no reduction for repairs). Even a light cleaning would take at least 1 month of holding + closing costs on both sides. Almost every "deal" that's hit my Inbox needed $45K to $60K in repairs. I've started asking myself, "Who's training these folks?!?!".
seeing the same thing here in Connecticut.
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Kyle EbersoleBusiness Member
Real Estate Agent · Lancaster, PA · Member since 2022 · 78 posts · 75 votes
2y
I've seen some of this in the Central PA market as well. Some wholesalers do a very good job with finding good deals, but the majority don't! I have to sift through a good numbers of deals to find one that works, but normally can find enough to pick up 3-4 a month. If it was easy, everyone would do it!
2 Reply
Christina Baliva
New to Real Estate · AZ · Member since 2019 · 15 posts · 14 votes
2y
Quote from @Ron Hollingsworth:

Quote from @Brett Tvenge:

We’ve done 8 flips ytd will do 20-25 by year end . Right now it’s split 50/50 buying on market and wholesalers
Would love to collaborate with you on wholesalers here in the valley. I get probably 20 deals per day coming in but that's just it, they aren't deals. They are 80+% of ARV. Would love to hear about who you are using? Reach out

@Brett Tvenge - I second what Ron said. If you are willing to share your sources, please reach out. Thanks!
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Peter MckernanBusiness Member
Residential Real Estate Agent · Irvine, CA · Member since 2013 · 2k+ posts · 1k+ votes
2y
Quote from @Michelle Masters:

I'm seeing wholesalers here in AZ asking 80% ARV flat (no reduction for repairs). Even a light cleaning would take at least 1 month of holding + closing costs on both sides. Almost every "deal" that's hit my Inbox needed $45K to $60K in repairs. I've started asking myself, "Who's training these folks?!?!".
Anyone in the Phoenix area have similar experiences? What is everyone else seeing in your markets?

Standard wholesalers due to the margins and the price point the seller wants the wholesaler will push the ARV up and then give a lower amount of true repairs. (not all wholesalers are equal).
The thing to do is get the one to two that are good in the market after searching around a bit and go after those one to two on all deals.!
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Morgan Gutierrez
Wholesaler · Texas, USA · Member since 2022 · 139 posts · 40 votes
2y
We always appreciate when we get feedback about our deal whether it is if the ARV is elevated, the repairs are off, or if there is something specific about an area only a local knows; or even how we presented the deal.
We want our investors to see the profits, otherwise they wouldn't buy our deals - as y'all are mentioning here. Occasionally we have 80% deals, more for our buy and hold investors that have a longer term to make their money. But our goal is to have our purchase price at at least 70% - repairs. We understand you are taking on the risk and need to reap the most profit!
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Jacob Sherman
12 Penns Trail Suite 138 Newtown, PA 18940 · Member since 2023 · 1k+ posts · 319 votes
2y
Hey Michelle ! My name is Jacob with Lendbright and would love to answer any questions for you that you may have in the analysis of your project . When is a good time for us to connect and discuss ?
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Ron Hollingsworth
Investor · Phoenix, AZ · Member since 2017 · 108 posts · 30 votes
2y
Quote from @Morgan Gutierrez:

But our goal is to have our purchase price at at least 70% - repairs.
I don't understand why there are never deals at 50% or 60%. I know that they exist, because I market directly to homeowners and negotiate with them and I get those deals almost always. So, the wholesalers are stripping too much equity of these deals.
1 Reply
Nasikpo Divine
Wholesaler · FL TX, CA and NV · Member since 2024 · 5 posts · 1 vote
2y
Quote from @Ron Hollingsworth:

Quote from @Michelle Masters:

I'm seeing wholesalers here in AZ asking 80% ARV flat (no reduction for repairs). Even a light cleaning would take at least 1 month of holding + closing costs on both sides. Almost every "deal" that's hit my Inbox needed $45K to $60K in repairs. I've started asking myself, "Who's training these folks?!?!".
Anyone in the Phoenix area have similar experiences? What is everyone else seeing in your markets?

yes, this has definitely been my experience. it's funny that I NEVER see a deal come to my email that is below 70% of ARV. Funny isn't it! I mean in reality, there would be deals that they secure that are 65%, 60% or less off of ARV. They just never make it to me and I get 20-30 a day. So they are either flipping them themselves or they are stripping a ton of equity out of the deal. Very frustrating to say the least.
Do you mean 65% without subtracting repairs?
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Nasikpo Divine
Wholesaler · FL TX, CA and NV · Member since 2024 · 5 posts · 1 vote
2y
My formula is 70% ARV - rehab cost= Contract price
Isn't it competitive enough?
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Ron Hollingsworth
Investor · Phoenix, AZ · Member since 2017 · 108 posts · 30 votes
2y
Quote from @Nasikpo Divine:

My formula is 70% ARV - rehab cost= Contract price
Isn't it competitive enough?
No, you will never purchase a property through a Wholesaler using that formula. Not a chance in hell.
0 Reply
Morgan Gutierrez
Wholesaler · Texas, USA · Member since 2022 · 139 posts · 40 votes
2y
Quote from @Nasikpo Divine:

My formula is 70% ARV - rehab cost= Contract price
Isn't it competitive enough?

Many people are looking for them at 70%-repairs. If you are working with the right wholesaler, you should be able to get them at or close to that. As long as their ARV and repairs are estimated correctly. Usually that is around where we are assigning contracts at.
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V.G JasonPro Member
Investor · Member since 2022 · 3k+ posts · 3k+ votes
2y
Quote from @Michelle Masters:

I'm seeing wholesalers here in AZ asking 80% ARV flat (no reduction for repairs). Even a light cleaning would take at least 1 month of holding + closing costs on both sides. Almost every "deal" that's hit my Inbox needed $45K to $60K in repairs. I've started asking myself, "Who's training these folks?!?!".
Anyone in the Phoenix area have similar experiences? What is everyone else seeing in your markets?

Most, like 98%, are trash. They are trained like trash, too. One was so embarrassing in Dallas that he was arguing from the house I was questioning his price tag on(he was in that house), when I was literally next door to him at the house I bought off-market at 55% of the price of his. Yet this one was 10% bigger and technically more updated.

We did not even realize we were both in each of those houses at the same time. I randomly hear sort of an echo outside, and go outside only to realize he was there doing a walk thru. I think he thought I was lying all along and stunned to see me face to face. I questioned him in person, how could the value be so off?

Then there was one in Houston, the run down house was listed $415k when next door full turnkey an extra br and 200 sq ft listed $420k. How you getting to that 415k homie?
I've found 4 out of maybe 200 that are legit. And I use them almost exclusively, and they come to me first on a lot of stuff in various markets.

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Vincent DeRue
Member since 2023 · 1 post · 1 vote
2y
@Michelle Masters
Sounds par for the course. Do keep in mind the path a deal takes. Priorities:
1) Wholesales find deals for themselves and keep the best: BRRRR => Flip => Assigns => list on market
2) Expanding on the assigns: VIP clients => clients with existing relationships known to close and make decisions fast => the rest of the world.
If you belong in the category at the end of the chain for that wholesaler, the property has been passed on by everyone and is not a deal.
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Bruce Lynn
Real Estate Broker · Coppell, TX · Member since 2011 · 5k+ posts · 4k+ votes
2y
@Michelle Masters When I first started 25 years ago I think it was pretty standard wholesalers tried to make $3000-$5000 on a deal. Now it seems they want to make $40-$50,000 on a deal. I guess good for them if they can get it. What I have seen today is two projects come my way that were probably 100% of ARV and needed plenty of repairs. I don't call them deals, because they are not deals. This is just one reason why 70% or more of wholesale deals don't close. That's where wholesalers go to die. That is what gives wholesalers a bad name.
Those are not deals, they're leads. They've done all the heavy lifting for you. Just wait until they give it up, then go close it at the right price. Quit calling them wholesalers, and refer to them as free lead generators.
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