Rental Property Investor · Katy, TX · Member since 2016 · 52 posts · 44 votes
Anyone have a positive experience with NWA in Houston? I have been on their mailing list for a few weeks now and run well over two dozen comps on their listings and have found that the comps are SO far off as to be almost unethical. Granted, "buyer beware" and "due diligence" all that jazz, but they are so far off I am surprised they are able to continue doing business. Are there just so many unsavvy buyers working without good comps that are willing to take these things at face value? I recently filled out a survey they sent me and said all these things essentially, and the broker called me to "go over a few of these issues" with me. Which is a nice customer service gesture, but I can't imagine what he is going to say other than "we are in the house sales business and this is just marketing."
I mean, I get it; I have been an agent in Houston for 6 years or so. When you list a retail house, you are going to aim toward higher comps to push your listing price to wherever the market can handle it, (although I make damn sure my sellers are aware of the most accurate and TRUE comps that exist because the appraiser sure isn't going to care to pick the "better" ones) and when your a retail buyer's agent, you find the comps that support those lower prices you hope to negotiate down to. (with the assumption you are not competing with 6 other offers--obviously depends on the area and price point.)
But DANG. Am I missing some important piece of the puzzle here? Has ANYONE had a successful buy and hold or buy and flip from a NWA listing?
Multifamily Syndicator · Houston, TX · Member since 2016 · 1k+ posts · 2k+ votes
5y
These companies are making money on those who are unwilling or unable to do the exercise you did to find out the truev value of a property.
For those lazy investors, there is always a hefty price to pay either in the short or in the long term. It sucks, but this is the genius of marketing, unfortunately.
Real Estate Broker · Houston, TX · Member since 2009 · 6 posts · 4 votes
5y
Hi @Cortney Arenstein- I’m the regional manager and broker of New Western Houston. My main purpose for commenting here is to seek feedback.
Years ago, we decided to stop marketing numbers like ARV and repair amounts. This change was based on feedback from customers and the fact that so much of the ARV is determined by the rehab choices the investor makes. While our agents may have an opinion on rehab and potential ARV, it's our policy not to market those numbers because it is ultimately up to the investor to decide the extent of the rehab and the ARV they believe that rehab will unlock. Now we obviously still provide items like tax rolls and comps in our analysis packets. We provide those items for the consideration and convenience of our investors. While we provide comps, we always encourage the buyer to do their own due diligence, which I think is a pretty universal recommendation. From my experience, whether it's an agent CMA, BPO or full-blown appraisal, I rarely see the same comps used from one individual's analysis to the next on the same property.
So for feedback purposes, my question is, would you as a customer view it to be more appropriate if we didn’t provide comps in our packets? It’s been an on-going question so any feedback would be appreciated.
Real Estate Broker · Portland, OR · Member since 2019 · 4k+ posts · 2k+ votes
5y
So for feedback purposes, my question is, would you as a customer view it to be more appropriate if we didn’t provide comps in our packets?
For feedback purposes since you seem to have little credibility with buyers on this post, how about just describing the property as-is without any promise of future returns. Might want to also say you're willing to give up some of your slice if the buyer is serious.
Contractor · Cypress, TX · Member since 2017 · 38 posts · 4 votes
5y
@Steve Rozenberg
I’m sure that much time in the industry has provided you with great insight to the good vs bad. Being that my model at this time is strictly fix and flip I am looking for wholesalers who can bring me the type of properties I am looking for with good equity where I can actually make money after rehab and fixed costs.
I definitely have a very concrete criteria I present to any wholesaler I speak with - SFRs to rehab and sell with ARV under $350k (preferably under $300k). Prefer the NW side of town but am open to all areas. Cookie cutter residential neighborhoods only - no industrial or revitalizing areas. I understand my criteria may be in stark contrast to those of a rental investor, and so I understand that not every deal a wholesaler brings will be for me. It just seems that in the last 1-2 years the deals from wholesalers have gotten much thinner, and some are just ridiculous and near retail. This combined with all the ‘wholesalers' marketing the same deal at different prices just convolutes things further.
Maybe I’m asking the wrong question here and rather than asking who you can recommend maybe I should ask where you would recommend me to find serious wholesalers with the type of deals I am looking for.
Investor · Cypress, TX · Member since 2015 · 143 posts · 144 votes
5y
@Sandeep Majumder You will definitely have a hard time and very limited deals waiting on a wholesaler to bring you a flip deal in one of the hottest areas. There's no reason for them to sell it that cheap when buy/hold investors are paying much more. Even the iBuyers are paying 85%. You will definitely need to be doing your own marketing to find a nice flip deal. That's not to say one won't slip through that works for you, but there won't be many.
Contractor · Cypress, TX · Member since 2017 · 38 posts · 4 votes
5y
@Chris Hopper I know I definitely have things working against me as far as the buy and hold investors and iBuyers are concerned. The very few good deals I’ve seen come across lately have sold sight unseen within minutes of being blasted. I’m getting my marketing going and hoping to start getting my own deals now. I want to build a scalable, sustainable, full time business rather than the onesie twosie stuff I’ve been doing for the last few years, and getting my own deals is the only way I see to do that. I wouldn’t mind continuing to buy from wholesalers until those deals start coming in, though.
Rental Property Investor · Katy, TX · Member since 2016 · 52 posts · 44 votes
5y
@Wale Lawal
I definitely struck a nerve here! Lol.
It is crazy to me that there are ZERO regulations on wholesalers. Just like it’s crazy to me there are ZERO regulations on relocation companies (who regular cheat agents out of commissions they absolutely should NOT be entitled to) and crazy to me that getting your RE license has such a low barrier of entry (waaaaay too many terrible agents muddying the waters in my neck of the woods.)
My access to accurate comps saved me for sure. It scares me for the average investor though. It’s ALMOST a case for most investors holding a license so they can learn to run good comps. Almost. Or maybe an appraiser license even. Almost.
Finding those “good” wholesalers seems to be something everyone says to do but no one is willing to share their guy/gal and for obvious reasons. You don’t advertise where your gold mine is located in the Wild West. 😂
Rental Property Investor · Katy, TX · Member since 2016 · 52 posts · 44 votes
5y
@Nick Koren
Yeah actually. I think the ethical thing to do would be to NOT provide comps. And to make it clear that your asking price is negotiable so that all investors know they MUST get their own comps from a non-biased third party and that they are welcome to begin bidding at the ACTUAL market value of the property in question and not the intentionally massaged value provided by the wholesaler/seller’s rep.
This would help first time investors make better choices and avoid overpaying based on what is essentially false advertising. Just because you SAY “but do your own due diligence” doesn’t make it all OK that you over valued a property through creative comps.
But hey. I just asked a VERY simple question of the group. The response has been pretty intense and overwhelmingly negative. I actually figured that maybe I was missing something (positive) since typically a company doesn’t stay in business for very long if they are blatantly bad for their customer base. I expected a more balanced response myself. Color me slightly more surprised than I had anticipated.
Rental Property Investor · Katy, TX · Member since 2016 · 52 posts · 44 votes
5y
@Kevin Wood Hey Kevin I would love to bend your ear a bit. I did my own intense Sub market analysis and cross referenced zip codes with property prices and rental rates to come up with my top 3-5 zip codes for BRRRR. Mostly I'm curious if I got close to what the pros are getting! I'll shoot you a DM!
Investor · Cypress, TX · Member since 2015 · 143 posts · 144 votes
5y
@Cortney Arenstein To your comment about having a license, just because someone has a license doesn't mean they know how to accurately comp a property. There's also a couple other good sites outside of MLS that provide the same data and allow people to run comps. I have access to MLS and have checked my numbers against the other sites and they're pretty accurate --- as long as you know how to interpret the data (same as you need to with MLS).
I appreciate you taking the time to respond. As we have done in the past, we will continue to take customer feedback into account as we continue our efforts to provide the best product and service we can. If you would like to discuss any specific property and the comps we provided I’d welcome the opportunity to review it with you. If we made a mistake, I have no problem owning that. Now to elaborate more on this subject as a whole I will say this…
I don't know who pioneered the expectation that a wholesaler should provide an ARV and estimated rehab cost. We continue to challenge this expectation as it is impossible to forecast those numbers when the competence and experience of investors vary so widely. One new investor could be incapable of managing contractors and a budget, and the next will have a full-time crew along with a long list of resources they have compiled over time. And both deserve the same opportunity to compete when purchasing properties. ARV is also challenging if not impossible for a third-party to predict due to market changes, investor design choices, listing agent competence, photography, access, even just keeping the damn place clean for showings, etc. etc. etc. and on forever with countless micro-decisions that will affect the end result.
I often say that there are far more "opinions" in real estate than deals being done. And we find ourselves here at the epicenter of that statement. It's really easy and safe for someone to learn about real estate and share their new wisdom online. It's much riskier to apply it and be rewarded with real insight. I would suggest following some wholesalers' sold properties all the way through to when they are resold on MLS and see how off their comps are. We do this kind of work regularly to track the market, and the truth is far different than the assumptions from the majority of online commenters whose actual experience in our industry may never escape fantasy. There is a lot of this online activity and it's hard to gauge who actually has real experience sometimes.
I do think it's important for any business to welcome new entrants (in this case new investors). I will say that we do make this effort but “new” is a far more challenging and laborious proposition for us than the alternative. Everyone has to start somewhere, and we have grown rapidly over the last 12 years servicing new and experienced investors fairly. Last year we closed a deal every 20 minutes. Regardless of the many, many opinions, the reality is that a lot of investors are out there buying all of these, and many of them won’t be found on BP. We find that to be true with many of our repeat and high-volume buyers. I would respectfully request you to believe that a decade old, high-growth company of this scale may not have a deficient product or be “blatantly bad for their customer base.” In fact, I think you have your answer within your comment. How could we stay in business if that was the case? A common misconception we hear over and over again is that experienced investors pay less for properties or need to buy them deeper. The reality is that experienced investors can pay more. I’m aware how unbelievable that statement is for many. We price properties where we feel the MARKET is willing to pay and is reflective of our commitment to the seller. Most times we have to pay more to get the properties, if we aren’t competitive on our offers to the seller’s we wouldn’t have any properties to sell. I’m happy to elaborate for anyone who actually cares, as I think it is a point of frustration for newer investors in this current market and can manifest itself in other ways, sometimes in ways they may find to be embarrassing in the future when they reread their old BP posts. From this perspective I find it exceedingly difficult to repeatedly hear investors whose experience extends to 1 or 2 deals, provide overly confident guidance on market pricing.
I guess a message of positivity I really want to convey with this rare BP rant is that I would encourage new investors to build bridges with the resources in their industry, not burn them. I really don't see the point or value otherwise.
Realtor · Houston · Member since 2019 · 12 posts · 18 votes
5y
I'll tell you a story that should answer this question.
Last year I had a hot lead in Sugar Land that responded to one of my post cards. I visited the property immediately and made my cash offer. Seller informs me a couple days later after some back and forth that she went with another investor. I asked her how much the other investor offered, and it was $40,000 more than I offered! I was SHOCKED.
The next day I get the email blast from New Western and see that this property I went to visit was on their mailing list. They had the ARV $100,000 over what seemed reasonable to me. It was the most abysmal set comps I have had ever seen. They grabbed from a completely different section of the neighborhood that was on the golf course while this one wasn't. There were also plenty of comps on the same street that they purposefully ignored.
To my surprise, someone actually bought it. I set an alert on that property on the MLS because I wanted to see the outcome. The selling price was not even close to the ARV.
Be extremely careful dealing with New Western. They have some good deals time to time, but they are mostly successful at finding buyers, not deals
Investor · Cypress, TX · Member since 2015 · 143 posts · 144 votes
5y
@Zachary Khushf Spot on! They are notorious for using comps not in the same neighborhood. Unfortunately there's always new investors who don't know any better so they will continue to do so and prey on the newbies. They churn through employees as well. You can always spot the newbie to NW with their Facebook post " I sell 30-50 properties per month, reach out if you want in", or something to that effect. Quite comical.
Rental Property Investor · Katy, TX · Member since 2016 · 52 posts · 44 votes
5y
@Nick Koren While I am certainly a new investor, I am NOT a new agent and I have been providing detailed and accurate comps to SFH investors for almost 6 years now. I'm actually rather skilled in this area and have tracked my own success rate from the beginning. (I am kinda a data nerd) It is a matter of pride for me that I learned early to find excellent comps. I studied the process and learned from some of the best. While I agree there is no fool-proof way to determine rehab costs or perfectly accurate ARV, I can say with confidence that (for example) a fully rehabbed 3/2/2 with 1200 sf is invariably comparable to the fully rehabbed 3/2/2/1200sf house in the same neighborhood and NOT with the 4/2.5/2/1750sf house.
And while the ABSENCE of that nearly identical 3/2/2/1200sf house as a comp can mean that you have to extrapolate from the available 4/2.5/2/1750sf house with the whole plus/minus song and dance that appraisers often need to do, that is NOT what I saw in the proffered comps for the NW properties.
When I say that the COMPS were unethically selected, I do not mean they were selected in such a way as to be debatable. I mean I have seen very clear, directly and inarguably comparable properties sold within 6 months of the subject property left off the list of comps, while larger properties whose square footage and bedroom count pushed the value far beyond what the subject property could ever manage to attain (without adding square footage!) were included.
I truly wish I had saved all my own analyses so I could show you what I saw. I'm not trying to be mean spirited here.
I came to BP looking for real experiences from a community I have come to trust. I certainly got far more feedback than I expected and far more vitriol than I guessed could be out there. I got many long time investors weighing in and while they were certainly more diplomatic than some of the others (the ones who seems to be a bit newer and clearly frustrated) the overall consensus remains.
I certainly did not mean to "burn any bridges" with anyone here. And personally I think your responses have shown real class. And as you said, there is something working to keep your company afloat. Just because I (and several other people here) can't fathom the business model that makes this work doesn't mean it doesn't work for ANYONE, right? Right.
I maintain that perhaps NOT providing comps at all would be the most ethical path forward. The seller's agent does not provide comps to the buyer on the retail market (without the buyer's agent reviewing them for accuracy.) That would be silly and a conflict of interest. The NW asking price is sufficient to determine NW's opinion of the potential value of the ARV comps (safe to assume it is north of the asking price at least a little). And at least the newer investors who do not have the MLS access to analyze dozens of offerings for a few weeks for the sake of checking trends would be forced to do GENUINE due diligence (and not just Zillow and guessing).
But hey. This has long since become a conversation that belongs to the entire community. I saw a lot of respectful and thoughtful responses--more of those than the frustrated angry ones. So barring a direct question posed to me from someone here (you or others) I will leave this wildfire I accidentally sparked with my unwitting question for the posterity of the collective.
New Western, Fairtrade, and Networth Realty are all the same. It's for first time investor who has no idea what they're doing. They take advantage of those young investors. Not only do they give bad comps, but they also charge you to double close, admin fees, etc. They upsell by 5% or more on these deals. So over these guy in my market. They have no idea what they are doing.
I largely agree but disagree in that they do know exactly what they are doing.
They double close to hide their profits from the investor while increasing the investor's costs by having him pay for both closings.
I've looked at many many of their offerings, but all were to highly priced for me. I don't want to spend $200k to make $10k. I stayed on their list for about 3 or 4 years thinking surely 1 good flip would come around. No. I had about 6 different young agents handle me and all of them quit due to being underpaid at a dead-end. The turnover is horrendous for good reason.
Ironically, I have sold them 2 houses in the last couple of years which they quickly sold to investors! So there are plenty of investors willing to pay high prices and they have that profitable list of them, which is why they have a good business.
Either the investors buying these are much more talented than me or much less talented. I honestly don't know which. I'm serious here. I do know I've made a lot of money flipping without buying from them.
They are making so much money that they MUST combat posts like these with "mile-long" explanations.
Real Estate Broker/Owner & Property Manager · Sugar Land, TX · Member since 2013 · 660 posts · 459 votes
5y
@Cortney Arenstein You really sparked big fire out by calling out NWA. I am surprised you got reply from NWA guy itself. As Investor myself and Investor mentor, I work with wholesalers in our Houston Market all the time. I worked with NWA for last few years now. To be frank with you, NOT A GOOD EXPERIENCE AT ALL. We have closed few properties but as you said bloated ARV and double closing kills your client. That's why I always stayed away from them. Now they want $7500 EM to even make an offer. It started out $3k few years ago and now to $7.5k which was surprising to me. I am still in their list to get deals but I usually glance at it and move on. Just do it to keep myself where are deals coming and so forth.
Anyway, I know you heard from my local houston investors. You are doing the right think for you and your client by checking your comps yourself and making the decision. That's the way to go whether it's NWA or other wholesalers.
You also came to BP network which is another source that I always depend on too..
It is crazy to me that there are ZERO regulations on wholesalers. Just like it’s crazy to me there are ZERO regulations on relocation companies (who regular cheat agents out of commissions they absolutely should NOT be entitled to) and crazy to me that getting your RE license has such a low barrier of entry (waaaaay too many terrible agents muddying the waters in my neck of the woods.)
My access to accurate comps saved me for sure. It scares me for the average investor though. It’s ALMOST a case for most investors holding a license so they can learn to run good comps. Almost. Or maybe an appraiser license even. Almost.
Finding those “good” wholesalers seems to be something everyone says to do but no one is willing to share their guy/gal and for obvious reasons. You don’t advertise where your gold mine is located in the Wild West. 😂
Very funny but true.
I have yet to find a rockstar wholesaler and that is why I am not recommending any. I'm a strong proponent of "Do Your Own Due Diligence"
There are a couple of websites for a non-license holder to run comps (CMA) though, PropStream and BatchLead.io are the top 2 I have used before.
It's getting cold already here in Spring, let me go back under my duvet
