Should you work with wholesalers—or avoid them altogether?

[Korey Ralston]

I’ve been going back and forth on this and wanted to get some real-world input from people actually doing deals.

On one hand, wholesalers seem like a great way to get access to off-market deals without having to build a full marketing machine yourself. It feels like a faster way to get in the game, especially starting out.

On the other hand, I’ve heard a lot of mixed opinions—deals being marked up too much, numbers not penciling out, or just getting blasted on massive buyers lists with the same property.

For those of you who have experience:

1. Do you actively work with wholesalers, or do you prefer to source deals yourself?

2. If you do use them, how do you filter out the good ones from the ones just pushing bad deals?

3. Have you actually closed solid deals through wholesalers that met your criteria?

And if you’ve had good experiences, would you recommend any specific wholesalers or how to go about finding reliable ones in a market?

Trying to figure out if this is a path worth leaning into or something to be cautious with. Appreciate any insight

[Jay Hinrichs]

Quote from @Matthew Morrow:

Morning Korey,

There’s definitely good and bad in the wholesale space. As an investor and team lead, I’ve personally bought deals from wholesalers, sold wholesale deals ourselves, and worked with investors across multiple states. The key is understanding that not all wholesalers are operators. Some truly understand numbers, construction, exit strategy, and investor needs… others just blast anything with an address attached to it.

The best wholesalers I’ve worked with are the ones who are transparent, know their market, provide real numbers, and don’t try to force deals that don’t make sense. We’ve absolutely closed great off-market deals through wholesalers, but we underwrite every single one ourselves and never rely solely on their numbers. Starting out, wholesalers can absolutely help you get in the game faster and build deal flow without a giant marketing budget. Just don’t shut your brain off because someone says it’s a “deal.”

Biggest advice: build relationships with a few solid operators instead of chasing every email blast. Good wholesalers usually have repeat buyers for a reason. Happy to connect as well if you want to bounce around deal analysis or investment strategy ideas.

Other than many wholesale deals have hair on them so one has to be careful there.. But the ones who only accept CASH sales the buyer is taking on Title risks..  the reason is the title insurance company will only give you title insurance for the underlying contract so what does that mean in practice.

Purchase price from the owner is 100k  your price is 120k wholesaler is making 20k you only get title insurance on 100k  so now this hairy deal ends up with buggered title that got missed and the title insurer only pays you 100k you just lost 20k plus any money you put into rehab. 

And of course the wholesaler demands you use their title company. What do you do ? You tell the title company you will pay for extra title insurance so you protect at least your 20k for maybe 100.00 extra premium.. Many will balk and say it cant be done but that is not correct I have funded 100s of these in my JV partner deals for my clients and I insist on the extra coverage or we wont close with that company and we find one that will insure us.. Now one wholesaler just pitched a fit in Ohio and I went back and forth with his title company and they simply wont do it so we moved to one that will but we don't source from that wholesaler anymore and they are missing out on my client buying 7 to 10 properties a year from them.

But it only takes on title claim were you lose big dollars and you are like shoot how did that happen well that's how and very few know this and many title companies closing attorneys don't know this unless asked like I do.. SO CASH buyers beware wholesaler deals are prone to title claims over time.. Now for many who just do a deal a year or so many times this will never raise its ugly head and you wont know the difference.. But for a company like mine that is funding buying 10 plus deals a month for my JV clients we average a title claim a year.

For a smaller or starting investor who may get stuck in a title claim like this and lose thousands of dollars it could be a disaster for them depending on their financial strength not to mention the stress and usually they go lawyer up only to find out they still are not going to get paid more than the underlying contract price.