My $52,996.25 wholesale deal complete!

Adrian Luckie

Lanham, MD · Member since 2015 · 18 posts · 2 votes

10y

wow that is a nice wholesale deal, I know a few people in the DC area that was able to pull a huge profit like that from one deal, in most cases its when the ARV is 500K or more which leave you with a higher spread.

Nnabuenyi Anigbogu

Chicago, IL · Member since 2015 · 298 posts · 261 votes

10y

You took a big risk and it paid off. Congratulations. That was some hard work and good due diligence.

@James Wise I agree with you on the fact that the owners could have fixed it up or even listed it without fixing it up and got a higher price. However the fact that they could not even pay the 5K to stop the tax sale tells me that they could not afford to list and wait for a buyer. If they didnt do anything they would have lost the house immediately. The OP was contacted by them and paid 5K of his own funds to stop the sale and in the process risked his money (no guarantee that the sellers would go through the deal). He then spent attorney fees on getting the entire probate aspect done. After that he placed it under contract for what the sellers wanted.

I personally do not see how he took advantage of the sellers. With an 800K arv, 50K is nothing. that is similar to a realtors commission.

4 Reply

Rob Rice

Wholesaler · Douglasville, GA · Member since 2014 · 72 posts · 63 votes

10y

Way to go Fitz...

That is awesome.

I just looked at your number and realize that you are on my buyers list...lol..

Guess what...

I have a deal for you to use that 50K on..LOL...

Way to go...

I'll request a connection...

Talk to you soon

Rob.

Podcast Guest on Show #92

Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes

10y

@James Wise If the sellers had come to you, hoping to list and sell before an upcoming tax sale....let's say 5 days before the tax sale....what would you have done? Would you pony up money to redeem a property from tax sale that the sellers don't have title to, subject to a probate action that was not yet complete? Would you have loaned the sellers money, hoping to get paid back after the probate was complete. Would you have brought the deal to one of your investor buyers? And if you did, do you not think they would want a huge discount for the risk of fronting money on a property that they don't have title to and filled with people and stuff with no place to go?

It's easy to criticize the profit on deals with large spreads. Not so easy to actually buy properties without clear title, a pending tax sale, and from sellers without a plan and a houseful of stuff. Your years of experience as a real estate professional and getting the best price for sellers is of no use to sellers who are about to lose their property and can't find their way out of a paper bag.

You're a smart guy with lots of experience. What would you have done? Be specific. :)

18 Reply

Brandon TurnerPro Member

Investor · Maui, HI · Member since 2009 · 13k+ posts · 3k+ votes

10y

Yeah, I also have trouble seeing how "being regulated" would have made this more or less legit. Like... if Fitz was an agent and a house flipper, and bought this house instead of wholesaling it... would that have made it more ethical @James Wise ? I'm not picking on you, just wondering your thoughts! :) Because it seems you are saying that a person buying a deal MUST give the seller the market price for a property. But that's ridiculous, isn't it? Or is that only for licensed people? So agents can't look for good deals?

I totally get the argument that wholesaler may be breaking the law, especially in Ohio, but I don't understand the "ethical" argument. Thoughts?

John Hixon

Investor · The Colony, TX · Member since 2013 · 283 posts · 205 votes

10y

@Bill Gulley I would like to hear your opinion on this topic.

Jerry PuckettPro Member

Wholesaler · Fort Worth, TX · Member since 2010 · 1k+ posts · 1k+ votes

10y

Originally posted by @Gary Pallini:

Thanks for clarifying. A suggestion....in the future, put more of these details in your post. If you don't, it will mislead the quality people here, AND (more importantly) encourage those that are looking for that "get rich quick" solution to think they can overly or overtly prey on distressed individuals.

Completely disagree.

In my opinion, "Quality" people do not jump to conclusions before dumping out uninformed negativity. Quality people are not easily misled because they ask questions and do not assume they have all of the answers.
There was plenty enough detail in the original post to make it clear that this was not a get rich quick scheme. In fact, those who would be drawn to such would, I think look at this and say "wow, that was a pain in the butt" @Fitzgerald Hall jumped through many hoops....many more than your average Joe Pro Agent would, and certainly more than the get rich quick guys who rarely if ever put their own money into a deal
Lastly, I see nothing at all predatory here for anyone to latch onto. Only a couple of stray remarks from some uniformed individuals who have contributed exactly NOTHING to this post or to the community.

This is a real estate success story forum post. Haters are going to hate. @K Marie P. summed it up nicely I think.

17 Reply

Devin Morgan

Baltimore, MD · Member since 2014 · 91 posts · 49 votes

10y

Impressive!

Congrats!

Christian CarsonPro Member

Cleveland, OH · Member since 2011 · 400 posts · 223 votes

10y

Paying a $5,000 tax bill is a little different than our standard joker wholesaler who puts a house under contract with nothing down and comes back 30 days later unable to find a buyer. The question is whether the original poster did enough to qualify as a principal in the transaction.

Raign Y.

Investor · Toronto, Ontario · Member since 2015 · 1 post · 0 votes

10y

good job! thanks for sharing! I think I would have done the deal then not get another one like this again. But in real estate, one never knows what can happen. One needs to be a constant problem solver. Like any other business, if you beat yourself up with 'why did this have to happen to me', it doesn't go far.

My 1st house brought me headaches after headaches, it turned me off single family homes. I have paused since then, stepping back for the leap.

James Green

Wholesaler · Waldorf, MD · Member since 2015 · 459 posts · 245 votes

10y

@James Wise are you serious? Some realtors/brokers won't take the time or have the patience to work with some sellers. Are you willing to list/market/represent/sell $25k houses that need work? For 3% commission?! What about a hoarder house, that no retail buyer wants & that a savvy investor is not willing to pay the offer price that is listed on the MLS.

I'm involved in a deal where the owner of a multi is going to foreclosure in less than 2 weeks. The property went under contract this week and will have mutliple offers on it by this weekend. Can you handle the sale of that, .....or would you tell the seller "it's kind of to late, you should of contacted me months ago and we would of got it sold."

But in this case, the owner keeps the credit & get's money in their pocket, and a troubled asset out from under them.

Some sellers HAVE TO SELL their property or lose it & they don't have months to have it listed & have people tramp through their house,..to not make an offer.

Like a previous poster said, what Licensed Real Estate Professional would of dug into their own pocket to pay for someone else's problem, jumped through other hoops, to make 3-6% commission?

Brian Holt

Mifflinburg, PA · Member since 2015 · 65 posts · 12 votes

10y

@Fitzgerald Hall, sounds like a win win to me. Congrats!

Modesta Lopez

Investor · Reading, PA · Member since 2015 · 27 posts · 2 votes

10y

Congrats! Thank you for the detailed experience.

Bill Gulley

Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes

10y

LOL, I don't have time to write a book on this, LOL

Is there any ethical obligation to tell a seller if they are thinking the place is only worth what the paid in 1997? Or, if they are grossly misinformed about the value?

However, we are also talking about a price about 20-25% below market it seems, don't rehab types try to get at least 30%?

I'd say it's because of the price range is how 50K was the profit, maybe not any fast talking, marketing mad man spreading misconceptions.

I really don't see that much risk was taken, taxes can be redeemed, property brought current, so there's no real knight in shinning armor here, but he thought he was taking more risks than actually assumed it looks like to me.

I'm guessing the sale contract was assigned, not really the right way if you're in the deal as a wholesaler, it worked this time and I suppose the seller doesn't care about how his "wholesaler" was acting legally or not, it closed.

Was there too much equity taken for the work performed, I'd say yes, all of the drama was irrelevant, the going above the call of duty here was to get a bigger paycheck, how much of that was actually earned, well, the value of the work may be overstated due to lack of experience, knees knocking when they didn't need to be.

And, I imagine the attorney made it happen, he had to be paid too, so that comes out of that 22/25% I'm guessing (I haven't read all the posts that carefully, I read a long post at the beginning and none of it pertained to the financial transaction, just drama).

And yes, it's is silly to think we must pay the highest price, the ethical side comes in when you steal to much equity, taking more than the true value of comparable work. Most new and even seasoned real estate types don't understand the concept of business vs. ripping someone off.

I can also see this as a distressed sale situation, that brings a lower price and properly marketed, the price increased. Then comes the ethical side again, do you inform a distressed seller of a more realistic price range that still allows a reasonable profit for the services actually performed? Yes, I would have, but then I wouldn't have had all the drama either and I don't charge for drama......usually. Of course I assist, that's part of the business, it's not a smorgasbord of services priced separately!

The ethical side is fair pricing for services rendered, it is covered under the Fair Trades Act as amended, gouging is usually associated with jacking up gas prices or selling generators at 4 times their value after a hurricane, but it also applies to general business conduct. With services, quality of service, experience, expertise, knowledge and ability are all factors. A brain surgeon makes more the a general practitioner, an experienced real estate broker is worth a lot more than a newbie wholesaler, if the general practitioner charges to treat a cold what the brain surgeon get an hour, that's out of line.

Understand too, most starting out in real estate out of high school with a few party years behind them have never been in business, much less management, they have never been exposed to business ethics (which has nothing to do with sleeping well or feeling you did right or your religious views). It's even worse when other investors lack the understanding of ethical practices and pass that along to the newbies, I got a eck of a deal, bought a property way under market value! LOL :)

Ndy Onyido

Toronto, Ontario · Member since 2014 · 615 posts · 172 votes

10y

Congratulations!

Fitzgerald Hall

OP

Wholesaler · Atlanta, GA · Member since 2012 · 243 posts · 103 votes

10y

@Tony SanFilippo I chose to do a double closing. It helps me gain experience point for my lender.

Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes

10y

Originally posted by @Christian Carson:

Paying a $5,000 tax bill is a little different than our standard joker wholesaler who puts a house under contract with nothing down and comes back 30 days later unable to find a buyer. The question is whether the original poster did enough to qualify as a principal in the transaction.

You know, that is a really good question. This thread isn't about the details of the agreement between the OP and the sellers/heirs, but it's really an important factor in estate deals. When it's been me I got assignments from the heirs. I don't front money for the lawyer or the taxes or deal with code compliance without owning the estate. I once fronted $25K to the bene and a retainer to her attorney 6 months before I was able to resell to my investor buyers. But I had an assignment agreement that made me the new sole bene. Acting as a wholesaler in an estate deal where title hasn't transferred is risky.

Jay Johnson

Pelham, NC · Member since 2015 · 160 posts · 54 votes

10y

Originally posted by @Fitzgerald Hall:

Hello all,

I finally have my own success story.

I guess this year alone has been a bit of a success story but Ill spare you and only discuss my most recent success, a 50k wholesale deal.

I have been working on this deal for about 3 months (mainly waiting on probate to finish). My attorney, who is awesome, had to find 12 people to sign off on the probate documents. We actually got this sone pretty quickly to my surprise, especially since none of them were receiving any of the proceeds form the sale.

Probate finally finished and my buyer was already prepared to close.

We ended up pushing the closing back 1 week because the current owners had not found a new home yet. Eventually I convinced the owners that it would be best to go ahead and close so that taxes wouldn't continue to eat away their profits.

Once they agreed, I tried to make the process a very smooth transition. I paid for professional packers to help pack the house, I paid for movers to transport the items to storage, and I even paid for 1 month of storage. Oh and not to mention $250 so that their disabled brother could live with a friend for the month until they found a new home.

I thought this was worth getting the deal done since they had no money and I was ready to get this deal done.

The day before closing, which is when the movers came to pick up the items of the house, the owner calls me at 6pm, several hours after the movers have left and delivered the stuff to storage, and says the movers didn't get everything so they were in the house trying to pack all of these big items in to a car smh.

I got really frustrated and decided to get off the phone and call my buyer, who I have a really solid relationship with. She said she would help with whatever I needed and immediately got a contractor out there to turn the gas off and unhook the gas line from the heater (one of the things the owner failed to mention she wanted until the last minute). Th contractor came the next morning on time and got it done quickly.

Now for the next problem. I decided the best way to handle all of the large items that were left in the house was to call another moving company. I decided to go to the property myself and place tape on all items that would need to be placed on the truck, at this point there was no room for mistakes.

Luckily for me, the week prior to this happening, I attended a commercial RE networking event and just so happened to meet the owner of a small moving company. I decided to call him at around 8pm. Surprisingly he answered and said he would be able to have a crew out to the house in the morning. This was really a life saver on such short notice.

Fast forward to the next day (closing day) everything is going as planned, but the rain is slowing traffic down which made the movers a bit late. No worries, still keeping a cool head. They finally arrived and got the items out of the house pretty quickly. This time I made sure that I checked the entire house before the truck was cleared to head to storage. The owner confirmed that everything that was tagged had been taken.

Sounds like its over right? Nope lol.

We get to the storage unit and when I opened the unit, it was backed very unprofessionally by the movers from the day before, it was a huge until and the movers did not use the space to its highest capacity.

The movers quickly let me know that rearranging was not in their job description. I agreed and ask them how much would they charge to rearrange the storage just enough to fit the new items in there. They answered $25/piece for the two of them. I replied "hows $50/piece" they said that will work and immediately got to work. They finished pretty quickly which I was happy about. The only thing I wasn't happy about was the fact that the guy tried to play me by asking for $75 a pice instead of $50. I immediately said no because 50 was more than fair. He agreed and that was the end of that.

Without boring you with details, we successfully closed on the deal and I got my largest wholesale check to date for $52,996.25.

Congratulations! I hope you have many more of these!

So, do investors on here look to buy property at retail, rehab and sell to lose money, or do they look to buy low, rehab (if not turnkey) sell high to make a profit (or rent)? Any cash buyer on here would have taken that deal if they knew that was a deal for that area. If there's no wholesaler involved and the cash buyer buys the same property at the same price or lower, does that mean the cash buyer hoodwinked the seller? Is the cash buyer the same scum (that's what it seems like some people want to say) as the wholesaler? It's still the same price. If it were a cash buyer, people in here would be praising them for finding a great deal. It's still the same price. It can't be that a cash buyer can buy at that price and it's a great deal, but if a wholesaler contracts for that price and sells the contract for whatever, it's misleading the seller. The seller still got the same price, and the only one loosing money on the deal is the cash buyer, but the buyer still sees a nice spread to be made, so, they're happy.

What I've heard from the public, before I ever took an interest in real estate, was how "how somebody bought a house for little to nothing, stealing the house from someone else". The key word is "bought" meaning cash buyer. Meaning those that complain about investors buying homes cheap look at the cash buyers as the scum for "stealing the house". If you ever bought a foreclosure or at the courthouse steps, how did that help the the person that lost the property? Did you go find the the person that lost the property to "help" them in any way since it's all about "helping". Did you go find them to let them know about their statutory redemption rights and that you would help them out with that so they wouldn't lose their property and no "mean" investors would profit off their pain, or did you run around feeling great about the deal you bought and telling your buddies about how you just got a "smoker" of a deal? How does buying a property from a distressed seller in a painful moment in their life, with cash, help them if you still got it real cheap and, more than likely, way cheaper than its current value even if it needs a lot of work? Does that help the seller more, or does it help you more? It's all about helping the seller right?

This is not to every cash buyer. This is for the ones who think that because they are cash buyers, they are not seen as scum. You are seen as the same scum, buy those that complain about investors stealing houses from people, as you see the wholesaler. You're in the same boat as the wholesaler in the publics eyes. The funny thing is, a lot of sellers don't know what a wholesaler is or what assigning contracts are, but they know about "greedy" investors, with cash, trying to buy their house for nothing.

2 Reply

James Wise

Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes

10y

Originally posted by @Brandon Turner:

Yeah, I also have trouble seeing how "being regulated" would have made this more or less legit. Like... if Fitz was an agent and a house flipper, and bought this house instead of wholesaling it... would that have made it more ethical @James Wise ? I'm not picking on you, just wondering your thoughts! :) Because it seems you are saying that a person buying a deal MUST give the seller the market price for a property. But that's ridiculous, isn't it? Or is that only for licensed people? So agents can't look for good deals?

I totally get the argument that wholesaler may be breaking the law, especially in Ohio, but I don't understand the "ethical" argument. Thoughts?

If a licensed agent went in and signed these sellers up to a net listing and ended up making a 50K profit they would risk loosing their license. Unethical equity stripping. That is my point. That is why those putting themselves out there in the business of doing deals should be licensed.

Forget about the ARV of 850k. Let's talk current value of the property. The current value was 224k (Likely more than 224k as Fitz did say he could have got more from his buyer but he is not greedy) 224k is 50k more than what they got. I see no logical reason why the seller would do this deal other than ignorance to the value of their property.

The deal was such a good deal for the end buyer that they snatched it up. Don't see why an agent would need to pay out of their pocket to sell the property. The actual buyer could have done all the probate work that Fitz did.

If Fitz clearly presented to them what the present day value of the property was I won't say another word. I just don't believe that the sellers understood they were leaving all of that money on the table.

2 Reply

Podcast Guest on Show #92

Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes

10y

Originally posted by @James Wise:

The deal was such a good deal for the end buyer that they snatched it up. Don't see why an agent would need to pay out of their pocket to sell the property. The actual buyer could have done all the probate work that Fitz did.

That didn't answer my question about how you would do it. If you, as an agent, had this listing and brought this deal to one of your buyers.....what kind of discount would your buyer require to front the tax sale money and go into contract with heirs that don't have title. The OP's buyer didn't save the property from tax sale, get the property through probate and move the heirs and their junk.

Your original thread was loud and clear that the OP ripped off the sellers. If your buyers would have paid the same amount as the OP, are they ripping off the sellers? Or is the fact that you are a licensee somehow make it okay for your buyer to pay the same amount as the wholesaler?

4 Reply

Brandon TurnerPro Member

Investor · Maui, HI · Member since 2009 · 13k+ posts · 3k+ votes

10y

Yeah - but , to quote you: "If Fitz clearly presented to them what the present day value of the property was I won't say another word."

In what other area of life is a buyer obligated to tell a seller that the thing they are selling is too cheap? Try that at the grocery store, the car dealership, etc. I just don't see it?

Yes, if he is legally representing the seller as a real estate agnet and has a fiduciary responsibility to get them the highest price possible, it's totally legit. But as a buyer? I don't see it. As a wholesaler? I don't think a wholesaler has a fiduciary responsibility to the seller either. Thoughts?

@James Wise

10 Reply

Matt Motil

Rental Property Investor · Cleveland, OH · Member since 2015 · 1k+ posts · 880 votes

10y

I was thinking the same thing as @Brandon Turner. It's not my job as a buyer to tell a seller what they're selling is worth. If they wanted to know that, then they should have hired professional help to assist them.

Same thing in construction when I work with other contractors or subcontractors. It's not my job to teach you how to run your business or stay in business or price your work. I have a PhD and I can hold class, but I have no duty to teach you something you should already know. If you want to go to battle with a stick instead of a sword, that's your choice unless you've hired me to inform you that your stick might not be the best choice.

Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes

10y

Originally posted by @Brandon Turner:

Yeah - but , to quote you: "If Fitz clearly presented to them what the present day value of the property was I won't say another word."

In what other area of life is a buyer obligated to tell a seller that the thing they are selling is too cheap? Try that at the grocery store, the car dealership, etc. I just don't see it?

Yes, if he is legally representing the seller as a real estate agnet and has a fiduciary responsibility to get them the highest price possible, it's totally legit. But as a buyer? I don't see it. As a wholesaler? I don't think a wholesaler has a fiduciary responsibility to the seller either. Thoughts?

@James Wise

Why does James not hold the seller responsible for selling without an agent? NAR and the state Realtor boards have done a fabulous job of making the case that you are in danger by selling without an agent. The campaign and message is everywhere. Yet, somehow the state law makers still allow sellers to sell without an agent. Just like they allow us to shop at grocery stores that charge 3x the price of other stores and don't show us a chart of all the prices in town.

4 Reply

Christian CarsonPro Member

Cleveland, OH · Member since 2011 · 400 posts · 223 votes

10y

Originally posted by @Brandon Turner:

Yes, if he is legally representing the seller as a real estate agnet and has a fiduciary responsibility to get them the highest price possible, it's totally legit. But as a buyer? I don't see it. As a wholesaler? I don't think a wholesaler has a fiduciary responsibility to the seller either. Thoughts?

@James Wise

Well, this circles back to what James said about regulation of the sale. The purpose of the brokering license is to impose fiduciary duties upon people who broker real estate. They must disclose, they cannot steer, and they must act with their principal's best interest in mind as they are agents of the principal. The state has prescribed an enforcement mechanism for punishing wayward agents.

Entering the real estate transaction with the intent to broker a sale to another suggests brokering activity, which requires the observation of heightened fiduciary duties in all states. The facts in this thread are a bit different than a standard wholesaling transaction -- paying taxes on property sets him up for risking loss of investment if the transaction doesn't go through. Certainly the more one acts like a principal in a transaction, the less likely a regulatory authority is to consider it unlicensed brokering.