real estate wholesaling under attack

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real estate wholesaling under attack

Rudy Ferrara

oak lawn illinois · Member since 2022 · 16 posts · 21 votes

Realtors want wholesalers out of the picture completely. We need to unite and fight back nationally

rudy ferrara

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Lydia R.

Investor · Austin TX · Member since 2016 · 1k+ posts · 2k+ votes

@Rudy Ferrara This isnt new. This was passed in Illinois at least 3 years ago but it might be closer to 5. You can still double close and you can still wholetail. This is what happens when you listen to youtube gurus that are just trying to get link clicks and not actually educate people with accurate information. There is a difference between wholesaling and assignments. Wholesaling is a strategy just like fix and flip or buy and hold. Assignments are the method, just like hiring contractors or doing the work yourself on a flip or getting a property manager or managing yourself on a rental. These are all methods that accomplish the same objective. Wholesaling is NOT illegal ANYWHERE. Assignments are the method that has come under the most scrutiny and been regulated in a lot of places. There are other methods of wholesaling. You can either complain about changes that you have no control over (unless you want to run for some kind of political office in your state) or you can adapt, adjust and keep making money. I know which one I would choose...

I am in an incredibly hot market, I recognize the value of being able to close on a property and then resell it at a higher price. I bought a house last year from a seller that was being transferred for work and needed a substantial leaseback. By the time he had moved out (after 60 days) the value of the property increased. I put the house on the market and sold it for 100k more than what I paid for it. There is no way I couldve gotten that same number off market. I found a lender with a loan product to help wholesalers buy and resell their deals. Game changer. So maybe do a little bit more research before you go all chicken little ‘the sky is falling’

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Joseph Stern
Investor · Tampa, FL · Member since 2020 · 287 posts · 152 votes
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@Rudy Ferrara can you still double close?
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
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Quote from @Rudy Ferrara:

Realtors want wholesalers out of the picture completely. We need to unite and fight back nationally

rudy ferrara

for sure just have the wholesalers association and their very strong lobbying group go right at it.
Wait there is no association and there is no lobbying LOL.. you guys are on your own :)
these are fun threads nothing will come of this wholesalers will continue reality is wholesalers many times work on product that is under served by the real estate brokerage community and brokers could give a rip.
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John Brodeur
Investor · Philadelphia Metro · Member since 2019 · 44 posts · 75 votes
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I couldn't agree more Jay. There are quite a few people who are trying to make money in real estate with "no money down", and this has attracted quite a few inexperienced wholesalers to the game. The combination of no training, little experience, greed, and individual homeowners who don't know the difference between a wholesaler and an agent can lead to very disastrous results.

Quote from @Jay Hinrichs:
You hit the nail on the head LITTLE OR NO TRAINING thats exactly what the states are trying to do away with .. you have all these folks that have little to no training or knowledge trying to transact with what is for many citizens the most important asset they have or will ever have.. this leads to many bad things happening to the public and then very little recourse ..

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Jonathan R McLaughlin
Rental Property Investor · Boston, Massachusetts (MA) · Member since 2016 · 2k+ posts · 2k+ votes
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@Rudy Ferrara well I was ready to go with you on the realtor monopoly for a while; the NAR certainly knows how to protect their turf, but I can't walk with you around most of the other corners you turned. A law against wholesaling being compared to the russian invasion of Ukraine? Um...ok then.
One of the reasons you have laws and licensure is to protect--not control--consumers. You shouldn't be able to put poison in mass produced drugs, or label untested things as medicine, you shouldn't be able to claim you are a professional when you aren't trained, and you shouldn't be able to take advantage of little old ladies or any distressed sellers by masquerading as a buyer. Not saying you are doing that, but thats what the assignment-with-no-money wholesaler space encourages if not demands.
What happens to the broader real estate market if ALL assignment of contracts vanished? Very, very little.
And if someone can't muster the funds or a few weekends to get a license its unlikely they will have the wherewithal or skills to succeed over the medium to long term.
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Rudy Ferrara
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oak lawn illinois · Member since 2022 · 16 posts · 21 votes
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I've learned a lot from you guys. As i said i'm a newbie. Did my first $7k wholesale assignment deal years ago and trying to re enter the rreal estate business as easily as possible until i'm up to speed and can do the more advancced stuff. My first deal i had a landlord realtor who was looking to expand his portfolio and through research at the records room which i'm real rusty at right now I found a motivated seller (which to me is the hardest part) who was tired of commuting to his rentals and just wanted out. I never saw the 2 houoses and i never attended the closing or dicker about arv and an acceptable offer. I let my buyer and seller do the negotiating which at that time i could not intelligently have done convincingly. It was an up an up ethical transaction. I guess you'd call me a bird dog. Now since assignments are more and more being phased out and will probably disappear completely nationwide which i think would be a tragedy especially for newbies i'm looking into transactional wholesaling deals and virtual wholesaling. Later perhaps jv's and buy and hold or flips. I'm getting some good instruction with axiom and kingdom with seasoned ethical highly successful wholesalers plus vena cox with over 25 years experience and my local ccia in chicago. Big learning curve but so far so good
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Matthew Irish-JonesBusiness Member
Real Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes
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Quote from @Jay Hinrichs:

Quote from @Matthew Irish-Jones:

Quote from @Rudy Ferrara:

yes jonathan i could get a realtors license which is exactly what realtors are lobbying for nationwide, elimination of wholesalers. No more competition. It eats into their profits. Just as uber does with over priced taxis. They have the clout and the lobbying power to sway congress just as monsanto buys off politicians to get their anti gmo labeling laws passed or big pharma suppresses any non drug unpatentable natural/organic preventon/cures as there's no profit in health. Is why there's a walgreens on every corner. Monopolies rule us. They own us through congress and citizens united legislation is exactly what realtors want. I for one believe in alternatives and choices that's what free enterprise is all about. Competition is the name of the game which you won't find in dictatorships like russia, north korea or china. Their government also CONTROLS their people OR ELSE as you are witnessing in ukraine which was in existence long before russia.

No one I know is worried about competition from wholesalers.

competition from wholesalers LOL.. my wife closed 28 million last year. what wholesalers ??

She could have had $28,000,100 if not for the fierce competition from wholesalers!
The only thing people fear from wholesalers is getting their time wasted.
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Rudy Ferrara
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oak lawn illinois · Member since 2022 · 16 posts · 21 votes
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whether you're wholesaling or not this is a people business. Seeing the others point of view is what it's all about not just making a quick buck whether your a realtor, investor, wholesaler etc. As my mentor vena says
Offering More Cash is a Tempting, but Losing Strategy.

Trying to “outbid” other investors

(or creating the ‘cleanest’ contract or waiving inspections that you actually need or offering to pay thousands in seller closing costs)

just means that you end up making bad deals. And that’s not what we’re here for.

The Winning Strategy Is…

To be the one that the seller WANTS to work with, because you:
- Actually listened, and really understood the seller’s problem and motivations, and really worked to solve those problems
- Built trust and a real connection with the seller, making him feel comfortable and valued
- In short, you didn’t come across as a pushy slime bag, like most of your competitors do
In a hot market, your negotiation and rapport-building skills give you the edge you need, to make and get great deals that your competitors just can’t.
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Denise Jdsmom
Investor · MD · Member since 2019 · 11 posts · 4 votes
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I've bought from wholesalers and in general had a great experience. I hate that they are trying to make them go. They are useful, and are an asset. Instead of getting a person depressed about the whole idea of selling by means of telling them the thousands of mini items they need to make it worth the sale. They give a great out for walking away and sometimes making profit as well, win-win-win situation.
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Rudy Ferrara
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oak lawn illinois · Member since 2022 · 16 posts · 21 votes
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amen
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Kevin Scott
Flipper / Buyer · Tacoma, WA · Member since 2013 · 160 posts · 80 votes
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Do they allow you to close and resell?

Quote from @Rudy Ferrara:

my sstate illlinois just banned wholesaling except for one deal a year. It will spread to all states. Watch the video in the link below

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Eric Ashby
Rental Property Investor · Miami, FL · Member since 2017 · 17 posts · 19 votes
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@Rudy Ferrara
Everyone but wholesalers want wholesalers out of the picture completely. I get dozens of unwanted spam texts and calls from them daily and there is no way to stop it. What an entitled bunch of jerks who feel the need to waste my time in a manner which is illegal.
Also, The marketing manner of those is eerily similar to unscrupulous individuals looking to scam vulnerable people out of their money… I wonder why they seem so similar. At least traditional scammers don’t try to pretend they are offering a service.
I’m not the only one who feels this way.
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Don KonipolBusiness Member
Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
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Quote from @Rudy Ferrara:

Realtors want wholesalers out of the picture completely. We need to unite and fight back nationally

rudy ferrara

The point is that states want people who “ wholesale” residential real estate (wholesale in quotes because it’s ‘contract flipping’, not wholesaling we’re really talking about) to have education in real property and be accountable to a state agency. The states haven’t outlawed or prohibited “ wholesaling “ in any form, although that may come later. Right now they merely require that those that do engage in wholesaling, contract flipping, or act as an intermediary in any way, possess a real estate license and operate within those guidelines.
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Rudy Ferrara
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oak lawn illinois · Member since 2022 · 16 posts · 21 votes
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around and around we go. I got the message this is a wholesaler unfriendly site. Positive things are happening wholesaling or even assignments. Like denise i've had positive experiences and don't need a real estate license. I am getting training in ethical real estate investment proceedures EVERYONE should have
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Cody L.
Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes
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Quote from @Rudy Ferrara:

Realtors want wholesalers out of the picture completely. We need to unite and fight back nationally

rudy ferrara

Why not just get licensed vs. trying to do unliensed brokerage via some run-around the intent of the law? Or if you want to flip properties, close them. Or if you just want to make a fee, find a property, bring it to a buyer, and get them to pay you a finders fee.
This whole "I put properties under contract that I don't intent to buy, and then try to assign the contract or double close" is shade as f***
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Cody L.
Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes
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Quote from @Rudy Ferrara:

Thanks lydia and jesse
i agree with both of you. Assigning a property is just less involved and allows newbies like myself to enter the real estate field with little or no money and training. That is the problem you've both had some training which is the main gist of my post. Assignments have gotten bad pr because of a few bad apples taking advantage of people. With proper training and respect fro buyers, sellers, title company, attorneys, lenders and UNDERSTANDING how all these people work together assignments are still a viable way to help distressed sellers hook up with potential buyers without taking possesion. Yes there are alternatives i'm looking into ie transactional, double closing, virtual wholesaling the latter can still use out of their own state assignments. All of these i'm sure i'll be doing. Double closing is much more time consuming and expensive with less profit than assignments but with the same cost in time. Transactional is the next best thing in my opinion as long as you have the buyer/lender ready to go with you.
I'm so happy for you lydia. I wish chicago was as hot as texas unfortunately it's not. Perhaps i can do a virtual deal there. I'm too new to recommend my hooking up with you guys but if you're open for a jv down the road please let me know and thanks for your reply
rudy ferrara

You want to make money with no money. Find someone who wants to sell, bring the deal to a legit buyer, get paid a finders fee. But don't mislead people by putting their property under contract with no plan to close -- and only a plan to sell the contract. I just paid a guy $48k for a deal he sent me.
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Matt Lyons
Rental Property Investor · Chicago, IL · Member since 2019 · 109 posts · 443 votes
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I live in IL and I work with a wholesale currently. I have bought 3 deals from him in the past 24 months. He figured out a work around for the IL current law that is completely legal: Basically he gets paid at closing a commission above the sales price (and its not called a commission but something else, I honestly forget).. in the end the only negative was that the buyer (me) learned what he made on each deal...but he provided me with value and he provided seller with value as well
Also, I 100% agree, it is NEVER illegal to buy a property direct from seller and then to sell it...that is not wholesaling that is simply buying direct and then selling FSBO. I realize the classic model of wholesaling allows people to get in with less money, but I suggest you find investors or partners that would support you in buying for cash and then paying back when sold...you will give up profit but you will be more valuable to all sides of that scenario
Change your focus: whatever the law or rule, there is always a solution...focus on finding that
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Lydia R.
Investor · Austin TX · Member since 2016 · 1k+ posts · 2k+ votes
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@Rudy Ferrara I totally get what youre saying...but not in this market. No seller is going to choose to work with you over the guy who can pay 30k more because they like you better. Maybe 5 years ago. But not now. Real estate is dynamic, the landscape is always changing and you either adapt or you go out of business. Zillow came in and shook things up for agents and brokerages. Some adapted and those that didnt are greeters at Walmart. Wholesalers have to do the same. The landscape is shifting for wholesalers and some of us are going to figure it out and make a lot of money and everyone else is going to go back asking “do you want fries with that?” I have no sympathy for those who dont make it because real estate has so much room for creativity and outside the box thinking. You can double close using transactional funding and its not that expensive at all. You can partner with someone that has money to close deals and put them back on the market, partner with someone who does lots of flips and learn how to flip. Trade discounted real estate for learning opportunities. There are so many alternatives to just crying about how its not fair that the easiest option is becoming obsolete.
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Joe SplitrockPro Member
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Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
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@Rudy Ferrara you are twisting this into something it is not. There is no conspiracy against wholesalers and they represent such a small percentage of transactions that they are not even competition for realtors. And nobody is going to ban together to "save the wholesalers", haha.
Real estate licensing is controlled by the state for the protection of its citizens. We wouldn't need any licensing or laws if we could trust people to do the right thing. We can't. Real estate licensing requires you take classroom training which includes legal and ethical components. This is to protect the consumer from predatory action of uneducated and unlicensed individuals. There is also a consequence if you don't follow the law, your license can be revoked.
Following your logic, we shouldn't need a license to drive a car or practice medicine. I am sorry, but having talked to hundreds of wholesalers on BP over the years, I have found a high percentage know nothing about the law and worse they don't care! Many have no money or experience. Some don't want to "trouble themselves" with taking a $500 real estate class and having to pass a test. It is not a few bad apples, it is a profession that attracts bad apples. This is directly due to the low barrier of entry. All it takes to be a wholesaler is to declare "I am a wholesaler". Download a contract off a website and knock on a door. That is literally it. That is where the risk is.
There are plenty of legit wholesalers who have their license. There are others who do actual buy and selling of real estate by taking title. It doesn't even take cash, just finding a partner willing to finance you. If you can't convince someone to finance your operation, you probably have financial or credibility issues.
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Matthew Irish-JonesBusiness Member
Real Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes
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@Cody L. 48K !!!!! I will bring you deals on a silver platter for 3% LOL. They just need to be in WNY. That’s one heck of a bird dog fee.
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James Wise
Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
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Quote from @Rudy Ferrara:

Realtors want wholesalers out of the picture completely. We need to unite and fight back nationally

rudy ferrara

This is not new. What many refer to as "wholesaling' is actually brokering real estate. It's been illegal to broker real estate without a license in the USA for decades upon decades.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
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Quote from @Jesse LeBlanc:

Transactional Funding all day long. It's a small fee and gets the deal done for a double close. I lend on a handful of deals each week for other Wholesalers who need Transactional Funding. Simplest way to legitimately buy the property and then sell the property as the owner without a license.

perfect thread to advertise your business LOL.. i do the same but a little different than what you do .. I take it the next step and help them become actual owners and investors ..
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
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Quote from @Matthew Irish-Jones:

@Cody L. 48K !!!!! I will bring you deals on a silver platter for 3% LOL. They just need to be in WNY. That’s one heck of a bird dog fee.

Cody's deals are all multi million 3% would be more like 150k plus if you were lucky enough to be on his team and paid broker fee's. :)
my last subdivision i bought I paid 125k assignment fee.. However the guy I paid although he could never close the deal at 6 million he did work it for a full year and got the entitlements that made it a 60 million dollar deal. ( at build out of course. ) But these are not transactions that mimic retail residential transactions.
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John P.
Investor · Vacaville, CA · Member since 2016 · 433 posts · 249 votes
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Quote from @Rudy Ferrara:

Realtors want wholesalers out of the picture completely. We need to unite and fight back nationally

rudy ferrara

Could also just get licensed.
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Owen DashnerPro Member
Lender · Omaha, NE · Member since 2008 · 1k+ posts · 1k+ votes
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@Jesse LeBlanc there are several states that have included language in legislation that specifically outlaw marketing a property before owning it (i.e. you cannot double close via transactional funding because you wouldn't have an end buyer without having marketed the property before owning it).
Title companies will be taking direction on this stuff from the underwriters, who will be taking direction from the real estate commission in the respective state. Gonna be tough to get around this in many states.
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John Teachout
Rental Property Investor · Concord, GA · Member since 2015 · 3k+ posts · 3k+ votes
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The problem with "wholesalers" getting licensed is that then they would have a fiduciary responsibility which wouldn't work very well the way many of them conduct business...
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