Can you be honest as a wholesaler?

Question

Hey Everyone!

I am curious as to how you guys let a seller know you are a wholesaler without causing friction with them. I believe you should be honest with everyone and not try to hide anything, but how do approach this with a seller and not scare them off at the same time?

Lawrence Potts · Answer

The problem with most wholesalers is that they act in secret and do not communicate their intentions because most of them have no idea what they are doing. And they'll lie not to be deceptive, but to hide the fact they are clueless and are barely holding things together.

And because of their secrecy, they never foster a good relationship with the sellers and they lose the deal. So they feel they need to hide them in the dark until closing to get any deal done. Which is farthest from the truth. They are afraid that if they knew their assignment fee, they will lose the deal. And if the assignment fee is wrong, then yes, they should.

Your assignment is a reflection of your worth and skills, your network and connections with investors and buyers that consistently close. For your ability to run numbers, relationships with agents and contractors. And the amount of work you've put into marketing to create your list of buyers. Also the cost of finding the motivated seller. If you're transparent, the right seller will understand. Honesty is key in any business, so why do people treat wholesaling differently?

If they ask, be upfront and honest. I'm not saying you have to tell them exactly everything you are doing, but you should answer honestly and be transparent about your intentions. I hope this answers your question!

Jerryll Noorden · Answer

Not only CAN you be honest, you SHOULD.

Not just because it is the right thing to do, but let me tell you what actually happens when you are honest.

You get WAY more contracts signed, and with far higher profits.

We get offers accepted for half what the competition has offered the seller and the biggest reason why they accepted our lower offers... they felt good about us, how open and transparent we were.

Being honest also will never get you in trouble when you can't find a buyer. We tell them everything that they can expect, including the risks, benefits, and disadvantages.

They know it all.

Look, wholesaling literally is a huge benefit to the seller. It honestly is what sellers want. So why lie? I never understood that!

Yeah my good dude. Go do you, be honest and you will make it far.

Tyler Lay · Answer

I couldn’t agree more, I think it’s just easier to be honest and transparent.

Andrey Shostak · Answer

Truly motivated sellers aren't going to care as long as you provide the solution to their problem (and you typically get more motivated sellers from inbound marketing like Google Ads than outbound marketing like cold calling).

But one thing you can do is explain the wholesale fee by comparing it to what they are saving (agent commissions, various closing costs/fees if you cover those, etc.). Since they are paying someone either way, the tradeoff is between speed and convenience on one hand and full retail value on the other. If they want the speed and convenience, they can go with you. If they want full retail value, they can use an agent. I have a calculator on my site that quickly shows them how much they might be saving, and that's a good starting point for discussion.

Melissa Haworth · Answer

@JD Monroe

Eliott Elias · Answer

You should not be putting property under contract that you know you cannot dispo. I don’t think it’s required to disclose you’re wholesaling a property, if you can get the seller the price they want you did your job.

Lydia R. · Answer

You absolutely can, but its going to limit the number of people who will end up working with you depending on your fee. If you are making 3-5K you arent going to have a ton of resistance from a seller when you tell them you wont be the end buyer of the property, but its hard to convince someone that you making a 20K-30K fee is in their best interest. Human nature will cause them to think of that fee as money they could've put in their own pocket. Its the same thing with real estate agents. More and more people work with flat fee brokerages or go FSBO because they just dont want to pay someone to sell their home. They see that $$ as cash that should be going in their pocket.

Personally I dont try and explain wholesaling to my sellers. I either tell them I am the buyer or I tell them I bird dog for a big hedge fund who pays me to find properties for them to purchase. But I never put anything under contract I'm not positive I can sell and many times I have the property sold before I even put it under contract. Its difficult to not hide something from the seller, because what seller would be totally cool with, in their opinion, losing out on 15K-20K

I know this is a controversial topic. Some people say honestly is the best policy and some people say keep things on a need to know basis. There isnt a right answer. I am completely against the wholesalers who lie and mislead and use fake docs to get properties under contract and have no idea what they are doing. But if you can close the deal and you arent conning a sweet old lady out of her home then I think wholesalers should decide what method they are most comfortable with.

Can you be honest as a wholesaler?

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