Are all wholesalers act like this?

Question

I've never dealt with wholesalers before but I heard and read that they could routinely find properties for 60-70 cents on a dollar.

So, I signed up to be on a buyers list of a wholesaling company that has a good reputation in my market (name is irrelevant at this point).

They started to call me the very next day. Every time it was "a great deal", "slam dunk", "you must act quickly" type of call.

Once they presented the property details the deals were not that great at all. In fact two were straight from MLS - once marked down a little, and another one marked up by 20%!

The comps were also questionable and I have no idea if their repair estimates hold any water.

Needless to say that I passed on everything they had to offer so far.

Now I wonder if what I experienced is a norm or aberration.

Thanks
	Nick

Tim G. · Answer

I guess if a wholesaler promises to deliver screaming deals for just signing up on an email list then shame on them and I agree with you.

I just sort of smile at the irony that someone thinks they can just add themselves to an email list and they suddenly deserve the best deal on a property for no effort at all. I mean really, does anything in this business take no effort? You get out what you put in.

Most solid wholesalers have a VIP list and they call them with deals, then when they have a stinker they eblast it out to the world to try and drag in a buyer from anywhere. Take some time, find a solid wholesaler and build a relationship and follow up on if they have deals. Its honestly no different than working with agents to get deals.

Sharon Vornholt · Answer

I used to rehab properties myself and either keep them for a rental or sell them to a retail buyer.  In 2008 when houses were sitting on the market for what seemed like an eternity, I decided to try wholesaling a property.  It was just a matter of making a phone call to one of my REI members. Because I knew my numbers (including how much is was REALLY going to cost to rehab the property), I found wholesaling to be really easy.

As the market changed, I had to change. The folks on my buyer's list added an additional buying criteria themselves; if the house didn't sell once it was rehabbed they needed to have a house that would cash flow as a rental. My buyers educated me on this new model they were following.

A rehabber is only going to pay in the range of 70% less repairs for a house they didn't have to look for. So what that means is that the wholesaler has to buy it cheaper than that. Like other folks have said, it's a numbers game.

Before I ever add someone to my buyer's list, they have to show me how they intend to pay for the house. I close all my deals in 7-10 days with my end buyer.  If they can't do that then they don't get on my list. The same 5 or 6 "A list" buyers buy all my properties. A good wholesaler with great deals only needs a handful of serious, qualified buyers.

There are only a few things you have to be good at to succeed as a wholesaler; marketing for deals, the numbers and building the "know, like and trust" factor with sellers.  Doing business in an ethical way is a given.

Sharon

Michael Giorgianni · Answer

These wholesalers are a dime a dozen and are the ones that will be in and out of the game rather quickly.  Build it like a business!  I started wholesaling 7-8 months ago and have closed 9 deals. Not much, but it's a start.  All of my properties have been deeply under market, cheaper than foreclosures and anything comparable on the mls.

My investors are buying at 65% of market value "minus" repairs or strong cash flow properties.

I have done little market due to my full time job, but now vamping up my business.

There are legit wholesalers out there!  I've met some shady ones myself though too.

Barbara Riley · Answer

Hi Nick,

I'm new. My last investment property  was bought and sold In the 1980's, so I'm starting over as a wholesaler. I can tell you that my rule  is to never wholesale a property that I would not buy myself if I had the means. Ultimately I want to have a few cash flowing SFRs or small apt bldgs. I will be looking for myself, and wholesaling until I accumulate the funds to buy for my own portfolio. I am not into exploiting other people, period! I'm sure I'm not alone in holding these principles. I hate it that others operate in the manner you described. Ultimately, they will fail as their reputation gets spread among investors. Can't happen soon enough!

J Scott · Answer

Sounds pretty typical for the vast majority of wholesalers I've worked with...

Ibrahim Hughes · Answer

Tim Gordon  has it right!  Today's experienced and successful wholesaler is like yesterday's REO Listing agent (before he/she lists the property on the MLS). They have deals that no one else has, they have the power to get you the deal at a great price, and they are likely to call up their 'inner circle' and give them a crack at it before blasting it out to the public.  Just like the reo listing agents of yesterday we want to make sure the deal closes.

Don Konipol · Answer

I have financed or purchased 482 properties since 2001.  I have looked at approximately 50 deals for every one I invest in (either investing equity or debt).

Totally a numbers game.

Mirinda Lowe · Answer

Yes, I see that a lot too.  Remember everyone is trying to make a buck.  Some will find ways to make those win/win and you'll get a great partner.  Some are only out for themselves, and will win at your expense.  Always do your own due diligence and make sure the numbers are yours, not theirs.

Rick H. · Answer

Nick B. - One of my best friends is a wholesaler extraordinaire (Mike Cantu). I can assure you that the best wholesalers will not provide access to purchase their deals until you are vetted and proven as someone they want to work with, not the other way around. If they're pitching you and you don't know them, neither one knows the other, neither has street cred, so it's a toss up. Remember, it's still a relationship game.

Tim G. - the guy in control flies "left seat". Hope to see you there soon!

Don Konipol - 485 properties is a good start. Don't give up; it'll work out (eventually). Just be patient :)

Ibrahim - I miss reading your convoluted title stories. I feel you are "my brother in missing and deceased owner properties."

Nick B. · Answer

Tim,

Maybe I am naive but I thought that using a wholesaler allows a buy-and-hold investor to bypass the entire process of searching for deals.

What exactly can I put in other than ask to add me to a mail list? I am looking for my first property and that alone does not qualify me as a VIP.

If I only plan to buy one of two properties a year, what are my options?

Thanks
	Nick

Are all wholesalers act like this?

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