Bad Wholesalers

Wholesaling
11yFollow

Bad Wholesalers

Hattie Dizmond
Investor · Dallas, TX · Member since 2014 · 2k+ posts · 1k+ votes

I'm not a negative person. But, my latest encounter with a specific wholesaling operation in DFW has once again left me with a nasty taste in my mouth. It's bad enough I have wholesalers marketing "deals" to me that are 90% of ARV and are being pitched as "great", "hot", "unbelievable" deals. Really? I know deals are hard to come by, but a lousy deal is NOT a deal. Anyway...back to the point...

The rep that I just encountered from this group had advertised a property in a very desirable portion of North Dallas...an area of particular interest to me. Once I got their "package", I quickly recognized the property. It was listed on the MLS. I had already run the numbers on it and passed. Now these clowns were offering it at $8k over the MLS list price. Not only that, they were up to their old tricks of vastly overstating the ARV. In this case by close to $100k.

I'm posting this as a warning to all the deal starved investors in the DFW Metroplex.  BUYER BEWARE!  Do your own due diligence.  Don't think, just because a package looks polished and well put together, and there is a actual business behind the reps marketing it that it makes it a legitimate deal.  The new tactic with these guys is..."This property is likely to sell within the hour."  Great!  Let it sell to someone else who will be stuck with a bad deal.  You should know your business well enough to run the numbers in less than 5-min anyway.  

Seriously folks...there are investors...mostly new ones...dropping the prices on flips all over Richardson, because they over reached on the purchase with an overly optimistic ARV. They are holding the properties longer than they thought, because properties (in general) are no longer selling above market, even though inventories continue to fall. Then, after they have incurred unplanned holding costs, they are having to reduce the price and further slashing their margins.

Be smart.  There is money to be made in this market, particularly with inventories as low as they are, but your profit is made on the purchase, not the sale.  If you buy to high, you're going to regret it later.  Don't get sucked in by the folks taking advantage of the bare market.

Good luck!

Hattie

13Reply
142 views

Most Popular Reply

Ryan Dossey
Real Estate Broker · Indianapolis, IN · Member since 2014 · 3k+ posts · 2k+ votes
11y

While it is unfortunate I'm afraid this thread (like several other) will take the bash the wholesalers route. 

 My advice for all wholesalers came from @Jerry Puckett. There are only 2 #'s you should need to give your buyers. The address and the asking price. Let them do their own due diligence. There is a reason why my buyers come back to me. 

@Hattie Dizmond I'm sorry to hear about your bad experience. Guys like that mess it up for those of us actually trying to help folks. (Get started AND Get out.) 

6Reply
See this reply in the discussion

45 Replies

Jump to latestLatest
  • Steve M.
    Realtor · Gallatin, TN · Member since 2009 · 292 posts · 164 votes
    11y
    Originally posted by @Hattie Dizmond:

    It was listed on the MLS. I had already run the numbers on it and passed. Now these clowns were offering it at $8k over the MLS list price. Not only that, they were up to their old tricks of vastly overstating the ARV. In this case by close to $100k.

    That would quickly end the relationship I had with this group. I understand "overstating" the ARV, at the end of the day, they are trying to "Sell" these properties, and bank on unsuspecting newbie investors. However, if I'm familiar with the property PRIOR to you (the wholesaler) bringing it to me ~ its already off the table. If a wholesaler wants a payday, that need to make it worth my while. MLS listings (which I have access to myself) ~ aren't worthwhile.

    2Reply
  • Bob B.
    Investor · Jasper GA · Member since 2015 · 1k+ posts · 1k+ votes
    11y

    Their company didn't happen to start with "New ......."?

    3Reply
  • Matthew Schroeder
    Investor · Carmel, IN · Member since 2014 · 332 posts · 245 votes
    11y

    Hattie, unfortunately (as you know) your experience is not unique.  I am sure that a lot of people see the exact same thing, but do not say anything - I encounter the same situation frequently.  But, good for you that you are well versed & researched with the local market.

    Caveat Emptor!

    1Reply
  • Dmitri L.
    Investor · DFW, TX · Member since 2013 · 319 posts · 101 votes
    11y

    Did the house "need leveling" as well? That's my new favorite euphemism in the wholesale game. Because "foundation repairs" sound too scary

    1Reply
  • Charles Colucci
    Washington, DC, WA · Member since 2015 · 39 posts · 1 vote
    11y

    It seems to be their company has no standard for product and shipping wise...

    0Reply
  • Nick B.
    Investor · North Richland Hills, TX · Member since 2013 · 1k+ posts · 1k+ votes
    11y

    @Hattie Dizmond, please provide the company name.

    1Reply
  • Jeremy Pace
    Contractor · Pittsburgh, PA · Member since 2014 · 885 posts · 359 votes
    11y

    I have to say, I'm pretty shocked that a company with a business model designed to degrade the quality of two deals at once while filtered money to themselves would be unethical in their execution of this model.

    Caveat Emptor.  All day, every day.

    0Reply
  • Tony Hernandez
    Homeowner · Parker, TX · Member since 2015 · 62 posts · 9 votes
    11y

    @Hattie Dizmond Thanks for this. I've not heard from them but I'm trying to get started in REI and might have been tempted to go with a deal like this. Thanks for reminding me to do my homework.

    0Reply
  • Hattie Dizmond
    OP
    Investor · Dallas, TX · Member since 2014 · 2k+ posts · 1k+ votes
    11y

    @Nick B.  I didn't provide the name here, because I've called them out publicly on this site previously, and this particular forum is about wholesaling, not reviews of companies.  But...feel free to PM me, and I'll give you the name.

    @Bob B.  Nope...but I wouldn't even expect these guys to disclose that up from, if they knew about it.  The whole "leveling" thing just makes me laugh.  That's a marketing ploy and a little like calling yourself a sanitation engineer, instead of a garbage man!  Whatever...it means the same thing.  

    0Reply
  • Tracy Selfridge
    Contractor · Lexington, SC · Member since 2015 · 62 posts · 50 votes
    11y

    I hate to this. As a new wholesaler it's giving us a bad name. I don't want to have bad name at all. I'm starting from scratch and this is my method of getting into investing. I'm lucky to have a mentor and the info I give out is legit. 

    For instance the one property I have under contract now is more rural. So it was hard to get accurate rent rates. My solution was to call a landlord in the area to get those accurate rent rates.

    For me, starting out, I'm focused on big goals and doing it right.

    2Reply
  • Guy Gimenez
    Investor · Corpus Christi, TX · Member since 2012 · 2k+ posts · 1k+ votes
    11y

    They are opportunists who recognize that ignorance by many will lead to significant profits for them. They often say that they have many experienced rehabbers buying their properties. My response is...I see 50 y/o men run across IH35 late a night too, but that doesn't inspire me to make the same mistake as the consequence are far too severe once the odds catch up to you.

    Never do something simply because someone else is doing it.

    2Reply
  • Richard C.
    Bedford, NH · Member since 2012 · 2k+ posts · 1k+ votes
    11y

    Wet water.  

    1Reply
  • Mark Lopez
    Investor · Cedar Hill, TX · Member since 2010 · 49 posts · 10 votes
    11y

    Thankfully you recognize the scam these knuckleheads try to put over on investors. I myself have dealt with types personally, and as a community we need to get the word out. Good work Hattie!

    1Reply
  • Javier Marchena
    Investor · Winter Springs, FL · Member since 2010 · 165 posts · 68 votes
    11y

    It is not just that company. They do the same in Central Florida. Buyers need to be careful and do their own homework. Always run your numbers.

    Thanks @Hattie Dizmond for this post. New investors need to hear that. 

    1Reply
  • Ryan KopczykPro Member
    Title Agent Investor Friendly · Maitland, FL · Member since 2014 · 139 posts · 59 votes
    11y

    I am with an investor friendly title company in the Orlando Florida area. Working with so many investors I get to hear all the good from the bad when it comes to wholesalers and any other real estate company. If you are in this area and are investing and want to run a name or company by me I will definitely share with you what I know and have heard. My job as a title agent is to always fully inform and to protect. Give me a call or shoot me an email!

    Thank you,

    1Reply
  • Hattie Dizmond
    OP
    Investor · Dallas, TX · Member since 2014 · 2k+ posts · 1k+ votes
    11y
    Originally posted by @Guy Gimenez:

    They are opportunists who recognize that ignorance by many will lead to significant profits for them. They often say that they have many experienced rehabbers buying their properties. My response is...I see 50 y/o men run across IH35 late a night too, but that doesn't inspire me to make the same mistake as the consequence are far too severe once the odds catch up to you.

    Never do something simply because someone else is doing it.

     Guy, that was an awesome analogy, and I'll apologize now, because I intend to claim it!  I laughed out loud.

    1Reply
  • Erin Legler
    Real Estate Agent · Orlando, FL · Member since 2014 · 231 posts · 130 votes
    11y

    Great post!  Thanks for reminding beginners to do their homework!  I see the same thing here in Orlando.  Half the listings I get, I wonder if they are pulling their comps from outer space!

    1Reply
  • Bruce May
    Lender · San Diego, CA · Member since 2011 · 664 posts · 231 votes
    11y

    Last year I was added to a wholesaler's list selling deals across Southern California. Every deal the guy sent out had an exaggerated ARV and rehab costs were too low. I finally sent him an email with a complete breakdown of what it takes rehabbers/flippers to make a profit on a deal. Nothing changed except my naiveté believing he would change his practices.

    2Reply
  • Ryan Dossey
    Real Estate Broker · Indianapolis, IN · Member since 2014 · 3k+ posts · 2k+ votes
    11y

    While it is unfortunate I'm afraid this thread (like several other) will take the bash the wholesalers route. 

     My advice for all wholesalers came from @Jerry Puckett. There are only 2 #'s you should need to give your buyers. The address and the asking price. Let them do their own due diligence. There is a reason why my buyers come back to me. 

    @Hattie Dizmond I'm sorry to hear about your bad experience. Guys like that mess it up for those of us actually trying to help folks. (Get started AND Get out.) 

    6Reply
  • Ben Leybovich
    Rental Property Investor · Phoenix/Lima, Arizona/OH · Member since 2012 · 4k+ posts · 4k+ votes
    11y
    Originally posted by @Hattie Dizmond:
    Originally posted by @Guy Gimenez:

    They are opportunists who recognize that ignorance by many will lead to significant profits for them. They often say that they have many experienced rehabbers buying their properties. My response is...I see 50 y/o men run across IH35 late a night too, but that doesn't inspire me to make the same mistake as the consequence are far too severe once the odds catch up to you.

    Never do something simply because someone else is doing it.

     Guy, that was an awesome analogy, and I'll apologize now, because I intend to claim it!  I laughed out loud.

     Just like Marcus & Millichap commercial guys my friends and I laugh about - looking for an ignoramous who doesn't know better. This is their entire business model in both cases...lol

    You go girl! I should write a post for the blog; I've done it before, but may be it's time for another...hahaha

    1Reply
  • Alex Bejenaru
    Lender · Yorba Linda, CA · Member since 2014 · 68 posts · 20 votes
    11y

    @Hattie Dizmond

    I've had very similar encounters here in Southern California where they are also very prominent. I follow their properties on MLS to see where they end up and many never sell. They definitely prey on entry level investors with no confidence in their ability to get an accurate ARV and especially repair costs. Most of their reps are young kids straight out of college who just got a RE license and are very sales aggressive. Their operation kind of reminded me of the movie "Boiler Room" but as RE wholesalers.

    4Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    11y

    @Hattie Dizmond

      this is common through most of the RE industry and the NOte business.

    you have note tapes that claim ARV ' of this and that and they are not anywhere close to the true ARVs but novice note buyers don't know the difference.

    Turn key the same thing happens  one turn key out fit has the exact same house rent etc and one is 10k hirer then the other.. and one look at marketing agents who resell for turn key they add their vig to the top. or even sellers who list for 20k higher than market and are just retail folks out of touch.

    Its really up to  the buyer know what the heck they are doing... I have looked at deals for 40 years I never get put out if the deal presented is not a deal I just say hey its not a deal. Its up to me to figure that out... I personally don't waste much time with wholesalers although I get contacted by them frequently like 5 times a week...

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    1Reply
  • John Tu Nguyen
    Real Estate Broker · Orange, CA · Member since 2015 · 31 posts · 14 votes
    11y
    Thanks for the heads up. I learn something new everyday on BP.
    0Reply
  • Hattie Dizmond
    OP
    Investor · Dallas, TX · Member since 2014 · 2k+ posts · 1k+ votes
    11y

    @Ryan Dossey I thought about this post for quite a while, before I actually wrote it, for the very reason you mentioned. I didn't want it to turn into a bash the wholesalers free-for-all. I wholesale properties. In fact, I wholesale properties whose numbers don't work for me. But, I NEVER inflate the ARV, manipulate comps, or intentionally understate required rehab costs. The point of the post was the fact that I get hit with multiple requests every week from newbies looking for advice. I also see a lot of newbies, particularly in DFW right now, desperate for deals. This was simply a cautionary note to not fall victim to the PT Barnums of the Real Estate world. There may be a sucker born every minute, but that doesn't mean you have to be one of them.

    2Reply
  • Carlton Kohler
    Wholesaler · Buford, GA · Member since 2014 · 119 posts · 15 votes
    11y

    Good advice for everyone @Hattie Dizmond, not just the DFW area. There's a lot of people claiming to know how to be a wholesaler out there who really have no idea what they're doing. I am by no means an expert but I'm getting there.

    @Bruce May As a wholesaler myself, wouldn't you as a buyer LIKE to see that a wholesaler who is offering you a "deal" had already done their own due diligence? Of course it's good advice for everyone to not take someone on their word and do their own due diligence until they have built a positive relationship with them. As a wholesaler, I'm not going to send anyone just an address and a price without letting them see how I got to the number first. 

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free