How to shut up the Wholesale bashers

How to shut up the Wholesale bashers

Wholesaler · Madison , WI · Member since 2016 · 79 posts · 64 votes

Wholesaling real estate can be life changing. I know a lot of people who started from nothing and now make 6+ figures annually doing so, that pisses agents off lol. 

The things I see about wholesaling on BiggerPockets are discouraging and borderline hate speech. 

Basically, the kids that grew up the nice comfortable middle class neighborhoods, went to college like mommy and daddy told them to are telling people that dont have the credit to get a traditional loan or capital to close on a property that you can't be in real estate. 

If you don't have a sh*t load of money to spend, or near excellent credit you shouldn't be in real estate, is the summary of the BS I've been reading. 

Now on to the legal part of it all...

Is wholesaling ILLEGAL? 

No. Wholesaling is simply buying something low and selling it low enough for the end buyer to make a profit. 

Assignments are legal in most states, some not so much...in every state that doesn't allow assignments I GUARANTEE there's an agent pissed off at guy who made his annual salary in one deal. 

Guys and gals, remember: From a legal perspective for a contract to be legitimate you have to have the intent and ability to close. 

The intent comes when you partner with a Transactional lender to fund your deals, you then have the intent and ability to close, if you meet the transactional lenders criteria with the way the deal is set up. 

Now I can already see someone saying "well if you're wholesaling you don't have the intent to buy" Well...you do. But you're only going to close on it if you can sell it, that's actually smarter to me. Rehabbers buy with the hope to sell, as a wholesaler we buy (double close) when we KNOW we can sell and I advise you to be upfront with your sellers as well. 

If you're an inspiring wholesaler be careful with what you pay attention to on here, chance are you got into the business due to lack of a big ol' fat bank account, excellent credit, connections, etc. (All the things the guys bashing wholesalers seem to have...hm...)

Organize your business, learn the laws, help sellers, be honest with them, and by all mean IGNORE THE WHOLESALING BASHERS ON THIS SITE. I bet none of them had to wholesale their way out of $37,380 in debt and a motel room. They don't know the struggle, they don't want you have a bigger pool than Kanye! 

But all jokes aside, guys and girls wholesalers get a bad rep because there are some people who mislead sellers, honesty and full disclosure is the key. 

I understand some people are afraid to tell sellers they wholesale, and that's understandable Don't say that; What you want to do is set up an LLC before you start, get the website the logo, etc. Look credible. Build your buyers list, build your transactional lender team as well, your business is dependent on those things.

So what do you say when a seller asks what you do or what the hell the and/or assigns means? 

"I work with a group of investors (the transactional funders and cash buyers; truth here!) I buy and sell properties to other investors, sometimes I'll assign the contract just to simplify things, that's less in transfer taxes, etc. 

....if they don't want you to assign it (yeah some people are picky and sensitive) and the numbers make sense just double close using a Transactional lender, 0 money out of pocket. It's very simple. 

So, let's go over that again. 

The "INTENT AND ABILITY TO BUY" comes from having a Transactional lender on your team, develop a relationship with them, get to know them. 

Too many people just brush off this idea, well let me tell you, the agents are getting tired of us helping sellers and making a killing so they're running to the big bosses and trying to stop it all, one day assignments may be illegal everywhere unless you're an agent, so in case that day comes be ready. 

Excuse any spelling or grammatical errors... actually don't, I don't give a sh*t. I made my point. 

Happy wholesaling! 

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Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
10y

This thread should get a lot of responses:)

Your arguments are bogus. Selling a contract is NOT investing. Closing on a deal and then reselling is investing. Laws vary state to state. Regardless of your arguments, most are just unlicensed operators acting as brokers. Most of the time they bring no or little value to a deal. I just saw a guy "wholesale" a property 20% under market in a HOT area. Any agent could have listed the property and got the seller EASILY 30K more after commission. Please tell me how this benefited the seller?

p.s.--you want to "shut up" people that disagree with your concept, disagree with a lot of post promoting dishonest, etc. What does that tell the BP readers? If you felt like making a statement about disagreeing with posters (I am one well known for expressing opinions) maybe that would promote better responses? I don't recall any posts from people wanting to "shut up" people promoting dishonest or illegal practices. BTW, what professional licensing do you hold and who holds you accountable for honesty and ethics? Anyone? Your arguments are FALSE and misleading. Some people need to do that to convince themselves they are right.

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  • Investor · Rochester, NY · Member since 2016 · 477 posts · 426 votes
    10y

    In my experience, there are two reasons wholesalers get a bad rap (both on BP and in the industry)

    1. "Honesty and Full Disclosure are Key" - does not seem to be the approach many wholesalers take. The "ZOMG I'm going to make a bajillion dollars my first year" doesn't usually pair well with patience and integrity.

    2. I have a suspicion that around 95% of 'wholesalers' have never done a deal, and if they ever get to a first one, they seem to be the least informed person in the deal

    As with all things, the minority may be giving the rest a very bad name, and I know for a fact that there are good, successful, ethical wholesalers out there - but I honestly don't know if they are the minority or majority.

    In any event, do what you do, do it ethically and well, and forget about all the critics.

    Keep up the good work Allen! I like that you're passionate about your profession.

  • Wholesaler · Madison , WI · Member since 2016 · 79 posts · 64 votes
    10y

    EMD isn't required in my state, we do not, and have not EVER put a gun to a sellers head and told them "you have to sign this contract, and you have to take less than $1,000 in EMD" I don't know about Florida but in my state you have to be 18 or older to own or sell a home, so we're dealing with adults here, that can read too! (Would you believe that?) They know what they're signing, there's no tricky language at all.

    Personally, I'm not gonna go put 10 houses under contract and pay $10,000 in EMD, that's money my kids can use, money I can use for marketing so I can HELP more distressed sellers.

  • Wholesaler · Madison , WI · Member since 2016 · 79 posts · 64 votes
    10y

    I've seen agents convince a seller to list at a certain price that the CMA didn't even justify.

    I've seen rehabbers, who actually have the personal capital to close kn a deal back out because "they sound a better deal" 

    I've also seen police officers kill innocent men, yet the wholesaler gets the bashing. 

  • Wholesaler · Madison , WI · Member since 2016 · 79 posts · 64 votes
    10y

    Found* a better deal

  • Realtor · Fort Lauderdale, FL · Member since 2016 · 271 posts · 144 votes
    10y

    @Allen Felker Great Post! I am tired of the wholesaler haters as well. It's basically the same four or five guys that think they are better than the rest. Keep that big ego to yourself, no one really cares. Treat people the way they treat you. Some of us are professionals, and teach the realtors  attorneys and investors a thing or two from time to time. I applaud you for breaking it down for those that may be getting started. My advise: be transparent with the seller. Have a great day wholesalers!

  • Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    10y

    This thread should get a lot of responses:)

    Your arguments are bogus. Selling a contract is NOT investing. Closing on a deal and then reselling is investing. Laws vary state to state. Regardless of your arguments, most are just unlicensed operators acting as brokers. Most of the time they bring no or little value to a deal. I just saw a guy "wholesale" a property 20% under market in a HOT area. Any agent could have listed the property and got the seller EASILY 30K more after commission. Please tell me how this benefited the seller?

    p.s.--you want to "shut up" people that disagree with your concept, disagree with a lot of post promoting dishonest, etc. What does that tell the BP readers? If you felt like making a statement about disagreeing with posters (I am one well known for expressing opinions) maybe that would promote better responses? I don't recall any posts from people wanting to "shut up" people promoting dishonest or illegal practices. BTW, what professional licensing do you hold and who holds you accountable for honesty and ethics? Anyone? Your arguments are FALSE and misleading. Some people need to do that to convince themselves they are right.

  • Wholesaler · Madison , WI · Member since 2016 · 79 posts · 64 votes
    10y

    Invest; Verb  

    expend money with the expectation of achieving a profit or material result by putting it into financial schemes, shares, or property, or by using it to develop a commercial venture. 

    I'm expending money when I market (direct mail) with the intent to see a return (Double close 80+% of the time). 

    My arguments are bogus to you because you're an agent. But I'd out negotiate any (ok not any but MOST!) agent, I'd do a better job at your job than most of you guys, I just don't like office politics and showing picky tire kickers around beautiful homes, sorry? 

    John, you seem like a very intelligent person, so I BET you understand that sometimes it isn't about getting the best price for a seller. He could have made 30k more? Sweet, I could've been a basketball player if I was 4 inches taller. 

    I respect all opposing views, but that's the problem with some brokers and agents you guys only focus on the MONEY. i've been in situations where I made $470.59! Assignments JUST to help a seller (she was an older lady, her husband passed away she was done with it) and i would've made 0.00 if I had to. I've never had a seller get mad after a deal. At least not yet. 

    One of the first things I ask sellers is if they want to list ( my partner is an agent and I bet she's gonna be pissed at some of my comments, I'll buy her coffee), I tell them I don't buy at retail value, I'm not forcing anyone to sign anything like these fake "We buy houses" Clowns, once again full disclosure is key. And unlike most of them I can close because I have a relationship with a private lender, so I'm not doing too many assignments these days. 

  • Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    10y

    From your post:
    "No. Wholesaling is simply buying something low and selling it low enough for the end buyer to make a profit."

    Buying? Assignments are NOT purchasing a property. Now, if we want to be clear, FLIPPING something you OWN is not the same. Most of these scammers NEVER take title and more than a few operate unethically and illegally. Sorry to burst your bubble but it is NOT about the money. This is a public forum which I love. Everyday I learn something new, try to contribute to others, and express opinions. You can take them or leave them. There have been many posts from "wholesalers" where they fail to respond to questions I pose because they CANNOT defend their actions or post. 

    You do realize there is an ignore feature on BP. If someone says things you don't like it is available. I have used it once!

    Last, I would love to know where all the EASY money, silver spoon, and glitzy neighborhood is that I was cheated out of! 

  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Jason V.  in my experience they are the HUGE minority.. not the majority.. 

    but its just like anyone in the sales business.. 10% will succeed  2 to 3% wildly and the rest will trundle along and 50% will not make it past 6 months.

    the internet has created this fantasy of real estate rich's and the fantasy includes starting with no money as a wholesaler.. but we know this is not true.. wholesalers need money to market.

    they need money to buy gas to go to meet ups.. or gas and a car to go meet with clients.

    Then they need innate skills to close the deals.. and we all know who those folks are .. they are the same that can sell used cars  or are great at selling time shares.. or any other hard close job.

    no mystery here.. the issue comes with a legion of beginners unleashed on folks who their property many times is their most valuable asset.. or they get snookered into giving it away.. and those that rip equity like this are proud of it etc .

    there is a place for this wholesaling I Believe in the low value asset areas of the US.. like pretty much any ghetto inner city area of the US.. were values are low and the traditional RE community just does not want to bother with it.. I can see wholesalers playing in these sand boxes.. 

    But either way its a free country and its up to our law makers and law enforcement folks to enforce the rules of the road if they don't wish to.. then its wide open and free to all. and Caveat emptor is the rule of law.. 

  • Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    10y

    @Allen Felker

    p.s...you never answered one simple question: how is a "wholesaler" getting a seller 30K LESS for their home a benefit? It was not a distress sale and the wholesaler pocketed 10K. Benefit or not to seller? 

  • Wholesaler · Madison , WI · Member since 2016 · 79 posts · 64 votes
    10y

    I have never wholesaled in the ghetto, ever. It's more based on situation than price when something is bought at a Wholesale price. 

    A good deal does not mean someone is was cheated out of anything, the negotiations I take place in are not adversarial, there's no haggling or fancy sales techniques, just 100% cooperation and problem solving. 

    I think people need to realize that when these deals take place, it's the motivation to cure some sort of unpleasant situation that makes them possible, so price isn't what the negotiations revolve around. 

  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @John Thedford  there is NO fiduciary between wholesaler and seller.. its the wholesalers mission to make as much as they can.. period ... then brag about it on BP  LOL. 

    I have dealt in distressed asset pretty much my entire 42 years in real estate.

    There are defiantly situations where sellers just want to walk.. these are usually extreme hoarder houses or other properties that have a lot of hair on them.

    but for wholesaling to work the only way it does work since 99% of wholesalers sell to investor flippers.. is there has to be enough equity for the end user.. ( although many times wholesalers price property so high they can never close on it).. 

    the bigger wholesalers in our market actually buy them at courthouse were they have to pay cash.

    our market is just too hot that mid west deep south wholesaling in any kind of volume is pretty difficult 

  • Wholesaler · Madison , WI · Member since 2016 · 79 posts · 64 votes
    10y

    Are we not all in this business to make a profit? 

    The seller and the 30k issue is being dismissed, I can be an *** too, send me the comps I wanna see ,PROVE IT. 

    The Midwest is an excellent place to wholesale. Wisconsin has very little competition...except dane and Milwaukee county. I love it. 

    I don't brag about checks, or ripping sellers off, I have a conscious, I believe in karma, god, the whole shebang. 

    I need some wholesalers to back me up lol. 

  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Allen Felker   its why I say this wholesaling is regional..

    it works in areas that have big inner city ghetto type areas.. but it does not work in most of the west coast as there is no an over supply of homes.. it works best in areas were there is more homes than buyers so sellers cannot just list and sell in a matter of days.

    but there is no doubt some folks don't want to work with agents and they just want to sell.  I have seen that over the years.. 

    as you know also many sellers think their property is worth far more than it is in reality in any setting.

  • Wholesaler · Madison , WI · Member since 2016 · 79 posts · 64 votes
    10y

    Todd toback does a ton of deals in San Diego. 

    Michael Quarles wholetails in California. 

    I think the difference is mindset. If we can send a man to the moon, we can definitely wholesale on the west coast. 

  • Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    10y

    @Allen Felker - I have no problem with the honest and educated wholesalers.  You guys provide a needed service, especially for sellers with time and property condition constraints that prevent them from being able to sell conventionally.  Just wish more were honest and educated!  

    What you do is not easy.  I've often said it is about the most difficult niche to master. It is the entire package, from source to exit and everything in between.  I've only begun to wholesale a few here and there that don't work for me after 12+ years in my market.

    If I may ask - why would one continue to wholesale over and over? Continue to work and work for one-time paydays at high tax rates?  To pass along sweet deals to others that you could have kept for yourself and got out of the rat race?  

    I've always wondered that.  As a mostly retired buy and holder, maybe I'm not meant to get it. I don't think that way.  I do RE for the tax benefits and freedom from the phone, the cubicle, the ups and downs of almost transactions.  Thanks for any insight into the why.  Cheers!

  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Allen Felker   I will be speaking in a few hours at the same event Mike Quarles is speaking at. And meeting him in person for the first time.

    He is exactly what I talk about listen to him on the pod cast he is a pro's pro when it comes to sales and closing.. he would succeed at any type of sales.. its the BP summit in Oakland.... as I have said 2% will rise and be rock star's in whatever they do.

    there is no questioning that.. but I can assure you that wholesaling in the mid west rust belt and deep south is completely different than west coast in general.. 

    I do business in 12 states I was in Milwaukee 2 weekends ago.. just missed the  riot there.

    but take south Chicago.. I have funded probably 50 deals there in the last 2 years.. you can drive on to any block and see a boarded 2 flat.. maybe more than one... those are wholesale targets. On the west coast you may see a boarded home 1 out of 50 blocks.. if your lucky.. its just very different. 

    I have done and still do business in Detroit there is hyper over supply of homes all wholesale targets.

    and generally any inner city area of mid west rust belt or deep south will have over supply of homes all prime wholesale opps.

  • Wholesaler · Madison , WI · Member since 2016 · 79 posts · 64 votes
    10y

    @Steve being an NFL quarterback is difficult and there's some people that do it very very well, I just like to negotiate. 

    As far as taxes go, to be 100% I'm not big into flips because i dont like managing contractors and at 24 I'm not patient enough to wait 3-6 months for a flip, in 3-6 months I can do 5-10 deals that equal the amount (pre-tax) on what a flipper makes. Most wholesalers work to become flippers or buy and hold investors, I see more opportunities in equities when there's a market crash. If you're familiar with Berkshire Hathaway amd Warren buffet I'm basically using wholesaling the way he uses GEICO once I automate this more I want to spend more time analyzing businesses to purchase (whole or partially through stock). 

    I honestly think developers have it the hardest, not wholesalers. What makes this business seem hard is something everyone overlooks: you cant predict when a seller becomes motivated, you could send out 10,000 and not get a call back, not because "wholesaling doesn't work" but because at that moment in time no one on your list happened to be motivated. 

    Also, we never go into a negotiation when price is the MAIN concern we're looking for situations, not pretty houses or even ugly houses for that matter, That business model alone basically forces us to be in a business where we literally help people going tthrough difficult situations. 

  • Wholesaler · Madison , WI · Member since 2016 · 79 posts · 64 votes
    10y

    @Jay, Wow Michael Quarles is my biggest inspiration in business besides Warren buffett. He's who got me into studying negotiation. 

    I know for a fact it's more difficult on the west, but not impossible, right? 

    No disrespect intended in any of this, 

  • Mike CumbieBusiness Member
    REALTOR® · Brockport, NY · Member since 2015 · 3k+ posts · 4k+ votes
    10y

    I have no problem with wholesalers in general. I believe there are situations that warrant the practice. The ones I have a problem with are the ones who say

    " I GUARANTEE there's an agent pissed off at guy who made his annual salary in one deal. "

    If I was ethically challenged I could find one little old lady a year to convince her house was worth $150k less than it really is. It's not the master negotiator doing it. It's not the guy going to investors and convincing them to sell cheap or owner finance. It's the swindlers taking the equity from those who don't have someone that knows watching out for them that piss me off. Not because I am jealous... Because it is dishonest. It's no better than giving them sugar pills for half their social security check and justifying it by saying "the power of positive thinking is real".

  • Wholesaler · Madison , WI · Member since 2016 · 79 posts · 64 votes
    10y

    @Mike I bet you net more than as an agent I just started about a year ago and was lucky I had an agent help explain and go over contracts and comps with me, I don't wanna argue with the big dogs. 

    14 deals in, I honestly do believe jealousy has a lot to do with assignments being illegal in some states. 

    My comment about the annual salary in one deal came from a personal experience, when a deal fell through because I was dumb newbie who thought he could wholesale off the MLS.

  • Wholesaler · Madison , WI · Member since 2016 · 79 posts · 64 votes
    10y

    Also I was fortunate to meet a private lender through my agent partner, that accelerated everything 11 deals came after that, so when I say "wholesale" I mean I'm literally closing on them most of the time, and reselling, so when people go around saying THAT is a shady business tactic it blows my mind. 

  • Mike CumbieBusiness Member
    REALTOR® · Brockport, NY · Member since 2015 · 3k+ posts · 4k+ votes
    10y

    If your closing, personally I consider that buying and selling or investing. Even if you assign a contract over it makes sense if something happened you could/would still close. If someone else is better equipped to handle the flip or something legitimate is found out about the property (cloudy title, mineral rights gone, easement through pool). Sure it is business, but if someone can't close or doesn't have the relationships with cash buyer's going in things get ugly and the general public gets hurt. Which brings regulations down on all of us. 

    If you work with integrity we all benefit. 

    Just my 2 cents and good luck in your investing

  • Flipper/Rehabber · Bakersfield, CA · Member since 2008 · 3k+ posts · 3k+ votes
    10y

    I have been on BP since its inception and although there are the pity pat arguments about nothing to do with real life in all its an encouraging place to be.

    As to the wholesaler haters... I don't see it. I do see some with miss information going around. But heck that's with everything. Now maybe some would characterize me as a hater because I use the word YUCK when discussing assigning and wholesaling.  Only because assigning has to be the worst investment strategy UNLESS the Assignor doesn't understand varies financing or resell opportunities.

    Heck most of the work is in the front side and folks give their profit away because they don't know how to market or finance the property for the entire gain.

    As to being dishonest when buying a home from a little ole lady at 150 off. I've bought one.. However I made certain she had her son there during the negotiation. And when done he thanked me for buying his moms house. It happened to be the last obstacle keeping her from moving in with him and his wife. BTW I treated her the same as I treat every seller, honestly.

    Its all about ethical negotiation.

  • Wholesaler · Madison , WI · Member since 2016 · 79 posts · 64 votes
    10y

    I'm joining your program (can I even say that on BP?). I wanna be "freakin' gorilla" too, 6 figures aint enough. 

    Not trying to kiss a** but I pretty much got the whole "being brutally honest with the seller" thing from you. BTW, we wholesale because for some odd reason no one else is really doing it in Wisconsin and you've been dropping like 92 podcasts a day so we didn't join yet to learn how to do what you do. 

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