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!

After reading and digesting all written in this thread, I have done some serious thinking about wholesaling and based on my 38 years experience as a real estate investor, note buyer, private lender and syndicator here are my thoughts 1. People who have the gumption to try and set up their own business, as wholesalers, should be praised for their independence, entrepreneurial spirit, and drive in attempting to become successful. 2. The fact that gurus and their hype lead some to believe that wholesaling is easier than it is, more financially rewarding than it is, and teach ethically questionable practices, is unfortunate. 3. Whether or not a wholesaler needs to be licensed is a question for Judicial interpretation, I do not trust state real estate commissions to make an unbiased judgement. 4. If a wholesaler can't or won't close on a purchase unless he assigns the contract, it is only moral and ethical that he inform the seller of such before the seller signs the contract. If he hedges in any way, then he is not representing himself honestly. However, doing such is not illegal. 5. Real estate brokers model usually precludes them from successfully representing sellers of very low priced houses, or houses needing more than just cosmetic repairs ( although they will sometimes still be willing to list these type properties, they will not put marketing effort or dollars into them, and their success rate of selling them is low). In these situations, a wholesaler may be the sellers only viable option to sell the house. Since rehabbers are better off concentrating on rehabbing and paying a little more for product, wholesalers provide an efficient method of sourcing this product. In these instances, wholesalers add value and provide a needed service. 6. The huge number of unknowledgeable, unrealistic, unethical (intentional or unintentional) and inexperienced wholesalers operating with no oversight produces problems for seller's and hurts the reputation of the real estate industry. Investors fear increased inappropriate governmental regulation will result. 7. Despite widespread misuse of the term, wholesalers are in no way, shape or form real estate investors. Just as brokers, appraisers, inspectors, plumbers, etc. are not real estate investors. To be a real estate investor, one must own real estate as an investment. So, if you assign contracts, or double close, you fail the test of ownership. And if you do take ownership, short term with the intent of a fast flip, you fail the "as an investment " test. You own real estate as inventory, not "as an investment". And despite the belief of some of the wholesalers, the distinction is very important.

@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!

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.

I thought I would share my agreement. PURCHASE AND SALES AGREEMENT DATED: ________________ PARTIES: _______________________________, as Seller, and ___________________________, as Buyer, whose mailing address is _______________________________________ and telephone number is _______________. Buyer and Seller which terms may be singular or plural and will include the heirs, successors, personal representatives and assigns, hereby agree that the Seller shall sell and Buyer shall buy the following legally described Property. • THE PROPERTY DESCRIBED AS: _________________________________________________________ (Street address) City of ______________________ State of _____ County of ___________ Assessor’sParcel Number ____________________: • FINANCING/TERMS/PURCHASE PRICE: The Purchase Price Offered is:$_______________.00.Deposit(s) to be held in escrow byCompany of Buyer’s choice. Deposit to be placed into escrow prior to the closing of escrow in the amount of: $ _______________. 00. Balance to close, (U.S. Cash, certified or cashier's check) not including Buyer’s closing costs and subject to adjustments and prorations Approximate Exact: $_______________.00. City of ______________________ State of _____ County of ___________ Assessor’sParcel Number ____________________: The Purchase Price Offered is:$_______________.00. Deposit(s) to be held in escrow byCompany of Buyer’s choice. Deposit to be placed into escrow prior to the closing of escrow in the amount of: $ _______________. 00. Balance to close, (U.S. Cash, certified or cashier's check) not including Buyer’s closing costs and subject to adjustments and prorations Approximate Exact: $_______________.00. If checked All Cash Purchase. If checked Subject to Existing Mortgages/Loans: See Addendum #_____ If checked Seller Financing and Terms: See Addendum #_____ • CONSIDERATION RECEIPT AND SUFFICIENCY: Seller hereby acknowledges and accepts the amount of consideration as the total consideration for the sale of the property to Buyer. Seller is satisfied as to the amount of consideration and acknowledges the consideration to be a sufficient amount to purchase the aforementioned Property. • APPRAISAL CONTINGENCY: This Agreement is contingent upon a written appraisal of the Property by a licensed or certified appraiser.The Buyer will order and pay for an appraisal on the property. If the appraised value is less than $__________ which is the amount quoted by The Seller as to what the house is Worth in its As Is Condition in Today’s Market, After Repair Value, the Buyer may, within three (3) calendar days of Buyer's receipt of the appraisal, at Buyer's sole option, declare this agreement null and void. Buyer is entitled to a return of all deposits, if any, less the appraisal fee and any other escrow expenses or fees chargeable to the Buyer. Thereafter,neither the Buyer, the Seller nor any brokersshall have any further rights, obligations, or liabilities under this contract. • CLOSING DATE: This transaction shall be closed and the Deed and other Closing Papers delivered in __________ days following the date of final acceptance or on _______________,20_____, or sooner, unless extended by other provisions of this Purchase andSales Agreement, or by written agreement of the Parties and also at the sole option of the buyer. • OCCUPANCY: Exclusive irrevocable possession and occupancy shall be delivered to Buyer, Buyer’s Assignees, or Buyer’s Agents at 5:00 PM on the date this agreement is signed by Seller, on the date of Close of Escrow, on ________________, 20______ or no later than ___________ days after Close of Escrow. If checked Property shall be vacant at least __________ days prior to Close of Escrow. If checked Property is intended to be rented or occupied beyond closing, the fact and terms thereof shall be stated herein. • CONDITION OF PROPERTY: Buyer is buying property in an “As Is” condition. • INSPECTION OF PROPERTY: Buyer shall have until the close of escrow to complete all Buyer investigations of the Property and approve all matters affecting the Property. Buyer may in Buyer’s sole and absolute discretion, give notice of termination of this Agreement at any time prior to the expiration of the inspection period, and upon such termination, all deposits held in escrow shall be returned to Buyer. • COSTS: Buyer shall pay for all normal closing costs. Costs shall not include voluntary or involuntary liens against the property. • NON-AGENCY RELATIONSHIP: A principal with Buyer is a Department of Real Estate Licensee. An Agency relationship between Buyer and Seller does not exist. Seller should seek advice from their legal counsel prior to agreeing to the terms of this Agreement. • TIME FOR ACCEPTANCE AND EFFECTIVE DATE: This Offer shall be deemed revoked unless the Offer is signed by Seller indicating an Acceptance and a copy of the Signed Offer is received by the Buyer on or before _____:01 PM, on __________, 20_____. If a copy of the Signed Offer is not received by Buyer on or before the Date and Time stated above, the aforesaid Deposit(s) shall be, at the option of the Buyer, returned to Buyer and this offer shall thereafter be null and void. • ASSIGNABILITY: Buyer may assign this Agreement. • Resell: Seller is aware that Buyer intends on reselling the property for a HUGE PROFIT. All profits made by Buyer during this transaction relating to the reselling of the property are the sole interest of and solely owned by the Buyer. • TYPEWRITTEN OR HANDWRITTEN PROVISIONS: Typewritten or handwritten provisions inserted herein or attached hereto as Addenda shall control all printed provisions in conflict therewith. • NOT A LOAN TO SELLER TRANSACTION: Seller acknowledges that the buyer is not lending to the seller any monies and this Purchase and Sales Agreement is an agreement to purchase the aforementioned Property only. All monies shall be given to the seller on the day escrow closes as defined in section II. • SECURITY DEPOSITS: Security deposits, if any, shall be paid to the Buyer. All Rents collected shall be prorated and said prorations paid to Buyer. • LIENS: Seller shall, both as to the Property and Personally being sold hereunder, furnish to Buyer at time of closing an affidavit attesting to the absence, unless otherwise provided for herein, of any financing statements, claims of lien or potential lienors known or reasonably expected to be known to Seller and further attesting that there have been no improvements to the Property for ninety days immediately preceding date of closing. • PLACE OF CLOSING: Closing shall be held in the county wherein the Property is located, at the office of the attorney or other closing agent designated by Buyer. • TIME: Time is of the essence of this Agreement. Any reference herein to time periods of less than six days shall in the computation thereof, exclude Saturdays, Sundays and legal holidays, and any time period provided for herein which shall end on a Saturday, Sunday or legal holiday shall extend to 5:00 p.m. of the next business day. • ATTORNEY FEES AND COSTS: In connection with any litigation including appellate proceedings arising out of this Agreement, the prevailing party shall be entitled to recover reasonable attorney's fees and costs. • DEFAULT BY SELLER: In the event that Seller should fail to consummate the transaction contemplated herein for any reason, except Buyer's default; (i) Buyer may enforce specific performance of this Agreement in a court of competent jurisdiction and in such action shall have the right to recover damages suffered by Buyer by reason of the delay in the acquisition of the Property, or (ii) may bring suit for damages for breach of this Agreement, in which event, the deposit made hereunder shall be forthwith returned to Buyer, or (iii) declare a default, demand and receive the return of the deposit. All rights, powers, options or remedies afforded to Buyer either hereunder or by law shall be cumulative and not alternative and the exercise of one right, power, option or remedy shall not bar other rights, powers, options or remedies allowed herein or by law. • DEFAULT BY BUYER: In the event Buyer should fail to consummate the transaction contemplated herein for any reason, except default by Seller or the failure of Seller to satisfy any of the conditions to Buyer's obligations, as set forth herein, Seller shall be entitled to retain the earnest money deposit, such sum being agreed upon as liquidated damages for the failure of Buyer to perform the duties and obligations imposed upon it by the terms and provisions of this Agreement and because of the difficulty, inconvenience and uncertainty of ascertaining actual damages, and no other damages, rights or remedies shall in any case be collectible, enforceable or available to Seller other than as provided in this Section, and Seller agrees to accept and take said deposit as Seller's total damages and relief hereunder in such event. • MEMORANDUM OF CONTRACT RECORDABLE, PERSONS BOUND AND NOTICE: Buyer may cause to be recorded, at Buyer's option and expense, in the public records of the county in which the property is located, an executed Memorandum of Contract. This Agreement shall bind and inure to the benefit of the Parties hereto and their successors in interest. Whenever the context permits, singular shall include plural and one gender shall include all. Notice given by or to the attorney for either party shall be as effective as if given by or to said party. • PRORATIONS AND INSURANCE: Taxes, assessments, rent, interest, insurance and other expenses and revenue of the Property shall be prorated as of date of closing. Buyer shall have the option of taking over any existing policies of insurance on the Property, if assumable, in which event premiums shall be prorated. The cash at closing shall be increased or decreased as may be required by said prorations. All references in the Agreement to prorations as of date of closing will be deemed date of occupancy if occupancy occurs prior to closing, unless otherwise provided for herein. • OTHER AGREEMENTS: No prior or present agreements or representations shall be binding upon any of the Parties hereto unless incorporated in this Agreement. No modification or change in this Agreement shall be valid or binding upon the Parties unless in writing, executed by the Parties to be bound thereby. • Clerical Error Waiver:In the event the Buyer at any time discovers that any of the documents executed in connection with this transaction contain an error caused by clerical mistake, calculation error, computer malfunction, printing error or similar error, all parties agree, upon notice from the Buyer, to re-execute any documents that are necessary to correct such error(s). Seller agrees that no party to this transaction will be liable to the Seller for any damages incurred by the Buyer that are directly or indirectly caused by any such error(s). • MARKETING: Seller authorizes Buyer to market property during escrow for Buyers benefit. Marketing is defined as, but not limited to, placing the property for sale in the Real Estate Multiple Listing Service (MLS), advertising in the Newspaper or other periodical, and placing a for sale sign on the property. • Meeting of the Minds Acknowledgement:Seller has thoroughly and completely reviewed the Purchase and Sales Agreement and understands completely all terms and conditions contained therein. Seller further acknowledges having no confusion, uncertainty about any aspect of the Purchase and Sales Agreement and has sufficient experience in real estate transacting to be able to sign the Agreement with absolute confidence in Seller’s ability to comprehend all matters related to it and to the sale of the property. Seller further understands and agrees to have been given sufficient time to read through this Agreement and has also been given the opportunity to seek advice from Seller’s legal council prior to agreeing to the terms of this Purchase and Sales Agreement. The Buyer, their representatives, or Seller’s current situation has not forced Seller into signing this Agreement. • ADDITIONAL TERMS: ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

@Jay Hinrichs I am always amused that some folks think that someone who is proficient in sales and negotiation is somehow taking advantage for folks. I think the opposite. Those who understand negotiation aren't afraid of honesty. We realize that it's an asset. When one understands the concept of character closes they then understand the power of disclosing and thus its effectiveness. Btw I have yet to have a seller complain about that paragraph.

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.

Folks, "investing" requires an investor to take on a financial risk, it has nothing to do with money in the deal really, a significant risk, not just the chance of losing earnest money, but taking ownership of an asset, accepting ownership and financial risks. A flipper is investing in real estate if they buy it, they certainly take on a greater financial risk by making and paying for improvements in hopes of forcing appreciation. If I buy a house with 100% seller financing, I've taken on a financial risk by signing the note and I take title. Doesn't really matter what I do in the next 30, 60, 90 days or in 5 years, my goal is to make a profit by holding title and paying for that house. If you don't take title and take on a financial risk with the dirt, you're not investing in real estate, you're an "operator" such as investing your money in options, you might be an options investor but you're not a real estate investor, you fall in to the real estate operators category. When and if you take title, along with accepting financial risks, then you become a real estate investor. I didn't take a poll, but most members on BP are operators, not investors in real estate. When you joined BP, you automatically get tagged by BP as an investor, that is simply marketing hype for the site, it's meant to pump you up, join the exclusive club of "investors" it's simply a cool title for social networking. It's a badge you get to wear on BP, nothing more. Everyone has an ego, in psychology we have an "Id" that little character that sits on your shoulder telling you how great you are, we have a mental picture of ourselves as to our social acceptance, this picture needs to be somewhat fairly assessed to be mentally healthy, too much of a higher opinion makes you egotistical and too little is low self esteem, that breads anxiety and depression. A good marketeer or sales person plays on your Id to motivate you, this can also be leadership, influencing others to do what they normally would not do. If you want to know what makes the "world go round" study psychology, you're constantly being "played", another reason to have a good BS Meter! So, we will always define ourselves generally a bit better than others see us, keeping this in check realistically is key to our personality. I'm often amused by some of the BSer's on BP, you can spot those whose favorite word is "I" and can't make a post without pumping their ego, then like a room full of junior high groupies following them, they'll dream up more stories to tell. But, it is a social site! I've accepted the popular term "investor" on BP, I'm amused when newbies begin a post with "I'm an investor in" everyone needs an identity, it's a hard wired psychological need. I don't see any harm in their impression of themselves on BP, but a bit more care might be in order when someone is speaking with someone who really is an investor, one with experience and means as they may be laughing behind that smile, knowing the difference between an operator and an investor. I'm not a shrink, but I did read a psychology book once! Okay, several..... And, Allen, I thought everyone on BP was in the "in crowd" membership status is another ego trip that is sold, (there are advertising advantages with Pro membership) but there is no reason to set yourself on the "outside" unless that is where you want to be. All investors and operators are welcome here! Just don't screw it up...... :)

How to shut up the Wholesale bashers

Michael Quarles

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

10y

@Allen Felker you can talk about my program all you want however I cant. Even when asked a direct question.

1 Reply

Bhekizwe M.

Bulawayo, Zimbabwe · Member since 2015 · 1k+ posts · 253 votes

10y

Great OP.Responses were helpful too

ethics & honesty go a long way

1 Reply

Andrew SyriosPro Member

Moderator

Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes

10y

"Borderline hate speech..." hyperbole much? A think the main reason wholesalers are looked down on by many is that a good number of wholesalers just mass email out overpriced junk in rundown neighborhoods. Of course, there are quite a few good ones and we have worked with several. The best way to silence the haters is to rise above the mediocre wholesalers and do it right. Haters are gonna hate, so just ignore the noise and get it done.

Podcast Guest on Show #121

4 Reply

John Thedford

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

10y

@Allen Felker

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

Thank YOU. You just proved exactly what I referred to in one of my previous posts.

1 Reply

Edgar Lafaurie

Investor · Fort Lauderdale, FL · Member since 2016 · 10 posts · 4 votes

10y

Truth is - most that hate on wholesalers are mad about paying assignment fees... But they shouldn't be. Most wholesalers find dormant deals, that otherwise would end up in foreclosure, probate or the owners simply procrastinate and wonder "what if?". If your hate wholesalers because you don't like paying them the additional $ on top of the contract price, then you should go out and do the leg work yourself. I'm sure most will loose any compassion as soon as they see the opportunity to make an extra $15k... Any responsible and fair wholesalers with multi family deals? Send me a message. Florida, Alabama & Tennessee

2 Reply

Adrienne Bryson

Flipper/Rehabber · High Point, NC · Member since 2016 · 276 posts · 183 votes

10y

People can bash if they want to. Truth is most laypeople think all real estate investors are the same and all scammers.

Some people have a superiority complex, but as long as you conduct yourself with integrity there's nothing wrong with investing regardless of which niche you choose.

1 Reply

Svetlana Foley

Realtor · New Berlin, WI · Member since 2016 · 118 posts · 47 votes

10y

Let me get this straight: the agent taught you negotionations, contracts, and showed you the ropes. The agent hooked you up with the lender that your business cannot survive without. The agent helped you with your first deals and your start in the wholesale business. And now you are bashing the agents????? The only hate I see so far is from you. There is a place for both wholesalers and agents and flippers, and some of us work in multiple capacities. Many times I negotiate with the wholesaler if I have a buyer.

Stop hating and put your energy into getting more deals closed.

6 Reply

Judah Alexander

Investor, Wholesaler · New Orleans, LA · Member since 2015 · 22 posts · 11 votes

10y

@Allen Felker

Interesting thread.

0 Reply

Brad Sanford

Investor · Harvest, AL · Member since 2014 · 29 posts · 9 votes

10y

June Piper-Brandon

Do you lend in Alabama and Florida? Mostly SFR, but a couple of small multifamily projects in the works.

0 Reply

Chris Boyd

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

10y

@Allen Felker I see you were able to get some of the haters to come out, lol! Your points are valid. From this thread, I can see you are a honest man, and a smart business man. Thank you for speaking up, and do not worry (at all) about that particular gentleman that thinks he knows everything. I see him all over BP bashing wholesalers...he obviously has too much time on his hands..cheers!

2 Reply

Cheryl Crockett

Real Estate Investor · Baltimore, MD · Member since 2016 · 63 posts · 35 votes

10y

Why can't we all just get along?

(because there's money involved)

-SMH-

Go Team "Double-Close"!!

2 Reply

Allen Felker

OP

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

10y

@Svetlana...

Don't take everything to heart, this is social media. No one taught me Negotiation, I studied it, took classes, etc. Facts.

0 Reply

Allen Felker

OP

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

10y

Dear agents, we love and need you..please do not hate us (wholesalers).

2 Reply

Joshua Martin

Investor · Milwaukee, WI · Member since 2016 · 389 posts · 193 votes

10y

Allen Felker Great thread. I'm trying to jump into the wholesale game because I'm also starting with pretty limited cash (enough for a small marketing campaign), and I plan to conduct myself exactly as you describe. My basic idea is, the seller and I have to be happy with the deal. I'm not out to be a shark or go for the throat, I'll offer as much as I can to make a deal still that, a deal. As for agents, I do have a license (and so am trying to navigate the terrain of doing both) though I primarily want to wholesale. I don't think one is better or worse, they are just for different sellers. I spoke with someone yesterday who called me off a yellow letter, and because she is in no pinch to sell, I suggested she list on the MLS because she could get closest to the 'as is' value as possible. The way I see it, the services of a wholesaler are just for a different type of seller altogether. To be honest with where I'm at though, while I don't intend to tie up poorly priced properties and try to shop them around, I don't yet have transactional funding, so based on your advice, I'll be talking to hard money lenders. (Is that basically where you'd look?) And lastly, I think wholesalers get a bad rap because there seem to be a lot of junky ones. Just fielding calls and talking to people the last few weeks I've talked to three now that talk talk talk about their connections, and try to get me to shop around clearly over priced properties. I told one he was out of his mind. In any case, good stuff. And let the haters hate. Best, JTM

0 Reply

Allen Felker

OP

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

10y

@Joshua, you know....you made an excellent point.

I just seen a deal come by from a wholesaler in Milwaukee. I forgot the numbers but since I have MLS access I checked and his ARV was WAAY off. This isn't used car sales guys...

And there is absolutely nothing wrong with having or getting a license I just never needed to for reasons I mentioned earlier.

It's not that hard, get a transactional lender (can't give away names so..) focus on negotiation skills to increase profits even if they take 1-2% off top.

As far as assignments go I just do it when the spread is too low to justify using my lender, which isn't too often because I'm like a 8.5 out 10 as a negotiator, My partner think I'm A 7 lol.

It's just all About honesty,

0 Reply

Larry Turowski

Flipper/Rehabber · Rochester, NY · Member since 2014 · 1k+ posts · 1k+ votes

10y

Originally posted by @John Thedford:

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.

John, what buyer wants to make sure the seller gets as much as they possibly can? Are you saying all investors should pay the most the market would bear? Or is it okay for a some who actually takes title and rehabs to pay $30k less but not a wholesaler?

1 Reply

John Thedford

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

10y

@Larry Turowski

What I am saying is there should be transparency, no misleading of sellers, legal actions, etc. We all want to make money. The deal I referred to skinned the seller out of 30K with the "wholesaler " acting as a broker. That was no benefit to the seller. There are so many threads on these new guys asking how to deceive sellers, etc and I have purchased houses from sellers messed over by these types of operators. It is almost as if dishonesty has become the norm..sad to say.

0 Reply

Allen Felker

OP

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

10y

John I bet if I brought you a deal that made you 40K you'd love wholesalers.

0 Reply

Don KonipolBusiness Member

Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes

10y

If a wholesaler will only conclude a purchase IF he is able to sell or assign at a profit, and If he wants to be honest with the seller, why doesn't he have as part of the purchase contract a statement that the purchase of the property will ONLY take place if he is able to flip the contract at a profit? Why instead is this point glossed over by "weasel clauses", vague references to "representing a group of investors", etc.?

Wholesalers claim to be principals in the transaction, and not intermediaries. But if they are not going to conclude the purchase as a principal, then are they actually principals or are they merely intermediaries disguised as principals? If they are principals then they are in an adversarial role vis a vis the seller (legal definition). If they are intermediaries then they are either an agent for the seller or a intermediary between seller and buyer. In either of these cases they have certain legal obligations to the seller which I doubt any wholesaler complies with.

So, wholesalers legal argument rests on the fact that they are principals, despite the fact that they do not do what principals do, which is conclude the purchase (for their own account).

Now, whether wholesalers provide an economically justifiable benefit or not is another matter. In a world in which Realtors represented an actual service industry, instead of a profit maximizing semi monopoly with PR and lobbyist to try to convince the public otherwise, and political contributions geared to the interests of sustaining their interests, wholesalers opportunity for profits would be very limited. However, since Realtors will not engage in any activity that does not maximize their profits and minimize their time commitment, the opportunity for wholesalers to profit is greatly increased. Some of these transactions involving wholesalers are of great benefit to sellers, buyers, and the immediate neighborhood. Some are detrimental to sellers resulting in significant financial loss to them.

If as I said at the beginning of my post wholesalers would include as part of their contract the disclosure that they will not be concluding the contract unless they are able to resell at a profit, I would have no issue with wholesaling. My problem with wholesaling is when the seller does not understand that the sale is contingent on the profitable assignment or double close, and the resulting possible financial consequences of the sellers lack of understanding.

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5 Reply

Allen Felker

OP

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

10y

@Don I love it! You're 100% correct.

Why are you not a guru?

0 Reply

Allen Felker

OP

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

10y

We actually explain that before we even get a contract signed. I'm not sure what the other guys who just walked out of "get rich quick" seminars do...

0 Reply

Adrienne Bryson

Flipper/Rehabber · High Point, NC · Member since 2016 · 276 posts · 183 votes

10y

Here's the thing... There are dishonest people EVERYWHERE and in every line of work. But if you told me you wanted to become a teacher, I wouldn't call you scum just because *some* teachers are child molesters. Yeah they're the ones that get all the attention but there are millions of really great teachers that only teach because they love making a difference.

Yeah some wholesalers are dishonest and sneaky and they lie to and cheat their sellers... And from what I've seen those are the ones that are only doing what their $5000 get rich in 30 days class taught them.

The majority of wholesalers I've met, talked to, and seen are like me... I'm young and relatively cash poor, I have a passion for real estate and I love helping people.

I wish I could afford to double close on every house. Maybe if I lived in one of those markets where a "cheap" house is $300k and assignment fees aren't usually lower than $15k... But when I'm faced with an old lady that desperately needs out of her house, am I really supposed to say "Sorry, but since your house is only worth $65k at best and I'll probably only make $2k profit I simply can't afford to help you, ya know because saving money with contract assignment is evil."

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Michael Quarles

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

10y

Investor categories.

Assignor - Someone who negotiates a contract to purchase real property and subsequently sells the aforementioned contract for a fee. The contract is the assignors personal property. The fee plus the contracted amount is typically, once added together, steeply discounted off of market value. However it does not have to be. In most cases the fee paid to the assignor is at the close of purchase. This person in some states is legally limited on the number of transactions allowable without a real estate licensee attached to the transaction. Marketing begins immediately. Typically never using a real estate licensee.
Wholesaler - Someone who negotiates a contract to purchase real property at a discount of market value. ARV x 70% minus repairs = MAO. Then subsequently purchases the property creating constructive notice or in some cases creates a performance contract. Then typically re-sells that property at a greatly reduced value of market value. This person is never legally limited in the number of transactions. Marketing begins immediately. Typically never using a real estate licensee.
Wholetailer - Someone who negotiates a contract to purchase real property at a discount of the market value. ARV - 2(repairs) = As Is x 65% = MAO. They then purchase the property creating constructive notice or in some cases creates a performance contract. Then re-sells the property for 100% of As Is value. Typically using a licensee via the MLS. Marketing begins immediately. This person is never legally limited in the number of transactions. Maximum work requires are health and safety.
Fix and Flipper - Someone who negotiates a contract to purchase real property at a discount of market value. Typically at ARV x 70% minus repairs = MAO. Then subsequently purchases the property creating constructive notice or in some cases creates a performance contract. Then rehabs the property, bringing it up to market standards and reselling aforementioned property at 100% of market value. Typically using a licensee via the MLS. Although not always. Marketing begins once rehab is complete. This person is never limited in the number of transactions. This person may need a GBC license in rare occasions or have one attached to the rehab.

2 Reply

Nathan Paisley

Flipper/Rehabber · Atlantic County, NJ · Member since 2012 · 514 posts · 209 votes

10y

There are several way's to wholesale and not all deal with a distressed seller. On a side note, I tried getting an agent (friend of mine) on board with me 4-5 years ago and his "mentor" told him not to work with me. The funny thing is this "mentor" who was an agent himself told me a story of how he walked away from a property he owned describing it like, pulling up to a red light in a car, opening the door and just walking away like nothing ever happened"! What a guy! Fast forward my agent friend funded our last flip together and is freakin out about how much money he's gonna make because we brought the wholesale deal and he funded it.

I believe the vast majority of agents (like 98%) don't further their investing brain power past what they learn while getting their license...

1 Reply

Michael Quarles

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

10y

I thought I would share my agreement.

PURCHASE AND SALES AGREEMENT

DATED: ________________

PARTIES: _______________________________, as Seller, and ___________________________, as Buyer, whose mailing address is _______________________________________ and telephone number is _______________. Buyer and Seller which terms may be singular or plural and will include the heirs, successors, personal representatives and assigns, hereby agree that the Seller shall sell and Buyer shall buy the following legally described Property.

THE PROPERTY DESCRIBED AS: _________________________________________________________ (Street address)
City of ______________________ State of _____ County of ___________ Assessor’sParcel Number ____________________:
FINANCING/TERMS/PURCHASE PRICE:
The Purchase Price Offered is:$_______________.00.
Deposit(s) to be held in escrow byCompany of Buyer’s choice. Deposit to be placed into escrow prior to the closing of escrow in the amount of: $ _______________. 00. Balance to close, (U.S. Cash, certified or cashier's check) not including Buyer’s closing costs and subject to adjustments and prorations Approximate Exact: $_______________.00.

If checked All Cash Purchase.

If checked Subject to Existing Mortgages/Loans: See Addendum #_____

If checked Seller Financing and Terms: See Addendum #_____

CONSIDERATION RECEIPT AND SUFFICIENCY: Seller hereby acknowledges and accepts the amount of consideration as the total consideration for the sale of the property to Buyer. Seller is satisfied as to the amount of consideration and acknowledges the consideration to be a sufficient amount to purchase the aforementioned Property.
APPRAISAL CONTINGENCY: This Agreement is contingent upon a written appraisal of the Property by a licensed or certified appraiser.The Buyer will order and pay for an appraisal on the property. If the appraised value is less than $__________ which is the amount quoted by The Seller as to what the house is Worth in its As Is Condition in Today’s Market, After Repair Value, the Buyer may, within three (3) calendar days of Buyer's receipt of the appraisal, at Buyer's sole option, declare this agreement null and void. Buyer is entitled to a return of all deposits, if any, less the appraisal fee and any other escrow expenses or fees chargeable to the Buyer. Thereafter,neither the Buyer, the Seller nor any brokersshall have any further rights, obligations, or liabilities under this contract.
CLOSING DATE: This transaction shall be closed and the Deed and other Closing Papers delivered in __________ days following the date of final acceptance or on _______________,20_____, or sooner, unless extended by other provisions of this Purchase andSales Agreement, or by written agreement of the Parties and also at the sole option of the buyer.
OCCUPANCY: Exclusive irrevocable possession and occupancy shall be delivered to Buyer, Buyer’s Assignees, or Buyer’s Agents at 5:00 PM on the date this agreement is signed by Seller, on the date of Close of Escrow, on ________________, 20______ or no later than ___________ days after Close of Escrow. If checked Property shall be vacant at least __________ days prior to Close of Escrow. If checked Property is intended to be rented or occupied beyond closing, the fact and terms thereof shall be stated herein.
CONDITION OF PROPERTY: Buyer is buying property in an “As Is” condition.
INSPECTION OF PROPERTY: Buyer shall have until the close of escrow to complete all Buyer investigations of the Property and approve all matters affecting the Property. Buyer may in Buyer’s sole and absolute discretion, give notice of termination of this Agreement at any time prior to the expiration of the inspection period, and upon such termination, all deposits held in escrow shall be returned to Buyer.
COSTS: Buyer shall pay for all normal closing costs. Costs shall not include voluntary or involuntary liens against the property.
NON-AGENCY RELATIONSHIP: A principal with Buyer is a Department of Real Estate Licensee. An Agency relationship between Buyer and Seller does not exist. Seller should seek advice from their legal counsel prior to agreeing to the terms of this Agreement.
TIME FOR ACCEPTANCE AND EFFECTIVE DATE: This Offer shall be deemed revoked unless the Offer is signed by Seller indicating an Acceptance and a copy of the Signed Offer is received by the Buyer on or before _____:01 PM, on __________, 20_____. If a copy of the Signed Offer is not received by Buyer on or before the Date and Time stated above, the aforesaid Deposit(s) shall be, at the option of the Buyer, returned to Buyer and this offer shall thereafter be null and void.
ASSIGNABILITY: Buyer may assign this Agreement.
Resell: Seller is aware that Buyer intends on reselling the property for a HUGE PROFIT. All profits made by Buyer during this transaction relating to the reselling of the property are the sole interest of and solely owned by the Buyer.
TYPEWRITTEN OR HANDWRITTEN PROVISIONS: Typewritten or handwritten provisions inserted herein or attached hereto as Addenda shall control all printed provisions in conflict therewith.
NOT A LOAN TO SELLER TRANSACTION: Seller acknowledges that the buyer is not lending to the seller any monies and this Purchase and Sales Agreement is an agreement to purchase the aforementioned Property only. All monies shall be given to the seller on the day escrow closes as defined in section II.
SECURITY DEPOSITS: Security deposits, if any, shall be paid to the Buyer. All Rents collected shall be prorated and said prorations paid to Buyer.
LIENS: Seller shall, both as to the Property and Personally being sold hereunder, furnish to Buyer at time of closing an affidavit attesting to the absence, unless otherwise provided for herein, of any financing statements, claims of lien or potential lienors known or reasonably expected to be known to Seller and further attesting that there have been no improvements to the Property for ninety days immediately preceding date of closing.
PLACE OF CLOSING: Closing shall be held in the county wherein the Property is located, at the office of the attorney or other closing agent designated by Buyer.
TIME: Time is of the essence of this Agreement. Any reference herein to time periods of less than six days shall in the computation thereof, exclude Saturdays, Sundays and legal holidays, and any time period provided for herein which shall end on a Saturday, Sunday or legal holiday shall extend to 5:00 p.m. of the next business day.
ATTORNEY FEES AND COSTS: In connection with any litigation including appellate proceedings arising out of this Agreement, the prevailing party shall be entitled to recover reasonable attorney's fees and costs.
DEFAULT BY SELLER: In the event that Seller should fail to consummate the transaction contemplated herein for any reason, except Buyer's default; (i) Buyer may enforce specific performance of this Agreement in a court of competent jurisdiction and in such action shall have the right to recover damages suffered by Buyer by reason of the delay in the acquisition of the Property, or (ii) may bring suit for damages for breach of this Agreement, in which event, the deposit made hereunder shall be forthwith returned to Buyer, or (iii) declare a default, demand and receive the return of the deposit. All rights, powers, options or remedies afforded to Buyer either hereunder or by law shall be cumulative and not alternative and the exercise of one right, power, option or remedy shall not bar other rights, powers, options or remedies allowed herein or by law.
DEFAULT BY BUYER: In the event Buyer should fail to consummate the transaction contemplated herein for any reason, except default by Seller or the failure of Seller to satisfy any of the conditions to Buyer's obligations, as set forth herein, Seller shall be entitled to retain the earnest money deposit, such sum being agreed upon as liquidated damages for the failure of Buyer to perform the duties and obligations imposed upon it by the terms and provisions of this Agreement and because of the difficulty, inconvenience and uncertainty of ascertaining actual damages, and no other damages, rights or remedies shall in any case be collectible, enforceable or available to Seller other than as provided in this Section, and Seller agrees to accept and take said deposit as Seller's total damages and relief hereunder in such event.
MEMORANDUM OF CONTRACT RECORDABLE, PERSONS BOUND AND NOTICE: Buyer may cause to be recorded, at Buyer's option and expense, in the public records of the county in which the property is located, an executed Memorandum of Contract. This Agreement shall bind and inure to the benefit of the Parties hereto and their successors in interest. Whenever the context permits, singular shall include plural and one gender shall include all. Notice given by or to the attorney for either party shall be as effective as if given by or to said party.
PRORATIONS AND INSURANCE: Taxes, assessments, rent, interest, insurance and other expenses and revenue of the Property shall be prorated as of date of closing. Buyer shall have the option of taking over any existing policies of insurance on the Property, if assumable, in which event premiums shall be prorated. The cash at closing shall be increased or decreased as may be required by said prorations. All references in the Agreement to prorations as of date of closing will be deemed date of occupancy if occupancy occurs prior to closing, unless otherwise provided for herein.
OTHER AGREEMENTS: No prior or present agreements or representations shall be binding upon any of the Parties hereto unless incorporated in this Agreement. No modification or change in this Agreement shall be valid or binding upon the Parties unless in writing, executed by the Parties to be bound thereby.
Clerical Error Waiver:In the event the Buyer at any time discovers that any of the documents executed in connection with this transaction contain an error caused by clerical mistake, calculation error, computer malfunction, printing error or similar error, all parties agree, upon notice from the Buyer, to re-execute any documents that are necessary to correct such error(s). Seller agrees that no party to this transaction will be liable to the Seller for any damages incurred by the Buyer that are directly or indirectly caused by any such error(s).
MARKETING: Seller authorizes Buyer to market property during escrow for Buyers benefit. Marketing is defined as, but not limited to, placing the property for sale in the Real Estate Multiple Listing Service (MLS), advertising in the Newspaper or other periodical, and placing a for sale sign on the property.
Meeting of the Minds Acknowledgement:Seller has thoroughly and completely reviewed the Purchase and Sales Agreement and understands completely all terms and conditions contained therein. Seller further acknowledges having no confusion, uncertainty about any aspect of the Purchase and Sales Agreement and has sufficient experience in real estate transacting to be able to sign the Agreement with absolute confidence in Seller’s ability to comprehend all matters related to it and to the sale of the property. Seller further understands and agrees to have been given sufficient time to read through this Agreement and has also been given the opportunity to seek advice from Seller’s legal council prior to agreeing to the terms of this Purchase and Sales Agreement. The Buyer, their representatives, or Seller’s current situation has not forced Seller into signing this Agreement.
ADDITIONAL TERMS:
____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

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How to shut up the Wholesale bashers

How to shut up the Wholesale bashers

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