Why am I running into the WORST wholesalers?
Hey BP!
In 2017, so far I have run into about eight wholesalers who were:
-Marketing properties they did not have under contract
-Daisy-chaining deals 3 and 4 deep
-Marking properties up 200 or more percent
-Dealing with properties that were not theirs to market
Is this normal? Or did I just manage to dive to the bottom of the pool?
More importantly, what are some good ways up front to tell if I am dealing with a reputable wholesaler? Thanks for the advice!
Originally posted by @Sherman M.:
How do you do bridge funding? Are you saying to buy the properties outright and then resell them instead of assigning them?
Ecactly
@Zana Blue I am still trying to figure that out! I guess this is where I get creative and listen to the advice and feedback from investors and learn what NOT to do. I don't want to be one of THOSE wholesalers. I think what I will do first is create a buyers list and find out what those buyers are looking for all the way down to the numbers...then I looks for those properties and get creative. I am in real estate already so the negotiation and conversation doesn't bother me. Im not afraid to get my hands a little dirty, I just need to get a solid game plan and get to moving! Also, I am all about honesty. I don't do the sneaky thing...Build trust and they will come!
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#2 All Forums Contributor
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@Ashlee Doerr I have been licensed for 42 years.. I have also been buying distressed real estate for 40 years.. took me two years to earn up enough to buy distressed real estate.
its all about disclosure.
And of course we are talking distressed real estate.. Not what some wholesalers do which is simply steal equity.. IE perfectly good home say its worth X when its really worth Y and the seller is ignorant.
But you can buy as a principal and just disclose:
I have put this simple line in my contracts for years.
"I am a RE broker in X state I am buying as a principal for profit or loss"
however and its a big However I Close .. the only time I have flipped has been big deals to national builders.. and its where I put up all the risk money to get land entitled. IE 100 200k of risk money..
with SFR type stuff I closed it all... and like I said its all been super distressed.... IE going to lose in in 3 days.. HOarder house... other issues.. if your buying that inventory and closing on it.. NO issues what so ever. its the deceitful practice that wholesalers are taught here on BP and other places that gives wholesaling such a crappy rep and slimmy thing to do
Heard the 80/20 rule. That refers to wholesales as well. 20% of them know what they are doing. I only have a handful the I work with.
I door knock for properties. What I don't do myself, I wholesale.
Thank you for that advice @Jay Hinrichs. I cant stand the feeling of being lied to. I work my real estate business the same way. I really want to help people who feel like they don't have any other option.
Give them YOUR formula and tell them you only want deals that fit those particular numbers, period.
I'm in Houston. I think its a Nationwide epidemic!
In all my years as an investor, I have learned one irrefutable fact: Wholesalers are like Prius drivers, the vast majority of them get into the fast lane and have no clue what they are doing!
in all reality, it's not even wholesaling....it's mainly (majority) wannabe's daisychaining deals in tyring to make a quick buck.
Originally posted by @Michaela G.:
Originally posted by @Sherman M.:How do you do bridge funding? Are you saying to buy the properties outright and then resell them instead of assigning them?
Ecactly
Ok. Thanks
#5 Wholesaling Contributor
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That may get through a loophole in LA, but it won't work in Florida anymore. Here is the statute. Regardless if you have a contract or not...it IS brokering. Note the wording about "contracts employed to permit an unlicensed person etc". The scammers are out of luck! There are only two ways to operate now: be licensed OR close and then sell.
| |||
| 475.43 Presumptions.—In all criminal cases, contempt cases, and other cases filed pursuant to this chapter, if a party has sold, leased, or let real estate, the title to which was not in the party when it was offered for sale, lease, or letting, or such party has maintained an office bearing signs that real estate is for sale, lease, or rental thereat, or has advertised real estate for sale, lease, or rental, generally, or describing property, the title to which was not in such party at the time, it shall be a presumption that such party was acting or attempting to act as a real estate broker, and the burden of proof shall be upon him or her to show that he or she was not acting or attempting to act as a broker or sales associate. All contracts, options, or other devices not based upon a substantial consideration, or that are otherwise employed to permit an unlicensed person to sell, lease, or let real estate, the beneficial title to which has not, in good faith, passed to such party for a substantial consideration, are hereby declared void and ineffective in all cases, suits, or proceedings had or taken under this chapter; however, this section shall not apply to irrevocable gifts, to unconditional contracts to purchase, or to options based upon a substantial consideration actually paid and not subject to any agreements to return or right of return reserved.
History.—s. 3, ch. 22861, 1945; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 27, 42, 43, ch. 79-239; ss. 2, 3, ch. 81-318; ss. 28, 30, ch. 88-20; s. 10, ch. 91-89; s. 4, ch. 91-429; s. 15, ch. 93-261; s. 376, ch. 97-103; s. 41, ch. 2003-164. |
@John Thedford I was responding to whether the wholesaler had it under contract or not.
#5 Wholesaling Contributor
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Closing and reselling probably doesn't even require a license in most states. I am sure you are well aware of the wave of unlicensed -0- capitol "investors" that are brokering without a license. If you read FL 475.43 they certainly addressed these issues....and for GOOD reason!
This is a little off topic from where the thread has gone, but still relates to wholesalers :-)
I receive emails from several different wholesalers. Sometimes the prices are reasonable and below the price you'd find on the MLS - usually about 10% below. But occasionally something more discounted comes up. There have been a few times we've put some serious thought into buying one of the properties.
I'm thinking about one now. It looks like a solid deal. But the wholesaler doesn't allow formal inspections, which is what holds me back. I can identify problems, but our inspector is awesome and always finds more than i would.
I can't figure out why the wholesaler won't allow an inspection. I wonder if there is something seriously wrong with the house? What other reasons could there be to block an inspection?
Originally posted by @Jennifer Streamer:
This is a little off topic from where the thread has gone, but still relates to wholesalers :-)
I receive emails from several different wholesalers. Sometimes the prices are reasonable and below the price you'd find on the MLS - usually about 10% below. But occasionally something more discounted comes up. There have been a few times we've put some serious thought into buying one of the properties.
I'm thinking about one now. It looks like a solid deal. But the wholesaler doesn't allow formal inspections, which is what holds me back. I can identify problems, but our inspector is awesome and always finds more than i would.
I can't figure out why the wholesaler won't allow an inspection. I wonder if there is something seriously wrong with the house? What other reasons could there be to block an inspection?
Sounds like your "wholesaler" might be daisychaining a deal he does not have a direct contract with a seller. Or, they are not being upfront with the seller and don't want to scare them or tip them off that they aren't really going to buy it direct if they don't get a contract so they can in turn assign the contract..so too many inspections or other visitors will certainly raise a flag...
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@Zachary Myers a couple of the guys I fund had run ins with your company in Dallas.. frankly you guys are TERRIBLE... ARV puffed way to high rehab numbers a pipe dream.. andyone does business with you guys needs to understand that any information coming from Great western is just a fallacy.
putting MLS properties under contract then trying to wholesale them is really just a bunch of crap..
would never recommend anyone talk or do business with New Western.
While I'm absolutely not fond of wholesalers, I also don't agree that only agents should be selling, because they're licensed. A seller/buyer might let more of their guard down, because they think that they can trust them, because they have a license and might do things they wouldn't do for a wholesaler.
Here's an example:
https://atlanta.craigslist.org/atl/reb/6011783058....
This guy states that he's an agent. This is my farm area and a +900Sqf older house will sell completely rehabbed for about 70K. Any sales above 100K here have been 2-story houses, built in the 2000's with 1500-2500sqf.
I'm sure there's a huge amount of work needed for this house. Looks like it has wood to earth contact on one side and I'm sure it has a big termite problem and probably termite damage.
So, clearly, this agent also doesn't care about fair and honest business.
Originally posted by @Michaela G.:
While I'm absolutely not fond of wholesalers, I also don't agree that only agents should be selling, because they're licensed. A seller/buyer might let more of their guard down, because they think that they can trust them, because they have a license and might do things they wouldn't do for a wholesaler.
Here's an example:
https://atlanta.craigslist.org/atl/reb/6011783058....
This guy states that he's an agent. This is my farm area and a +900Sqf older house will sell completely rehabbed for about 70K. Any sales above 100K here have been 2-story houses, built in the 2000's with 1500-2500sqf.
So, clearly, this agent also doesn't care about fair and honest business.
I agree, also Appears to be marketed by networth realty?
Ralph,
I don't know networth realty. I assume this agent is working for them.
Originally posted by @Jay Hinrichs:
@Zachary Myers a couple of the guys I fund had run ins with your company in Dallas.. frankly you guys are TERRIBLE... ARV puffed way to high rehab numbers a pipe dream.. andyone does business with you guys needs to understand that any information coming from Great western is just a fallacy.
putting MLS properties under contract then trying to wholesale them is really just a bunch of crap..
would never recommend anyone talk or do business with New Western.
Nail on head Jay!
I wholesale properties myself since I am starting a new company to build capital. While marketing for properties I came across many people who claim claim to be wholesale but were really not forthcoming as to there role in the deal. So now the first thing I ask a wholesaler is if they have the contract and can I see it. If they resist I move on. Your best bet is to find someone who is willing to learn and train them ti find properties for you. That way you know what you are dealing with.
Quote from @Joshua Feit:
Agreed all the way around. I wish I could meet a wholesaler in Atlanta that:
- Markets for their own deals (not daisy chains)
- Doesn't write things like "do your own due diligence" (of course I will, but the wholesaler should do the research too!)
- Knows their market
- Is the king or queen of accurate ARV
- Finds decent deals that really work for their buyers
- Makes an honest living, and doesn't try to add ridiculous markup
If this is you -- please, please, please, contact me!
Lets connect here's my LinkedIn- https://www.linkedin.com/in/ja...