Why am I running into the WORST wholesalers?

123 Replies

@Will Barnard   the wholesalers are watching the flipping shows.

PP                400k

rehab            100k

sold for         575k    with a whopping 75k  profit...  end of discussion.  its amazing how weak math skills are in our country...

and its one of the things I have always had to help many of my borrowers with as they get started.. they simply don't account for all the costs..   1 mil property needs 200k minimum on top of all in to make a decent profit..  and so on

@Joshua Feit

From my experience, after speaking to 10 you get 1 with decent deals.

"Wholesalers" sometimes are big well operated firms that bring good deals to the table. Then you have bird dogs or someone that has seen a webinar or two and now thinks this is the way out. Too many Gurus telling people you can be in real estate without your own money. It can be done but for that you will need to become resourceful.

There is plenty of good wholesalers who are honest and take their business serious and do it full time making a decent income. Speak to enough people, go to enough meet ups and you will eventually partner up with a few decent one

Originally posted by @Michaela G. :
Originally posted by @Sherman McLendon:

So I'm just wondering, is it or is it not okay for a REALTOR to do Wholesaling?  I want to get into it and fully let everyone know exactly who I am and what the outcomes can be and such, as well as treat everyone fairly so that everyone is a winner.  I'm just new into the industry and wondering if it's legit for an agent to do it?

 As long as you're a principal in the transaction, you should be fine. But I know there are some states where that differs. 

That means that you're an actual buyer and/or seller in the contract and not just a middle man. Maybe use bridge funding to buy the property and then sell directly to an end buyer. 

Realtors are fighting hard against investors doing that, because it takes business away from them. And then there are the bad wholesalers, mentioned in here, that give those realtor ammunition and that'll make it more difficult for anyone doing it legitly.

 How do you do bridge funding? Are you saying to buy the properties outright and then resell them instead of assigning them?

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!

@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.   

@Zachary Myers

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. 

PROFESSIONS AND OCCUPATIONSChapter 475
REAL ESTATE BROKERS, SALES ASSOCIATES, SCHOOLS, AND APPRAISERS
View Entire Chapter
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.

@Zachary Myers

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...

@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.