What would you ask a wholesaler?

Wholesaling
8yFollow

What would you ask a wholesaler?

David Olson
Katy, TX · Member since 2017 · 149 posts · 72 votes

So I was at a recent REI event and I ended up winning a free 1hr mentor session this upcoming Friday with the co-founder and managing partner of a large wholesaler. Being the newbie I am, I would like to reach out to the BP community for a list of questions you would ask if you were in my shoes. Maybe some questions that you wish you had asked a wholesaler you worked with in the past? Maybe you wish you had more clarity on a certain step in their business model before you worked with them? Maybe there are a list of questions that are an absolute must for you to trust them?

I have listened to a plethora of the BP Podcasts (this wholesaler was a guest on two of them) and a lot of successful BRRRR investors work with wholesalers however they also say that 9 out of 10 aren't worth your time and the key is to finding a TRULY reliable wholesaler.

I literately plan to collect these questions from everyone on here and put them together and bring them with me. Following this 1hr spent with them I will get back on here and answer the questions that everyone asked. I think its a great way for me to learn and to ask tough questions that I likely wont think of on my own. 

So if you would be so kind as to giving me 5 or so questions you feel are absolutely a must for you to trust any wholesaler you would ever do work with it would be GREATLY appreciated!!

Thanks!!!

4Reply
57 views

Most Popular Reply

John Thedford
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
8y

Are you licensed or unlicensed?
Do you provide appraisals to back up your claimed ARV?
Do you have written bids from contractors when you state "x" rehab costs?
Can you provide me with at least five references for deals you have done?
Do you required a non-refundable EM deposit even though that is not standard in the RE industry?

7Reply
See this reply in the discussion

26 Replies

Jump to latestLatest
  • John Thedford
    Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    8y

    Are you licensed or unlicensed?
    Do you provide appraisals to back up your claimed ARV?
    Do you have written bids from contractors when you state "x" rehab costs?
    Can you provide me with at least five references for deals you have done?
    Do you required a non-refundable EM deposit even though that is not standard in the RE industry?

    7Reply
  • David Olson
    OP
    Katy, TX · Member since 2017 · 149 posts · 72 votes
    8y

    @John Thedford Good questions. I would assume regarding if they are licensed is that almost all wholesaler do not have a real estate license correct? All your other points are great and thing I would have never thought to ask. Especially the bids from contractors when they state the rehab costs. 

    1Reply
  • John Thedford
    Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    8y

    @David Olson there are many that are not licensed, have no money, and are desperate to make a buck. Those types will often say/do anything to make a deal and/or fool a buyer. Some "wholesalers" actually tie up properties on the MLS trying to "wholesale" them when there is no legitimate discount off of FMV. The title "wholesaler" implies value but that is often not the case. BEWARE of their "comps". Especially bad are the ones that victimize sellers with a promise to buy when they have none and then walk if they cannot make it work.

    1Reply
  • Bryan Frost
    Investor · Overland Park, KS · Member since 2015 · 26 posts · 19 votes
    8y
    Let’s start by assuming that this is a solid and experienced wholesaler. Since you are newer to investing I would start by explaining your strategy and see how you could potentially help each other. As far as questions that are more general and that you could share with the BP group. 1. What is your most effective marketing approach? Adwords, TV, Radio, Direct Mail? 2. What is your average cost per lead and cost per deal? This will help you handle the $10k assignment fees a little better. 3. How have you helped sellers? Wholesalers tend to get a bad reputation but some have truly helped countless homeowners improve their situations. 4. How many deals do you average a month? 5. Where are the best opportunities in my market to implement my investing strategy?
    2Reply
  • John Thedford
    Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    8y

    Name?

    0Reply
  • Matthew Paul
    Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
    8y

    You won a  " free" one hour session .  How much you want to bet at the end of that " free" hour , somebody is going to want dig into your wallet to learn more 

    2Reply
  • John Thedford
    Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    8y

    I am curious if the wholesaler is Northwest acquisitions

    0Reply
  • Grant Rothenburger
    Investor · Taylor Mill, KY · Member since 2016 · 2k+ posts · 964 votes
    8y

    @David Olson You're gonna get a lot of negativity from people who have had bad experiences with wholesalers. If you're wanting to be a wholesaler, I would make a point to ask what he needs in his business, and offer to do that for free.

    1Reply
  • Ginger A.
    Real Estate Investor · Philadelphia, PA · Member since 2014 · 19 posts · 5 votes
    8y
    I’m kind of disheartened to hear that a lot of people do not trust wholesalers. I’m looking to go into it with integrity, honest and educated in the field to the best of my ability.
    2Reply
  • David Olson
    OP
    Katy, TX · Member since 2017 · 149 posts · 72 votes
    8y

    @John Thedford it is not Northwest acquisitions. It's actually Senna House Buyers here in Houston. 

    @Matthew Paul that could be the case. I'm a hard sell. Just ask our last time share presenter. 3hrs later I had a free cruise package (upgraded the package at my choice/cost to a nicer room), $25 gas card, two nights in a Marriott, $100 restaurant gift card, and two tickets the comedy club. 

    @Bryan Frost my strategy is BRRRR. Which after listening to a few podcasts and reading some posts on here could be a good match. This is assuming they are great to work with.

    @Grant Rothenburger not wanting to be a wholesaler but use them to find BRRRR deals. Close friend of mine is a successful real estate agent back home and he didn't have much if anything positive to say about them. It seems if you are truly a genuine wholesaler and are truly helping people find deals or sell their home than you are already greater than 90% of them out there.

    1Reply
  • John Thedford
    Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    8y
    Originally posted by @David Olson:

    @John Thedford it is not Northwest acquisitions. It's actually Senna House Buyers here in Houston. 

    @Matthew Paul that could be the case. I'm a hard sell. Just ask our last time share presenter. 3hrs later I had a free cruise package (upgraded the package at my choice/cost to a nicer room), $25 gas card, two nights in a Marriott, $100 restaurant gift card, and two tickets the comedy club. 

    @Bryan Frost my strategy is BRRRR. Which after listening to a few podcasts and reading some posts on here could be a good match. This is assuming they are great to work with.

    @Grant Rothenburger not wanting to be a wholesaler but use them to find BRRRR deals. Close friend of mine is a successful real estate agent back home and he didn't have much if anything positive to say about them. It seems if you are truly a genuine wholesaler and are truly helping people find deals or sell their home than you are already greater than 90% of them out there.

     Not familiar with them. Some of these guys don't have real deals. Regardless, I really don't like the ones that put properties under contract with a bunch of escape clause BS. Some are pretty sleazy.

    0Reply
  • Grant Rothenburger
    Investor · Taylor Mill, KY · Member since 2016 · 2k+ posts · 964 votes
    8y

    @David Olson That is the truth! Wholesalers do serve a purpose imo but a lot of them can be lazy, shady, and/or under-educated.

    0Reply
  • Andre Simon
    Sandy Springs , Georgia. · Member since 2017 · 4 posts · 2 votes
    8y
    Get ready to be sold ...on training.
    0Reply
  • Travis White
    Houston, TX · Member since 2014 · 50 posts · 20 votes
    8y

    Who knows, there might be a pitch at the end. Still, I think 60 minutes with a local REI pro is pretty nifty prize to win and, even if he does pitch you at the end, chances are still good that this guy will talk your ear off about REI if given a chance and an student eager to learn.

    I'd try and start out by taking a couple brief minutes letting him know your experience/knowledge level so he knows where you're at. 

    Maybe bring some leads with you and ask him what he thinks about them, go through an analysis together. 

    Ask him what he's learned over his career, things he wishes he would have learned sooner or looked out for. Things that really helped him out. 

    Ask him about the local market, what parts of town he thinks are providing good deals. Ask him about his methodology. 

    Maybe let him drive the conversation, ask him what you should be thinking about or learning about. 

    Ask him about different parts of the biz...wholesaling, flipping, brrr/rentals, multifamily, lending, managing rehabs, etc. why did he choose to focus on wholesaling. 

    I think there's lots to talk about and I'd be pretty excited about your prize if I were you

    0Reply
  • Caleb Heimsoth
    Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
    8y
    David Olson 1. Are you licensed if it’s required? 2. What’s the ARV? Most wholesalers I’ve seen don’t even list an ARV. 3. What did you pay for it? Being transparent is important to me. I don’t care if you’re making money if it’s still a deal Recently Ive seen a wholesaler try to sell a property for 99k when they bought it for 65. Needs at least 30k in rehab and it’s ARV is around 130k. So that’s not a deal at 99k, at all. I could probably get a better deal buying a turnkey property which is truly shocking.
    0Reply
  • Account Closed
    Real Estate Investor · Shelton, WA · Member since 2013 · 369 posts · 639 votes
    8y

    Please ask them the following:

    1. Do you tell sellers you're a cash buyer, even though you don't have the means to purchase the property?
    2. Do you tell sellers you're buying their house, even though you have no intention on actually closing?
    3. Do you advertise/market the property before you own it?
    4. Do you tell sellers you're bringing 'partners' or 'inspectors' to the house in order to show it to perspective end-buyers?

    If they answer yes, ask them to explain how what they're teaching, is not fraud in the inducement and brokering real estate without a license. 

    If they answer yes, it will tell you a lot about how they operate. 

    Im all for off-market deals, but if you're going to do it, i suggest you get your funds together or learn how to get on title. Buy it and then do whatever you want with it. Why?  Because the explosion of guru boot camp 'fauxsalers' in every market, out and out lying to old folks and people in distress just to get a deal under contract, with no intent or ability to close... gives us ALL a bad name. Every time a fauxsaler burns a seller, the reputation of EVERY investor in that market takes a hit. 

    0Reply
  • Peter Pratti
    Rental Property Investor · Knoxville, TN · Member since 2017 · 147 posts · 65 votes
    8y

    I would ask them for pictures of the property and then go look at the property and then run the numbers/comps myself.  Why would you not do your own due diligence on any property? It wouldn't really be the wholesalers fault if you underestimate costs.

    0Reply
  • John Thedford
    Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    8y
    Originally posted by @Account Closed:

    Please ask them the following:

    1. Do you tell sellers you're a cash buyer, even though you don't have the means to purchase the property?
    2. Do you tell sellers you're buying their house, even though you have no intention on actually closing?
    3. Do you advertise/market the property before you own it?
    4. Do you tell sellers you're bringing 'partners' or 'inspectors' to the house in order to show it to perspective end-buyers?

    If they answer yes, ask them to explain how what they're teaching, is not fraud in the inducement and brokering real estate without a license. 

    If they answer yes, it will tell you a lot about how they operate. 

    Im all for off-market deals, but if you're going to do it, i suggest you get your funds together or learn how to get on title. Buy it and then do whatever you want with it. Why?  Because the explosion of guru boot camp 'fauxsalers' in every market, out and out lying to old folks and people in distress just to get a deal under contract, with no intent or ability to close... gives us ALL a bad name. Every time a fauxsaler burns a seller, the reputation of EVERY investor in that market takes a hit. 

     You are starting to sound like the "wholesaler hunter" LOL.
    We have a BP member here in FL that offers "wholesaling" classes with the BS escape clauses. I posted in a thread where they had posted asking why someone would pay to learn from a dishonest "mentor". No response from them. Laws vary from state to state. TX has done some work on this, requiring their advertising to include info that they are selling a contract. I guess that is some kind of start to dealing with the issues. FL already addressed it. Now that a license is required to advertise properties in FL unless you own them, I still wonder about agents putting properties under contract with no intention of closing. If everyone would stand up against the bad operators, the industry would be better for all. It isn't what you call yourself, it is HOW you operate...licensee or not.

    0Reply
  • David Olson
    OP
    Katy, TX · Member since 2017 · 149 posts · 72 votes
    8y

    @John Thedford @Bryan Frost @Travis White @Caleb Heimsoth @Account Closed Well the meeting went great! Well over the 1hr too and they shared with me some of their own investment strategies for a first timer like myself. They didn't try to sell me on training or sell me on anything for that matter. They were more than happy to answer the questions I had gathered from everyone. So below are the questions and answers from this past Friday.

    1. Are you licensed or unlicensed? Licensed. All reps are getting their license as well.

    2. Do you provide appraisals to back up your claimed ARV? : They Guarantee their ARV. If it’s worth “X” and they don’t hit their mark within 10% they will pay you $1,000. They also provide comps to back up the numbers.

    3. Do you have written bids from contractors when you state "x" rehab costs? The numbers in the rehab costs are based on the assumption you will be doing the contractor work yourself. The buyers walk the property and they put together the estimate. When their rehab estimate was wrong in one instance they dropped the price of the home enough to make it a deal for the purchaser.


    4. Can you provide me with at least five references for deals you have done? Reviews are on Google.


    5. Do you require a non-refundable EM deposit? (Even though that is not standard in the RE industry?) Yes but it is an option fee. A $5,000 check is written to them not the title company and that check applies to the cost of the home. If it does not close because of them or the title company they will refund you the money. They want the work to be done on your part prior to placing the deposit on the property. It is about a two week turnaround after the $5,000 deposit.


    6. What is your most effective marketing approach? Adwords, TV, Radio, Direct Mail? All of the above. Some months Direct Mail works better and some months Adwords and other marketing tools work better.


    7. What is your average cost per lead and cost per deal? (This will help you handle the $10k assignment fees a little better Assignment is how much they make per deal.): Between $4,000-$5,000.


    8. How have you helped sellers? (Wholesalers tend to get a bad reputation but some have truly helped countless homeowners improve their situations.) They have to add value to the clients. If they don’t then they don’t have a business to build on. They have to genuinely care about their sellers. They train their team and buyers to show the value they bring to each home owner.


    9. How many deals do you average a month? 20+ per month since Sept. Goal is to do 300 this year.


    10. Where are the best opportunities in my market to implement my investing strategy? Anywhere outside the loop.


    11. Do you tell sellers you're a cash buyer, even though you don't have the means to purchase the property? They tell them they are there as a wholesaler.

    12. Do you tell sellers you're buying their house, even though you have no intention on actually closing? No they don’t tell them that. Same answer as #11 above.

    13. Do you advertise/market the property before you own it? Yes they market the property but technically speaking they are marketing the equitable interest in that contract.

    14. Do you tell sellers you're bringing 'partners' or 'inspectors' to the house in order to show it to perspective end-buyers? No they tell them they are the wholesalers. If you go and try to speak to the home owner you get black listed. 

    2Reply
  • John Thedford
    Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    8y

    @David Olson

    If they cannot find a buyer do they close? That is one problem with dishonest operators.

    0Reply
  • Brian Pulaski
    Flipper/Rehabber · Montgomery, NY · Member since 2016 · 2k+ posts · 1k+ votes
    8y

    They Guarantee their ARV. If it’s worth “X” and they don’t hit their mark within 10% they will pay you $1,000. They also provide comps to back up the numbers.

    Regarding this quote... if they say ARV is $250,000, they have a 10% swing? So if it sells for $225,000 they technically got it right? Also if it sells for $200,000 they will pay you $1000? Sounds like no guarantee of anything.

    Also they say the numbers are based on "you doing the contractor work yourself"? So they give you material quotes? Or do they mean you GC it yourself? Big difference acting as your own GC and paying subs for all the work, and being the contractor doing all the work yourself.

    1Reply
  • David Olson
    OP
    Katy, TX · Member since 2017 · 149 posts · 72 votes
    8y

    @Brian Pulaski those are the answers I got on the 10% rule which I agree if it is that large of a swing then it would be not so good. They do provide a detailed quote but as to the specific type of material I do not know. I didn't see one of their quotes up close. These are questions I plan to go back to them with.

    0Reply
  • Brian Pulaski
    Flipper/Rehabber · Montgomery, NY · Member since 2016 · 2k+ posts · 1k+ votes
    8y

    @David Olson yeah, I imagine guaranteeing any kind of ARV is tough. I wouldn't guarantee it, but then again I'm not a wholesaler trying to make money!

    0Reply
  • Paul AmegatcherPro Member
    Rental Property Investor · Brookville, OH · Member since 2016 · 488 posts · 363 votes
    8y

    I'm always amazed at the standards set for wholesalers in this forum. People guaranteeing ARVs really? You might as well guarantee repair costs whiles you are at it. Next you may want to guarantee the DOM before selling. 

    If you are an investor and you don't do your own due diligence when dealing with anyone in real estate you deserve to lose your money. I always do my own due diligence. I run my own comps and also assess the repairs needed. A wholesaler is just bringing a lead for me to vet. The quicker people learn that nobody is going to do the work for you the better of you will be. End rant.

    0Reply
  • David Olson
    OP
    Katy, TX · Member since 2017 · 149 posts · 72 votes
    8y

    @Brian Pulaski your scenario of ARV is correct. If they said 250k and it sells for 225k, no gurantee payment. If you sell for 200, then you receive the $1,000 payment. However I wont be selling I will be doing a cash-out refi although the same rule apply.

    Also the walk-through and rehab cost estimates assumes you are GC-ing it and hiring subs, not doing the work yourself.

    @Paul Amegatcher I agree with you. That is the same vibe I got from them as well and in a good way. They said when someone comes in to put $5,000 down as the option fee that the potential buyer has likely done their homework prior to this point. If they send me a deal, I'll run it through the BP BRRRR Calculator, send it to my contact whom is a seasoned real estate agent and investor himself, and then I will send the repairs to a trusted GC that I have a great relationship with ( my sister in-laws husband). If it all comes back that I can make this deal work as a rehab and rent with a cash-out refi then BOOM I have a deal!! If not then I am no way under contract obviously. I will just evaluate another property of theirs until one matches my criteria.

    They mentioned that they wanted to know my exit strategy too and that they would ask questions prior to me placing my deposit so they knew I did my due diligence. Obviously after 2-5 or more of these they would no longer ask as they know I would likely have a system in place. It would also help because by this point they will know exactly what types of properties in what area and what ARV's I like to see. If any one person out there can guarantee their ARV, and rehab estimate 100% let me know because I will buy through them with everything I have and sell my kitchen sink and car then get my friends to invest in me to get more properties through them lol.

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