Buyers asking about my assignment fee?
Cincinnati, OH · Member since 2013 · 90 posts · 89 votes
Buyers asking about my assignment fee?
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Property Manager · Allen, TX · Member since 2015 · 190 posts · 160 votes
8yIt’s questions like this that make me doubt the wholesale profession as a whole. The only way wholesalers make money is by convincing a seller to sell for less than their property is worth or convincing a buyer to pay more than a property is worth. If you can’t conduct your business and be completely honest with the people you are dealing with, then you shouldn’t be in this business at all.
151 Replies
- Property Manager · Allen, TX · Member since 2015 · 190 posts · 160 votes8yOriginally posted by @Michael Quarles:
If someone believes that buying low and selling higher without performing improvements is unethical and that the buyer is harming the sellers then that person doesn't understand the value of liquidity and convenience.
People often ask why a seller would sell me their home for 260,000 when I tell them and prove it to them with both a BPO and Appraisal its is worth 400,000 . The answer is simple. Because the need or solution my cash offers has a greater value than the solution of traditional Brokerage.If you're saying that there are fully informed and educated sellers who value liquidity and convenience to the tune of $140,000, then I simply don't believe you. I think the MUCH more common scenario is the wholesaler who finds a property worth 100k and convinces a less knowledgeable seller that they'll buy it for 55k, while the real plan is to assign the contract for 65k and walk away.
Maybe you are one of the tiny minority of wholesalers who really are completely honest and open and can run a successful business at wholesaling at the same time. In which case, more power to you. But you aren't going to be able to convince me that that is anywhere close to the typical wholesaling deal.
- Investor · Cincinnati, OH · Member since 2012 · 506 posts · 331 votes8y
Originally posted by @David Hines:
Originally posted by @Bryan Chuchta:
If I contracted a house for $25k that the ARV was $100k, I might have a $10-$20k fee on it. If your an investor and could buy at 50% ARV (assuming no major repairs) why would you pass that up? Or worse yet, try to cut the wholesalers fee after he brought you such a great deal.
No investor would pass up that deal. However, that isn't what I was talking about. The point I've been making is that you or any other wholesaler is acting unethically when they get a property under contract for 25k that they know they can turn around and sell to their buyer list for 35k or 45k. It is completely irrelevant what the ARV is. The value of the property at the time of purchase is much lower. I think wholesalers tend to rip off sellers, I don't have as much an issue when it comes to getting a fee from an investor later.
Do you always offer 100% of what you'd be willing to pay when you're negotiating with a seller? Otherwise, I guess I'm failing to see the difference between what a wholesaler does and what you're doing, at least as it relates to offer price. By your logic, it seems that all people should offer the max they're willing to pay, otherwise they're taking advantage of a seller. The difference between what a wholesaler is doing and what most investors are doing is that the wholesaler is receiving that extra profit margin instead of it going to the investor/rehabber.
- Flipper/Rehabber · Bakersfield, CA · Member since 2008 · 3k+ posts · 3k+ votes8y
Originally posted by @David Hines:
Originally posted by @Michael Quarles:
If someone believes that buying low and selling higher without performing improvements is unethical and that the buyer is harming the sellers then that person doesn't understand the value of liquidity and convenience.
People often ask why a seller would sell me their home for 260,000 when I tell them and prove it to them with both a BPO and Appraisal its is worth 400,000 . The answer is simple. Because the need or solution my cash offers has a greater value than the solution of traditional Brokerage.If you're saying that there are fully informed and educated sellers who value liquidity and convenience to the tune of $140,000, then I simply don't believe you. I think the MUCH more common scenario is the wholesaler who finds a property worth 100k and convinces a less knowledgeable seller that they'll buy it for 55k, while the real plan is to assign the contract for 65k and walk away.
Maybe you are one of the tiny minority of wholesalers who really are completely honest and open and can run a successful business at wholesaling at the same time. In which case, more power to you. But you aren't going to be able to convince me that that is anywhere close to the typical wholesaling deal.
I am not a wholesaler.... I have assigned a contact once. Was paid 100% of "As Is" value. That said, I have bought and sold hundreds of homes as either a Wholetailer (which I really like now) or as a fix and flipper. All with constructive notice. Being a Broker in California as well as a California General Building Contractor allows for some privileges. Not that they are needed. I have been DRE Audited 3 times, all passing with flying colors so to speak.
As to buying at 65%, that's more frequent then maybe you would think...
- Property Manager · Allen, TX · Member since 2015 · 190 posts · 160 votes8y
Originally posted by @Michael Quarles:
Originally posted by @David Hines:
Originally posted by @Michael Quarles:If someone believes that buying low and selling higher without performing improvements is unethical and that the buyer is harming the sellers then that person doesn't understand the value of liquidity and convenience.
People often ask why a seller would sell me their home for 260,000 when I tell them and prove it to them with both a BPO and Appraisal its is worth 400,000 . The answer is simple. Because the need or solution my cash offers has a greater value than the solution of traditional Brokerage.If you're saying that there are fully informed and educated sellers who value liquidity and convenience to the tune of $140,000, then I simply don't believe you. I think the MUCH more common scenario is the wholesaler who finds a property worth 100k and convinces a less knowledgeable seller that they'll buy it for 55k, while the real plan is to assign the contract for 65k and walk away.
Maybe you are one of the tiny minority of wholesalers who really are completely honest and open and can run a successful business at wholesaling at the same time. In which case, more power to you. But you aren't going to be able to convince me that that is anywhere close to the typical wholesaling deal.
I am not a wholesaler.... I have assigned a contact once. Was paid 100% of "As Is" value. That said, I have bought and sold hundreds of homes as either a Wholetailer (which I really like now) or as a fix and flipper. All with constructive notice. Being a Broker in California as well as a California General Building Contractor allows for some privileges. Not that they are needed. I have been DRE Audited 3 times, all passing with flying colors so to speak.
As to buying at 65%, that's more frequent then maybe you would think...
I apologize for calling you a wholesaler, I wouldn't want to be labeled one unfairly either. However, I don't think the way you break down the differences in terminology is at all indicative of how the real estate investing industry uses the terms. Just to be clear, I have absolutely no problem with a fix and flipper, I think flippers provide value and a genuine service in the industry and do not have to rely on deception to get paid (like a wholesaler).
- Property Manager · Allen, TX · Member since 2015 · 190 posts · 160 votes8y
Originally posted by @Sean Cole:
Originally posted by @David Hines:
Originally posted by @Bryan Chuchta:
If I contracted a house for $25k that the ARV was $100k, I might have a $10-$20k fee on it. If your an investor and could buy at 50% ARV (assuming no major repairs) why would you pass that up? Or worse yet, try to cut the wholesalers fee after he brought you such a great deal.
No investor would pass up that deal. However, that isn't what I was talking about. The point I've been making is that you or any other wholesaler is acting unethically when they get a property under contract for 25k that they know they can turn around and sell to their buyer list for 35k or 45k. It is completely irrelevant what the ARV is. The value of the property at the time of purchase is much lower. I think wholesalers tend to rip off sellers, I don't have as much an issue when it comes to getting a fee from an investor later.
Do you always offer 100% of what you'd be willing to pay when you're negotiating with a seller? Otherwise, I guess I'm failing to see the difference between what a wholesaler does and what you're doing, at least as it relates to offer price. By your logic, it seems that all people should offer the max they're willing to pay, otherwise they're taking advantage of a seller. The difference between what a wholesaler is doing and what most investors are doing is that the wholesaler is receiving that extra profit margin instead of it going to the investor/rehabber.
No, I don't always offer 100% of market value, but I am capable of closing on the transaction. Unfortunately, whether you realize it (or like it) or not, the vast majority of wholesalers do not have the intention or ability to actually close the transaction. There is a HUGE difference in my mind between saying here is what I am willing to offer for your property vs saying here is what your property is worth while planning to add an assignment fee and immediately sell the contract to a list of buyers.
Just ask yourself, if you met with a seller as a wholesaler and were completely honest and open about your intentions and shared your knowledge of the marketability of the property, would the seller sign a contract?
I think most sellers would say no in that situation and most wholesalers know it, so the only way to make that fee is deception.
- Property Manager · Allen, TX · Member since 2015 · 190 posts · 160 votes8y
Hi David,
My name is Travis and my brother and I run a well-known wholesale company in Southern Florida that acquires properties directly from the seller, (no middle-man), and are beginning to do some wholesale deals in Texas. Our properties are being sold at 75-80% of the ARV, less repair expenses. We would like to add you to our cash-buyer email list so you can have the first opportunity at acquiring the properties we get under contract in Houston.
Thanks,
Travis (Transaction Coordinator at Zenith Trust LLC)
Dude, you are the middle-man...
Wow, I literally just received this on the BP message system...
No thanks man, I prefer not to help perpetuate a system where you deceive sellers into thinking their homes are worth less than they really are...
I'm thinking Travis may not have been reading all my posts in this thread...
- Specialist · Memphis, TN · Member since 2012 · 1k+ posts · 1k+ votes8y
Originally posted by @David Hines:
Originally posted by @Dean Letfus:
If you want to have a successful business then just tell them the truth. I've done hundreds of transactions and always disclose my fee. It's on the HUD anyway. The way to market this is to explain the value add you provide. I would say for example this is a 100K property, you are buying it for 60K and paying me 10K. So I have just made you 30 grand. I have NEVER lost a sale through being the wholesaler. Tell no lies, build your brand on whatever your point of difference is.
In fact one of my previous strategies was to charge the buyer half of what I saved them. They found a house they wanted and would happily pay 110K for. I get them a contract at 70K. I get 20K, they get a big smile on their face through the 20K equity!
I agree that being honest and ethical is key to having a successful business. I am curious how you are able to get a contract with a seller for 70k on a property that is worth 110k if you are being open and honest with the seller?? I think it is much more likely that a wholesaler in that situation has taken advantage of an uneducated seller if not been outright deceptive in convincing them that the property is actually worth 70k.
To head off one potential argument, if the property is distressed and in need of repair and you are really talking about an ARV of 110k, then I would say that at the time you buy it the property is not worth 110k. But it doesn't seem like that is what you are referencing when you celebrate the 40k profit...
Great question David. I made no reference to sellers I am talking about buyers.
I nearly always buy the homes and get them in best possible condition. I occasionally do contemporaneous settlement but that is only with large packets where I would struggle to fund the closing.
In my market of Memphis homes sell for wildly varying amounts due to the circumstances surrounding the sale. For example I have purchased many homes and small packets from people who just wanted me to pay the outstanding mortgage amounts. I have on more than one occasion had a seller actually apologise for the notes not being smaller! I have bought homes off Craigslist, auction.com, banks, wholesalers and lenders. Creating a decent margin is very easy in my market. The only sales I have ever seen that are full price are realtors sales of fully rehabbed homes to owner occupiers. I always feel sorry for them paying so much but that's all part of the supply and demand curve.
In my native New Zealand I have often told a seller to not sell as the price was too low, usually caused by an inexperienced or unscrupulous real estate agent. That is because in New Zealand house values are easy to work out and they fluctuate hardly at all. We have no REO industry, no private lending and no govt backed excuses to lose money and still make a profit like Freddie and Fannie. Therefore a 500K house will sell for between 475K and maybe 550K if some falls in love with it.
However the USA is not like that at all. A bank will sell a 100K home for 50K or a pool of notes will sell for 30 cents on the dollar. A seller who is sick and tired of bad tenants just wants to quit the house for his note value. the list of scenarios is endless. It's up to sellers to decide what they want for a home it seems to me in the USA, and that may not reflect it's genuine value at all.
- Specialist · Memphis, TN · Member since 2012 · 1k+ posts · 1k+ votes8y
Accusing wholesalers of deception is just nonsense. There are dishonest realtors, wholesalers, pastors and cab drivers. It has nothing to do with the industry, except maybe politics where lying is required :-).
An honest wholesaler is buying homes often sight unseen from a variety of sources where the properties are discounted, marketing them well and then selling them at closer to their value. I call that capitalism and it is the bedrock of western nations, especially the USA.
- Property Manager · Allen, TX · Member since 2015 · 190 posts · 160 votes8y
Originally posted by @Dean Letfus:
Accusing wholesalers of deception is just nonsense. There are dishonest realtors, wholesalers, pastors and cab drivers. It has nothing to do with the industry, except maybe politics where lying is required :-).
An honest wholesaler is buying homes often sight unseen from a variety of sources where the properties are discounted, marketing them well and then selling them at closer to their value. I call that capitalism and it is the bedrock of western nations, especially the USA.
Based on my experience (and I grant you that it may be possible that I have been unlucky and only come across the ones trying to make a quick buck), I believe that wholesalers are more likely to be dishonest or deceptive than realtors or pastors or cab drivers. As I believe Jay Hinrichs has pointed out repeatedly, realtors are subject to licensing and a code of ethics from various local and national associations. With wholesalers it is the wild west, caveat emptor and all that. If a realtor is dishonest, they get caught and lose their license, unfortunately the same can't be said of wholesalers. The lack of licensing requirements, oversight and the ability to swindle some pretty stunning amounts of money from uneducated sellers is exactly what attracts a lot of wholesalers and gurus in the first place.
Believing that there isn't a large majority of wholesalers who are deceptive, dishonest and do nothing of value in a transaction is just nonsense. You can deflect to larger points like capitalism being the bedrock of western society, but that doesn't change the fact that the incentive to be deceptive as a wholesaler is huge, just look at the OP's question.
- Specialist · Memphis, TN · Member since 2012 · 1k+ posts · 1k+ votes8y
"I believe that wholesalers are more likely to be dishonest or deceptive than realtors or pastors or cab drivers."
Your faith in certain sectors of society is fascinating, naive but fascinating!
Seriously though I think your point may be that the real estate industry tends to attract people looking to make a quick fortune who are often of low moral character? Now that is probably true. However in my experience property managers and general contractors are far, far more likely to be dishonest than a wholesaler. And anecdotally the people who I have tried to assist into their own homes who have been most dishonest are????? pastors :-(.
And I see the OP's question as nothing to do with dishonesty. When you buy a Big Mac do you insist on knowing how much profit they are making? For some reason we overlay this "morality obligation" on real estate transactions. Truth is it's nobody's business how much anybody makes on a real estate deal. We volunteer to be transparent build trust and build a business. But no one has any "right" to know IMHO. The seller and the buyer have an obligation to not be stupid and sell or buy at a price they are happy with. Who gets paid what in the background is irrelevant providing the buyer and seller get what they want.
For example if I sold you a house for 200K and you were totally happy with it in terms of equity and yield, then found out I somehow bought it for 50K, has the quality of your deal changed? No not at all.
- 8yCurt DavisBusiness MemberFlipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
What state can a wholesaler who is not the legal owner of a property have it listed on the mls? Listing agreements can only be between realtor and actual seller.
Originally posted by @Michael Quarles:
Originally posted by @David Hines:
Originally posted by @Michael Quarles:Your comments/concerns brought my fingers to my keyboard. So I am jumping in. To begin , if I may, let's define terms.
- Assignor - A person who is selling the rights to an agreement/contact. Some states have limitation on the number of contacts a person may sell without the attachment of a real estate Brokers License involved. Some state that number is Zero in California it is 8.
- Wholesaler - A person who buys low and sells low, both with constructive notice. Typically zero or little work performed to the property between the buy and resell.
- Wholetailer - A person who buys low sells at 100% "As Is" value, both with constructive notice. Typically zero or little work performed to the property between the buy and resell.
I think most people just lump all these under the term wholesaler. Most of my ethical issue is with assigning contracts, but in my experience that is what a very large percentage of those who call themselves wholesalers do. I don't have as much a problem with it when they are actually closing the sale and putting it in their own name. However, I still believe that if someone is knowingly convincing a seller that their property is worth less than it really is, while planning to turn around and profit off of that deception, then that is unethical. Wholesalers can try to justify it however they want in their own minds (or on this thread) but that isn't the same as acting with full honesty, openness and integrity.
I agree which is why I disclose to the seller the amount of money I expect to earn and let them know it will be a HUGE amount.
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 brokers shall have any further rights, obligations, or liabilities under this contract.
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.
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.
Curt Davis - KAIZEN Realty538 Reviews - Flipper/Rehabber · Bakersfield, CA · Member since 2008 · 3k+ posts · 3k+ votes8y
@Curt Davis the MLS requirements say the seller must authorize the insertion into the MLS.
It also defines who the seller is. And it defines who the owner is.
A long time ago trading was common. Not to lose anyone however it was nearly a bartering system.
NAR was smart enough to understand that they couldn't inhibit it so they wrote and adopted what they did.
Could it change? Sure. Most things do.
In fact in the day and still today one could take a net listing.
Please don’t misunderstand me. I personally think entering into an agreement to buy without predetermined means is highly unethical.
I do not see the issue of offering real property for sale prior to ownership being unethical or illegal as long as constructive notice is recorded.
I do see a huge issue with assignment.
- Specialist · Honolulu, HI · Member since 2014 · 1k+ posts · 1k+ votes8y
Originally posted by @Michael Quarles:
@Curt Davis the MLS requirements say the seller must authorize the insertion into the MLS.
It also defines who the seller is. And it defines who the owner is.
A long time ago trading was common. Not to lose anyone however it was nearly a bartering system.
NAR was smart enough to understand that they couldn't inhibit it so they wrote and adopted what they did.
Could it change? Sure. Most things do.
In fact in the day and still today one could take a net listing.
Please don’t misunderstand me. I personally think entering into an agreement to buy without predetermined means is highly unethical.
I do not see the issue of offering real property for sale prior to ownership being unethical or illegal as long as constructive notice is recorded.
I do see a huge issue with assignment.
Hey Michael, I think its been like 3 years since I last saw you post on here! What have you been up to.. still wholesaling/wholetailing?
- Flipper/Rehabber · Wilton, CT · Member since 2015 · 4k+ posts · 4k+ votes8y
Originally posted by @David Hines:
@Chris Turner I'm not sure what assumptions I'm making that you may disagree with. I've had this discussion with other wholesalers before and they say things like A) "I'm connecting buyers and sellers" or B) "I'm planning to make improvements or repairs that the seller may not be able to afford."
In situation A, I believe that the open market of the MLS is the best way to connect buyers and sellers. Investors don't need to be connected to sellers, they'll find properties a multitude of ways. So, what this situation really boils down to is a wholesaler was able to convince a seller to sell for less than market value and then is planning to reach out to their buyer list in hopes of getting an assignment fee from the buyer. This seems highly unethical to me.
In situation B, I believe that the wholesaler is really a flipper and not using the correct terminology when they talk about what they do.
Your mistake is you judge the complete niche of wholesaling by the way "most" wholesalers conduct business.
So, guns are evil then because people use them to kill.
Well heck a shark is evil because they bite people too then.
The guy asked a very good legitimate question. Not because one feels uncomfortable answering the how much are you making question means they conduct business in a shady way.
Some sellers get pissed because you make money at all!
They think it is not fair you make anything off of their property.
They do not know how much time a good wholesaler puts into a deal, walks the property does a CMA, does a cost of repairs, finds buyers, preps buyers ets appointments and just makes it happen, and then when they hear you make 2 K 5K 14K they get pissed.. yet an agent does less work often and the get more money depending how expensive the house is.
Don't bash or belittle wholesaling or wholesalers because you simply do not fully understand it! Most wholesalers are doing it wrong. I agree.. this doesnt mean wholesaling is bad/shady..
What is most funny is that you keep saying "from my experience wholesalers [insert negativity here], and .. yada ada yada..
yet everyone here that replied to is against you defending wholesalers and most of these defenders are not even wholesalers.
Maybe it is time to just say "hey, I know nothing about wholesalers and I don't think I really have justification to talk as if I know wholesalers or wholesaling.
Are their dishonest wholesalers? Sure. Are there honest wholesalers that just don't know how to do it right? Of course.
are there honest wholesalers that are honorable fair transparent and awesome? Absofriggin lutely.
If you are going to base your point on the fact that there ARE dishonest wholesalers, then of course you can find them. But to jab an entire niche because of.. what ever.. nahh dude.. not cool
- 8yCurt DavisBusiness MemberFlipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
I only asked bc as a licensed realtor I have had many wholesalers ask me to list their deals on the mls but when I first asked by broker about this he told me the only way I could list the home on the mls was a listing agreement between the actual owner and myself.
Thx!!!
Originally posted by @Michael Quarles:
@Curt Davis the MLS requirements say the seller must authorize the insertion into the MLS.
It also defines who the seller is. And it defines who the owner is.
A long time ago trading was common. Not to lose anyone however it was nearly a bartering system.
NAR was smart enough to understand that they couldn't inhibit it so they wrote and adopted what they did.
Could it change? Sure. Most things do.
In fact in the day and still today one could take a net listing.
Please don’t misunderstand me. I personally think entering into an agreement to buy without predetermined means is highly unethical.
I do not see the issue of offering real property for sale prior to ownership being unethical or illegal as long as constructive notice is recorded.
I do see a huge issue with assignment.
Curt Davis - KAIZEN Realty538 Reviews - Flipper/Rehabber · Bakersfield, CA · Member since 2008 · 3k+ posts · 3k+ votes8y
KIM Bokers tend to rent desk space and don’t want to disrupt that revenue stream.
- 8yJoseph ODonovanPro MemberProperty Manager · Ridley, PA · Member since 2017 · 427 posts · 449 votesWow. I'm amazed at the level of animosity towards Wholesalers on BP. Just a few questions for those judgemental peeps. Are you in business to make a profit? If so, how do you profit from RE transactions? Do you buy low and sell high? HMMM. Did you ever find a deal on the MLS? If so, when you rode your high horse to the settlement table, did you offer to give the seller any $$ back because after all you got a good deal? No? Well, then you must be deceitful. Where are your ethics? For the RE Agents here. Have you ever sold a property in a hot market? If so, did you get your full commission? Yes? Did you disclose to your client that in this hot market, a realtor may not be necessary, as the property will sell at the same price as a FSBO. No? How deceitful. When you are selling a property for your client, have you ever told potential buyers that there is alot of interest in this property, or I have multiple offers coming in? When, in reality, that was just sales talk and not true. How deceitful. It's also pretty amazing that you peeps have this uncanny ability to know that all the sellers the wholesalers contract with are "not smart", or are old ladies, or are uniformed. And for RE Agents, you guys are very fortunate as your clients are all intelligent, young, vibrant and educated. Bottom line is Wholesalers are filling a void. They offer a service valued by their sellers and buyers, just as Wholesalers in other industries offer a service. I can't help but think this is nothing more than sour grapes.
- Developer · Houston, TX · Member since 2015 · 1k+ posts · 1k+ votes8y
It seems like the arguments against wholesaling jumps around.
You don't like that wholesalers are not offering full market value for a house. Buying anything below FMV is scamming the owners.
Oh but you have the funds to close? If you can close then it's okay if you buy for 70% ARV and get it under title. Somehow you were scum for buying it $40k under market previously but if you can close then you're good again.
So let met think, if it's okay to buy it cheap then what else do I hate about you? Oh I know, you don't put enough earnest money down. And you don't have a license. And you're only in it for the money and not building long lasting personal relationships.
- Property Manager · Allen, TX · Member since 2015 · 190 posts · 160 votes8y
Originally posted by @Jerryll Noorden:
Most wholesalers are doing it wrong. I agree.. this doesnt mean wholesaling is bad/shady..
This is the only thing that you said that matters. You agree that most wholesalers are doing it wrong. This is NOT a few bad actors who are breaking some set of rules. There are no rules for wholesalers the way there are for agents. Your conclusion is wrong. The fact that most wholesalers are doing it wrong is exactly what makes wholesaling shady.
- Flipper/Rehabber · Wilton, CT · Member since 2015 · 4k+ posts · 4k+ votes8y
Originally posted by @David Hines:
Originally posted by @Jerryll Noorden:
Most wholesalers are doing it wrong. I agree.. this doesnt mean wholesaling is bad/shady..
This is the only thing that you said that matters. You agree that most wholesalers are doing it wrong. This is NOT a few bad actors who are breaking some set of rules. There are no rules for wholesalers the way there are for agents. Your conclusion is wrong. The fact that most wholesalers are doing it wrong is exactly what makes wholesaling shady.
just don't agree there mate! I guess we have to agree to disagree!
- Specialist · Memphis, TN · Member since 2012 · 1k+ posts · 1k+ votes8y
@Michael Le,I think it jumps around because it's rubbish. I have never seen such ill informed petty comments in all my years on here. I had no idea such anti success sentiment lived in this forum. Quite out of character with any other subject. it's great to be successful and make money providing you do it exactly how I think it should be done......
- Property Manager · Allen, TX · Member since 2015 · 190 posts · 160 votes8y
Originally posted by @Michael Le:
It seems like the arguments against wholesaling jumps around.
You don't like that wholesalers are not offering full market value for a house. Buying anything below FMV is scamming the owners.
Oh but you have the funds to close? If you can close then it's okay if you buy for 70% ARV and get it under title. Somehow you were scum for buying it $40k under market previously but if you can close then you're good again.
So let met think, if it's okay to buy it cheap then what else do I hate about you? Oh I know, you don't put enough earnest money down. And you don't have a license. And you're only in it for the money and not building long lasting personal relationships.
It only seems like the arguments are jumping around because you don't seem to have a full grasp of what I'm saying. Do I expect everyone to pay full market value for a property? No, absolutely not. Do I think it is unethical for a wholesaler or anyone else involved in a real estate transaction to use an informational advantage to deceive a party to the transaction in order to personally gain? Yes, absolutely YES! Unfortunately, this is the business model that a large percentage of wholesalers tend to follow.
I've said it before and I'll say it again, if you cannot be 100% completely honest, open, forthright and truthful when conducting a real estate transaction, then you are being unethical! Ask yourself if you ever have to be concerned about whether the party you are dealing with is gonna go through with the transaction after they know how much you make on the deal or what the assignment fee is or what the property is worth. If any of that raises a concern, then you are not acting ethically.
- Specialist · Memphis, TN · Member since 2012 · 1k+ posts · 1k+ votes8y
"Do I think it is unethical for a wholesaler or anyone else involved in a real estate transaction to use an informational advantage to deceive a party to the transaction in order to personally gain?"
So becoming an expert in an area and learning how to buy homes through institutional channels etc is deceptive??? That doesn't even make sense. So becoming the best baker in town so you can charge a premium for your bread and cakes is dishonest? Learning to negotiate so you can give someone benefits other than top dollar is deceptive?? Never heard anything so silly, and you don't appear to be silly. So why do you have this view of a very simple buy and sell strategy? There has to be more to the story for your view to be so distorted?
"I've said it before and I'll say it again, if you cannot be 100% completely honest, open, forthright and truthful when conducting a real estate transaction, then you are being unethical! Ask yourself if you ever have to be concerned about whether the party you are dealing with is gonna go through with the transaction after they know how much you make on the deal or what the assignment fee is or what the property is worth. If any of that raises a concern, then you are not acting ethically."
This is also patent rubbish. You would be stupid to not be concerned about such things, so many buyers are dishonest, fail to complete and looking to take advantage. I can only assume either
A: Wholesalers are your competition and they out perform you or
B: You have been very badly burned personally.
Either way you attacking a whole industry is without foundation.
- Property Manager · Allen, TX · Member since 2015 · 190 posts · 160 votes8y
Originally posted by @Dean Letfus:
"Do I think it is unethical for a wholesaler or anyone else involved in a real estate transaction to use an informational advantage to deceive a party to the transaction in order to personally gain?"
So becoming an expert in an area and learning how to buy homes through institutional channels etc is deceptive??? That doesn't even make sense. So becoming the best baker in town so you can charge a premium for your bread and cakes is dishonest? Learning to negotiate so you can give someone benefits other than top dollar is deceptive?? Never heard anything so silly, and you don't appear to be silly. So why do you have this view of a very simple buy and sell strategy? There has to be more to the story for your view to be so distorted?
I'm not sure how much further down this rabbit hole I want to go, but here's one more shot...
No, becoming an expert and using what you've learned to buy homes is not deceptive, what I said is using an information advantage to deceive is deceptive, which should be plainly obvious. The point I'm making is about (what seems to me to be) the majority of wholesalers who act unethically. If you are able to wholesale while being completely honest and open and truthful and sellers still choose to go with you, then hey no problem, I wouldn't say you are acting unethically. However, that is not my experience with wholesalers in general.
I don't believe that sellers who are fully informed are very likely to choose to go with a wholesaler.
- 8yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Joseph ODonovan:
Wow. I'm amazed at the level of animosity towards Wholesalers on BP. Just a few questions for those judgemental peeps. Are you in business to make a profit? If so, how do you profit from RE transactions? Do you buy low and sell high? HMMM. Did you ever find a deal on the MLS? If so, when you rode your high horse to the settlement table, did you offer to give the seller any $$ back because after all you got a good deal? No? Well, then you must be deceitful. Where are your ethics? For the RE Agents here. Have you ever sold a property in a hot market? If so, did you get your full commission? Yes? Did you disclose to your client that in this hot market, a realtor may not be necessary, as the property will sell at the same price as a FSBO. No? How deceitful. When you are selling a property for your client, have you ever told potential buyers that there is alot of interest in this property, or I have multiple offers coming in? When, in reality, that was just sales talk and not true. How deceitful. It's also pretty amazing that you peeps have this uncanny ability to know that all the sellers the wholesalers contract with are "not smart", or are old ladies, or are uniformed. And for RE Agents, you guys are very fortunate as your clients are all intelligent, young, vibrant and educated. Bottom line is Wholesalers are filling a void. They offer a service valued by their sellers and buyers, just as Wholesalers in other industries offer a service. I can't help but think this is nothing more than sour grapes.do you know why we have real estate licensing in all states and most countries.. ???
why do we ?
who needs license why dont we all just wholesale.. ? its like that in China.. there is no licesning there. Highly restrictive in Singapore a lot of the turnkey guys learned that the hard way.. LOL
I dont think most people equate an investor who buys with their own cash closes and then resells as a wholesaler to me I think we all equate that to being a true investor.
I think where this thing gets muddy is when wholesaler say they are going to buy but really dont and never do.. Like Mr. Quarles above said he thinks assinging has major issues and so do I if your bringing two people together just like a broker does.. and its not just an odd occurance but its your full on scheme its what you do it your whole business model
So to that end I got tired of is this OK or not in our State Oregon and I got a mail chimanzee thingee on my emial.. it was a wholesaler I doubled checked that he did not own it.. In our area we can call title company customer service and get a date down on the phone in 60 seconds .. so as of that Minute I called Becky at Chicago title this person did not own it and the owner had bought it in the 80s..
So I sent it along to my state DRE department of real estate investigator and asked her whats up.. how can these folks market properties excatly how us agents do it why do we need a license and they dont ???
here was her response and again only our state.
""
Hello Jay,
Thank you for getting back to me. The advertising copy you attached to your email came out perfectly and will be very helpful. Thanks!
The Agency is well aware that unlicensed “wholesalers” are rampant in our jurisdiction. Addressing the problems is like trying to put out small individual fires in a forest that is burning. The Agency’s investigations are complaint driven, so we rely heavily on the public, and our licensees to bring these individuals to our attention.
Thank you again for the information, if I have further questions for you during the investigation I will certainly reach out.
Best regards,
Frances Hlawatsch | Financial Investigator
State of Oregon - Real Estate Agency
530 Center Street NE, Suite 100, Salem, OR 97301
"""
So there you go in our state they know its an issue they no its selling RE without a license and they will open an investigation.
I have two folks i work with on distressed assets in our state we mainly buy auction stuff.. but they both got turned in over the last 5 years for marketing properties they dont own.. one had a sign in the yard LOL.. neighbor wanted the house got peeved and filed a complaint.. so in essence in our state its up to us who pay to be in the business and be regulated to help regulate our industry.
I dont like having to do CE all the time.. and MLS dues and NAR dues.. but the MLS system is mandatory to make any money its the only way to truly comp anything.
to me its just more of a level playing field and if in your state they don't care then thats the hand your dealt.
the other thing i asked this regulator when we chatted was .. double escrow.. I said well a lot of these guys hid behind these with transnational funding.. I have done transnational funding in the past and wanted to ask her about that.. her / or states opinion is same thing your marketing a property you dont own.. I do think What Mike talks above getting written permission happens though.. so not sure how the state deals with that. but in our state title company wont do pass through you need to bring your own funds to closing.
Its nice BP banter.. and I can see both sides as i fund a lot of stuff in PA specifically that has wholesalers little fees on there and co wholesalers sometimes 4 of your guys on one hud..
So thats where i see the heartburn .. one set of folks is doing the exact same thing as another set of folks one has to be licensed can lose their ability to work if they do something contrary to licensing laws.. the other set has no rules or laws other than basic contract law.
so thats my take on this debate I love it though about every 60 days we go into the tules on this.. and it did cause me to finally sit down and ask my state regulator which is the defining authority its not some guru its not the internet its not the guy on BP selling you on equitable interest theory which is bunk by the way..
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