Rental Property Investor · Newport News, VA · Member since 2018 · 11 posts · 14 votes
I am in the process of looking for potential/motivated sellers in order to do some wholesale deals (enough to get me the money to do my own rehab/flip). As I've been researching, I see a lot that Wholesalers turn out to be the "bad guys." Unfortunately, I am an accountant/auditor, so I am automatically looked as a bad guy with my clients (lol) and do not what to be known as the bag guy in my real estate world. So I am starting this discussion for investors to vent or simply let me know the things that wholesalers do that annoys them. I know the main two things are estimating rehab costs and ARV (I am currently reading and doing a lot of research into this to accurately calculate these values, and my accounting skills help a little). My intent is to get all the bad things wholesalers do to ensure that I make it my mission to be the complete opposite and start an honest business with high integrity. Vent away!
@Latia Rowland@Mike Cumbie is totally ignoring the fact that there are several categories of sellers who can't or won't sell through a realtor. He's living in a fantasy if he thinks every seller can list every house in every possible scenario and come out better than selling direct. I know this because I exclusively buy direct from sellers who fall into the following categories:
1. Sellers who have been burned by agents before. 2. Sellers who have no equity with which to pay a commission. 3. Sellers who don't have the time, money, or desire to get their property "listing ready". 4. Sellers who don't want the fact that they need to sell to be "shouted from the mountain tops". They want a private and discreet transaction. 5. Sellers who don't want a parade of tire-kickers marching through their house. 6. Sellers who tried listing and their agent failed to produce an offer.
You can do real estate however you want. But being a realtor is totally different than being an investor. You work with a different group of sellers with different needs. "Wholesaling" is not about scamming sellers into taking less than they can get listing with a realtor. True wholesaling is an entirely separate market from the retail MLS.
There are two issues here. One is the price you pay, This can be negotiated between the parties and as long as both are informed and happy with the final agreement there is nothing wrong with any agreed price. I agree that there are good reasons people would sell for less than market like expediency, privacy or other reasons. The other one is the definition of "buy". To me "buying" is handing over money in exchange for title. It is not putting something under contract, tying up the seller and then hunting for a buyer who would pay more that what you "promised" to pay. You put all the risk on the seller and nothing on yourself. That is wrong. IF you put a house under contract you should be willing and able to close at that price. Most wholesalers dont have two nickels to rub together or access to credit. That is what I have a problem with.
Exactly. Most wholesalers are happy to take as much profit as they can, but if they can't find a buyer that meets their minimum margin, they just back out of the contract. I have met a few wholesalers who close no matter what, but they are the minority.
The most successful wholesalers that I've had the pleasure of working with and buying from have built up their business on integrity and trust, with their buyers and sellers, and are usually licensed.
What makes them successful on the buyer side is that they come up with numbers that are well researched and reasonable.
On the seller side, the seller has been educated about all of their options, including listing on the market, and they can and do close themselves if need be.
I see no down side to wholesaling while licensed as it allows you to provide the entire spectrum of options that turns out to be 90% on market sales, and to serve the remaining 10% with alternative options if they are desired.
Yes there are plenty ****** people licensed or not, so a license isn't going to fix that, but even the basic education needed to get a license and ethical requirements are better than nothing in pursuit of the above goals, and the cost of acquiring it is frankly minimal and can be easily recouped if you have any idea of what you're doing.