Hi guys I was thinking about this today and just wanted to ask this question and see what your opinion on the matter is. Many people in and out of real estate frown upon wholesaling. There are so many negative stigma's and opinions towards it. I just want to ask why do you think people view it as wrong, unethical or shady? I personally don't think it is any of those things, because I view it as every other aspect of real estate, problem solving. You are providing value and a solution for others. I know that there are some bad wholesalers just like there are bad people in every profession. I think this kind of trickles down and stems from the negative attitude towards people in real estate in general. As I have transitioned into wholesaling I have come to realize that it isn't all peaches and cream, and is actually very hard. Definitely not as easy as guru's and people on FB, and YouTube make it seem. I see many wholesalers work hard, help others, and provide value to both the seller and the investor, yet they are called "vultures" and seen as the bad guys. What would it take to change this? What is it going to take to change the overall view on real estate investors to a positive one?

@Michael Guzik Don't waste your time trying to change the perceptions of the general public. There are only 3 groups of people who's opinions matter: 1. Sellers. If they're motivated they don't care about anything other than: "Can you solve my problem?"2. Buyers. If they're motivated they don't care about anything other than: "Can you solve my problem?"3. Friends and family. Just tell them you flip houses. They'll think you're a rock star.

My opinion is this.. If you are wholesaling properties you are acting as a 3rd party real estate service provider (or solution provider, or consultant, or whatever..) So, you should have a license. Going through RE school and getting your license one of the only useful things that they really teach is ethics. They provide examples and show you how and why something is unethical and how to avoid it. Like for example even representing both sides of a transaction (which is what wholesalers typically do) and how that can be a sticky situation. Now.. here is how I approach a motivated seller or any seller. I disclose I am a broker 1st.. (and also and investor) then I ask them if they want to get top dollar and list on market, pay a commission, go through inspections, possibly make repairs etc.. OR.. do you want cash right now, quick close, no commission, no inspections etc. I run quick numbers for them and let them know how either situation would work. I tell them my price would net you X amount. Or we could list at X price on the MLS and try to predict the net to them and Days on market. The fact that I can present options, provide comps, and give them a bit of control I think puts them at ease and makes them want to work with me. If I can get the deal, good. If I can get a listing thats also good. If I'm to busy to list it, I can kick it to another agent and take referral. I feel like I can close a higher percentage of the leads that come through, pushing my advertising costs down and I don't have to make the redicoulus mark up that some wholesalers have to make because they spend 10k a month on mailers and ads and ditch 80% of the leads because the spread isn't big enough. Also, if I do get the property under contract and the end buyers back out or fall through I make sure that I have the cash to actually buy it make sure it closes no matter what. To me its just good business and makes it ethical. Give the seller all the info, treat them like a client. Do what you say you are going to do, put your money where your mouth is etc..

Depends on the jurisdiction really.. in some states its simply illegal end of story. and I don't think anyone is advocating breaking the law.. right ?

@Doug Pretorius Further Doug don't get me wrong I would LOVE to not have to be licensed as I am or have been licensed in 3 states plus a Licensed Mortgage banker.. the CE for all this stuff is just over the top etc etc. it would just be nice if we level the playing field. My interview yesterday with the state of Oregon regulators was based on that.. If we are going to have an industry then we need everyone to play by the same rules. If there are no rules then so be it and everyone can just go do there thing. However is will say this if you read in EVERY state in the union what activity needs a license they will all say the same thing bringing two parties together for expectation of compensation. and at the end of the day that's what all of us do in some manner. the US folks like to hid behind equitable interest and E Interest is NOT just being in contract.. even though the gurus will tell you that.. and to whole or assign contracts I have yet to see and add anywhere that says Hey I have this contract for sale its written on an 8 1/2 X 11 contract form etc.. NO they say this house at this address is for sale.. that's the issue. especially people starting out there I no way they can just sell a contract they have to advertise the house .. its already very difficult business for most and the reality is 95% who thinks its easy and the way to get started fail in 6 months we see this one BP every day.. people get gung ho then fade away.. its a very tough thing to do successfully so is being a real estate agent or broker.. I have owned 3 brokerages over the years and had literally hundreds of agents that worked for me its a never ending cycle of new people coming in and those that cant cut it leaving.. Those that do well at this would do well at anything they put their mind to.. that I am dead certain on .. smart is smart.. driven is driven.. sales ability can be god given but some have it some don't.. that kind of thing.

@Jay Hinrichs Every time this is mentioned I still shake my head in disbelief that there are some states which won't allow you to sell something you own.

@Doug Pretorius What you are saying may be true for your area --- I have no idea what the situation is in Ontario or in Canada in general. But jurisdiction matters a lot when it comes to legal matters. And with an issue like wholesaling, you generally can't make blanket statements about its legality. Just so I'm clear, I'm not making an ethical judgment about wholesaling. There is not necessarily a correlation between the legality of an act and the ethical nature of the act. For example, jaywalking is "illegal" in most jurisdictions. But I doubt any of us think of it as a seriously unethical conduct. Compared that to eating meat. For most kinds of meats, it legal to do in the United States and in Canada. But for some vegetarians and vegan, it is a deeply unethical act that's akin to murdering a human being. I'm also not lingering on this topic for fun or to embarrass anyone. My main concern to make sure that the BP community doesn't oversimplify a complicated legal issue. Many people --- especially new investors --- are already often confused about the fine details of a particular topic. For instance, I can't count the number of times newer investors ask on BP about some convoluted asset protection scheme. Now it may very well be the case that the scheme itself is legit. But it could also be the case that it's flat-out inappropriate for someone who is just starting off investing and has no meaningful net worth to protect. The fine details matter. I suppose I'm sensitive to this topic since I've met many newer investors who tried to embark on their journey as wholesalers. Many of them were nice folks trying to dream big. Unfortunately, many of the people I met were also frankly taken advantage of by others. For example, I remember one older gentleman who paid a decent amount of money to go to this no-money-down investing course that ended up being a wholesale lecture. The stuff he learned from that course was so rudimentary and generic that he could've gotten in serious trouble if he tried to wholesale in Pennsylvania based on that lecture. At the end of the day, I don't care whether people think wholesaling is ethical. But I do have concerns when people make blanket statements about its legality. When it comes to legal issues, the devil is in the details. Speaking in absolutes without strict justification will only add confusion to what is already a complicated topic. Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.

@Doug Pretorius I don't think your murder analogy doesn't quite work for various reasons. But we can stick with it since it's kind of interesting. Let's say there is a law that defines "murder." Consider the following: • Does abortion constitute murder? In the United States, the states disagreed on this question until Roe v. Wade gave some clarity when SCOTUS held that a person has a constitutional right to an abortion until the third trimester. Sounded easy enough --- except that it wasn't at all. Setting aside the "politics" behind Roe, lawyers have argued countless numbers of cases on what Roe and its progeny means. • Here's a recent example: in California, a pregnant girlfriend asked her boyfriend to punch her in the stomach until the baby/fetus died. The pregnancy was early enough that the girlfriend could've gotten an abortion. Did these two commit murder? If so, why? • Another real-life example: a person with HIV (or even AIDS) sleeps with someone. No protection is used as the person intentionally failed to disclose (or outright lie) to the partner. A year later, the partner dies from complications associated with AIDS. Did the person commit murder? • A slight variation to the above facts (and another real-life example): same facts as above but this time the person disclosed to the partner about his/her HIV status. If the person later dies, is it murder? Many people I have spoken to about this case intuitively say "no." But if I recall correctly, the person was in fact found guilty of murder (technically attempted murder) and had to go to the state Supreme Court to get exonerated. • One last real-life example: parents have a young child. The parents are religious and do not believe in vaccination. There is an outbreak of a contagious disease in the area that they live in. Despite this, the parents still refuse to vaccinate the child. The child ends up contacting the disease and dies. Did the parents commit murder? The law against murder has been around since the early days of civilization. In the very earlier days, none of the above examples would have been something that they were pondering about when banning murder. But as time goes on, we have to deal with new practices. And often times it's unclear how the law will rule on it. Let's leave the grisly topic of murder and get back to your point. I think you are committing a strawman fallacy. Notably, I --- nor anyone else --- is making the argument that acts are only legal if the law says it is. Instead, here's the argument: • In all states including Pennsylvania, there is some kind of law that regulates the "practice of real-estate." In Pennsylvania, we call it RELRA. • Under RELRA, only brokers and salespersons can engage in certain activities. RELRA and related regulations expressly spell out situations where there's an exception to this rule. • The government agency in charge of administering is the State Real Estate Commission. One of its jobs is to offer guidance in situations where the law is unclear. So if it is unclear under RELRA and the regulations about whether a particular activity violates RELRA, the Commission can initially rule on it. • If you disagree with the Commission, you can file an appeal with the Commonwealth Court. • And if you lose at the Commonwealth Court, you can file an appeal to the Pennsylvania Supreme Court and hope that the Court: (1) takes your appeal; and (2) rules in your favor. By the time you get to this point, you would've spent at least five figures --- if not six figures --- in legal fees. • Now wholesalers often appear to engage in activities that seem "suspiciously" similar to what brokers and salespersons do. • As you can see from this discussion, reasonable people can disagree on the legality of the topic. With the above in mind, are wholesalers engaged in the illegal practice of real estate in Pennsylvania? From what I can tell, you say "no." Other people say "yes". My point is that both opinions are irrelevant from a legal perspective. Until there is a firm ruling on the issue, we are all just guessing. Now some guesses might be better than other guesses. But it's still a guess. Note that often times there are many legal issues that we will never have a clear answer on. For example, there are pretty interesting questions in Pennsylvania about how you are supposed to calculate damages when the landlord fails to properly return the security deposit. Last time I checked, the trial courts have come up with at least three different ways to calculate this. Now we could get clarity if a landlord or a tenant would appeal this matter to the appellate courts. The problem is that filing an appeal to the appellate courts is very expensive. So while it's an interesting issue, I doubt we will ever get a clear answer on it. I suppose my broader point here is that the law is rarely black and white. If it was, lawyers wouldn't make any money. :) Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.

Sorry @Dylan Barnard the referenced to Chapter 475 was Florida. I see you are in Texas. All I know about Texas is the BBQ is fantastic and Austin is overpriced :)

Wholesaling in unethical... why or why not?

Eric Jacobs

Specialist · Fort Lauderdale, FL · Member since 2016 · 187 posts · 128 votes

8y

How are values in Roundrock and San Marcos. This is the second time I've heard of the latter which has piqued my interest.

0 Reply

Ryan Proffit

Saint Joseph, MO · Member since 2018 · 401 posts · 244 votes

8y

I think illegal, and unethical are two different things. I have wholesaled exactly 0 times, but if I ever do get the chance, I will be 100% honest about what I am trying to do. If I found they would be better served listing it, I would even refer them a good realtor. I would also try and have a plan to by it myself if for some reason the buyer backed out. I try and live every day on the Air Force core values, Integrity First, Service before self, Excellence in all we do. If you live your life on principals, you never have to waste any time trying to decide if something is unethical or not. Now, that does not mean you can't be doing something illegal and not realize it. Again, I am no expert. Not yet at least.

2 Reply

Mike CumbieBusiness Member

REALTOR® · Brockport, NY · Member since 2015 · 3k+ posts · 4k+ votes

8y

@Michael Guzik

Disclaimer: Just the personal opinions of some dolt on the internet, not legal or ethical advice.

Wholesaling itself is fine, you purchase something low and sell high. Makes sense, it is the framework of our society. Not going to speak for Canada, because I don't live there. Contract assigning itself is fine and not unethical either. You have 25K in your pocket. You get a contract for a place for 20K, your friend shows up and says I'll give you 30K for it. You assign it over. Sure fine no issues. If your friend fails you just hand over the 20K and keep going.

Now if you have 2K in your pocket and then put something under contract for 20K and the only way you could purchase it is if (You get lucky, pray really hard, find a complete sucker, hit the lotto). Then you are being unethical and/or illegal. You are not wholesaling, you are playing a shell game. You did not enter into a contract with "Good Faith". Because you can't fulfill your end of the contract.

3 Reply

Doug P.

Investor · Kitchener-Waterloo, Ontario · Member since 2008 · 1k+ posts · 1k+ votes

8y

@Kevin Sobilo I only use options for wholesale deals, and it works well. They're usually non-exclusive too so the seller can continue to try to sell the property themselves at the same time I'm working on it. Sometimes that means I lose out, but it also means I only have to pay $1 for the option.

0 Reply

Dylan Barnard

Rental Property Investor · Justin, TX · Member since 2017 · 134 posts · 57 votes

8y

Originally posted by @Eric Jacobs:

How are values in Roundrock and San Marcos. This is the second time I've heard of the latter which has piqued my interest.

Well, he told me he bought an 8plex in San Marcos that he is slowly renovating as tenants move out for around $565k I think is what he told me. We stayed in one of those units when we visited for memorial day, and he said he's been putting around $20k per unit in renovations and raising rents to around $1200 per unit. I'm not sure what they are getting for the non-renovated units, but they are going to try to fetch over $1 mil when they are done with it. Might take another year or so, but he's making it happen slowly but surely. I'm up here in the Dallas / Fort Worth area, so I'm not familiar with much other than what he tells me he's doing. But it seems like San Marcos still has deals, and it has the college and the river, which are huge pluses.

1 Reply

Kevin Sobilo

Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes

8y

@Doug P., I think that is roughly equivalent to being an agent and signing a nonexclusive listing agreement.

I believe with a nonexclusive listing agreement the seller can continue to sell a home, but if you find a buyer you collect a commission.

0 Reply

Mike CumbieBusiness Member

REALTOR® · Brockport, NY · Member since 2015 · 3k+ posts · 4k+ votes

8y

@Kevin Sobilo,

When it comes to options.The people represented to govern have decided what requires a license to do for another person for money (Cut hair, fix brakes, sell real property, plumbing, electrical, chauffeuring, running a day care). Could in any of those cases, a person offer to sell their house\car\kid to you for $1.00 and then when you fix the electrical\brakes\cut hair on "your own house\car\kid because you have an interest" and then sell it back for the dollar plus a fee?

I don't know. Sure some regulators/lawyers/judges may just look and say with a grin "What a crafty individual, sure got us go on with your business". Or they may consider it a veiled attempt to save a couple hundred on registering and licensing requirements.

1 Reply

Kevin Sobilo

Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes

8y

@Mike Cumbie, the difference being that while wholesalers they aren't representing someone else's interest nor doing work on behalf of someone else.

If I paid a seller $500 for the option to buy their property for $20k within the next 6 months or give them a $500 earnest money deposit on a sales contract to close in 6 months, I have skin in the game as an investor. If I them turn around and sell that deal to someone else for $25k, I was never in any way doing work for or representing the seller. It isn't a veiled attempt at working around licensing laws.

1 Reply

Mike CumbieBusiness Member

REALTOR® · Brockport, NY · Member since 2015 · 3k+ posts · 4k+ votes

8y

@Kevin Sobilo,

OK, works for me. I am not a regulator and I have never sent an ad into regulators because they failed to meet the DOS guidelines. My assumption is that when you are trying to find a buyer for your option. You are using words like "For sale, letter sized piece of paper in black ink. Writing is in Ariel font, includes 2 signatures and is discussing a fun project". If you are using words like 123 Main street, 3 bedroom 2 bath, single family home in xyz county with 2 acres. You are brokering real estate. If you have any doubts call the PA department of state and ask them. Ultimately they are going to be the ones to either accept or prosecute.

Personally I would just pay the $300 to get a license, hang it with a transaction broker (you don't have to pay the thousands for MLS access or to join the board) and then sell the properties the same way you are selling options, except that you can describe the property, have pictures, put up flyers, take out a TV ad if you want. You can charge whatever fee you want to sell. Do an exclusive right to sell or let them still try and sell on their own. Or you can just use options and if someone sends one of your ads in to the DOS deal with it when it comes. Like I said, makes no difference to me I am not regulating the industry.

If it was up to me a whole lot of industries would have a lot less regulation. There would be no license required for half this stuff. But I don't like spending my time and money defending myself all the time, so I chose to follow the rules they laid out. Plenty of people use loop holes for all sorts of things.

2 Reply

Doug P.

Investor · Kitchener-Waterloo, Ontario · Member since 2008 · 1k+ posts · 1k+ votes

8y

@Mike Cumbie The way you talk it sounds like the US has judges just itching to overturn basic contractual rights at the drop of a hat, I don't buy that. Whether you like it or not assignment of contractual rights is a fundamental part of contract law. I believe that's why that anti-assignment law in BC was so carefully worded to apply only to licensed real estate agents, and specifically exempts all non-licensed individuals and corporations.

@Kevin Sobilo Exactly. Everyone seems to be confusing the stark difference between entering a contract that says: "I can buy your property for $100,000 within 6 months." vs. "I will try to sell your property for you for $100,000 within 6 months and if I do you will pay me 6% for this service."

Agents are charging a fee for providing a service for another person.

Wholesalers are buying and selling contractual rights for themselves at their own risk.

1 Reply

Doug P.

Investor · Kitchener-Waterloo, Ontario · Member since 2008 · 1k+ posts · 1k+ votes

8y

@Mike Cumbie I like how your entire argument hangs on this idea that you can't advertise a property you don't own without a license. Guess what? The person on title doesn't own the property either. They own a piece of paper that says they have a bundle of rights toward that property. Same thing with wholesalers. They are buying some of the rights toward that property and selling those rights. That is not brokering. That is investing.

I've already been investigated by the Ontario Real Estate Council. The second I pointed out that I'm buying and selling property for my own portfolio, the case was dropped.

Can we all just agree that you need a license if you want to run a service business of helping other people buy and sell their real estate, but if you want to buy and sell real estate for your own portfolio, you do not need a license?

0 Reply

Mike CumbieBusiness Member

REALTOR® · Brockport, NY · Member since 2015 · 3k+ posts · 4k+ votes

8y

@Doug P.,

@Kevin Sobilo is more than welcome to take your advice. Use it fully, live by it, call you in to testify on his behalf. Personally I have no idea what is happening in BC or anywhere else in Canada. I don't profess to understand their laws and customs much less what impact their anti-assignment laws effect NY and PA in another country.

"I can buy your property for $100,000 within 6 months" when you have $63.17 to your name, a credit score of 501 and a 72% DTI, has some effect on the "good faith" part of a contract. Canada may have different parts of contract law though.

0 Reply

JD MartinBusiness Member

Moderator

Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes

8y

The rub in wholesaling (where it's legal) is that many (most?) represent in good faith, as @Mike Cumbie said, that they are going to buy this property at $X dollars, when in reality they do not have any access to those funds. If a wholesaler has the intent and ability to close on the property at contracted amount, irrespective of their ability to find a buyer, and it's not illegal, then I don't necessarily see anything wrong with it. But I suspect most states see the aforementioned issue as a primary issue that makes wholesaling real estate illegal. Further, RE agents & brokerages are almost certainly, in every state, required to carry insurance to protect themselves, the buyer & seller from contract and other issues - this is something I would guess virtually no wholesalers do.

Podcast Guest on Show #243

Skyline Properties

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2 Reply

Doug P.

Investor · Kitchener-Waterloo, Ontario · Member since 2008 · 1k+ posts · 1k+ votes

8y

@Mike Cumbie and @JD Martin you guys keep flip-flopping when you're arguments are called out as bogus. One minute it's illegal (brokering without a license), the next it's unethical (promising to buy when they can't afford to).

I think I'll just end this by calling out the fact that this forum has moderators who are promoting their own businesses with their own agendas that are at odds with the topic of the forum itself.

2 Reply

JD MartinBusiness Member

Moderator

Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes

8y

Originally posted by @Doug P.:

@Mike Cumbie and @JD Martin you guys keep flip-flopping when you're arguments are called out as bogus. One minute it's illegal (brokering without a license), the next it's unethical (promising to buy when they can't afford to).

I think I'll just end this by calling out the fact that this forum has moderators who are promoting their own businesses with their own agendas that are at odds with the topic of the forum itself.

I don't see Mike answering the question as promoting his own business and his own agenda, just because he happens to be a realtor. I believe he answered in a factual way. As for me flip-flopping, I said that I personally don't have a problem with it if ethics are being followed. Whether or not the state has a problem with it - as most do - is another matter entirely. What I take issue with is someone misrepresenting their good-faith requirement to fulfill the terms of the contract. As noted above, someone that can't get a loan to buy a coffee at Starbucks is not going to be able to close on a contract. That, to me, is bad faith misrepresentation at best and outright fraud at worst. Most states recognize that, because they recognize that agreeing to buy a house/piece of property is not the same thing as agreeing to buy a car or a used couch, both in the sheer scope of the transaction (most people will not conduct a bigger transaction than buying a house in their entire life) and in the complexity and nuances involved with the sale, such as other contract contingencies, moving truck schedulers, school relocations, etc. You may file that as "don't count your chickens until they hatch", but most states have determined that agreeing to buy someone's property when you know you don't have a chance in hell of closing the loan is operating in bad faith. Realtors in some states may be liable for bad-faith efforts on the part of their buyers, which is why they're required to carry E&O insurance. That may not be applicable in Canada - I can't say - but the original question was "Is wholesaling unethical?". I suspect 95%+ of the people on this board would agree that signing a contract that you know you cannot fulfill is unethical. Now, if you sign a contract with the seller that states that your sole intention is to assign it to someone else, and that is the entirety of your obligation, then tough luck for the seller - but that is not what most wholesaling entails, because most sellers won't agree to something like that.

Podcast Guest on Show #243

Skyline Properties

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2 Reply

Doug P.

Investor · Kitchener-Waterloo, Ontario · Member since 2008 · 1k+ posts · 1k+ votes

8y

@JD Martin I think the ethics of the situation can be summed up this way: Realtors come into this forum on a daily basis to slander individuals and the entire wholesaling niche. While wholesalers do not do the same thing in the real estate agent forum.

It's obvious that the only reason these threads keep coming up is because realtors want to dominate the real estate business. They want it to be made illegal to sell your own property without hiring them to do it for you so they can take a piece of the pie.

In conclusion. There is absolutely nothing illegal or unethical about buying and selling your own property or contract in a free country. What is illegal and states and provinces take issue with, is buying or selling other people's property for them without a license. Totally separate issue from wholesaling.

2 Reply

Tyion Bridgeman

Real Estate Agent · Atlanta, GA · Member since 2014 · 135 posts · 40 votes

8y

I don't think wholesaling is unethical. I just think wholesalers add very little value, usually don't know anything, and inflate the cost of real estate.

1 Reply

Chris K.

Attorney · Nashville, TN · Member since 2015 · 1k+ posts · 1k+ votes

8y

From a lawyer's perspective, this topic is "simple" (not really but the basic concept is). Wholesaling --- whatever that may mean to you --- is "legal" in your jurisdiction only if certain scenarios are true. I'm sure there are other scenarios but the following three comes to mind.

There's an express statute that says wholesaling is legal;

An appellate court has expressly ruled that wholesaling is legal (although you have to be careful from overreading an appellate decision); and/or

The relevant regulatory agency for the jurisdiction has expressly stated that they consider wholesaling to be legal (and they haven't changed their mind since).

Unless one of the above is true, the legality of wholesaling is ambiguous at best. You can try to guess whether something is legal and you can look into it to evaluate the legality. But until there is a definitive act, it's unclear.

In terms of ethics, I don't think there is anything inherently unethical about wholesaling. The problem I see is that many wholesalers don't know what they are doing. As a result, I often see at least one out of the three parties get screwed in a wholesale transaction.

Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.

2 Reply

Michael Guzik

OP

Real Estate Agent · San Antonio, TX · Member since 2017 · 523 posts · 362 votes

8y

@Doug P. Very well said. I hate to be an astriskhole but sellers are normally from the "general public" so when going to them and talking to them, the "general" opinion does matter, since they are part of the general public. I see what you are saying but I don't agree to a certain extent.

@Ryan Mullin I don't agree with you but I respect your opinion and can see why you think it is right. That just isn't applicable to everyone only a select few. I don't know very many people that have the cash to close all the deals that come their way. If that was the case then 99.999999% of people would automatically be out of REI. That's the beauty of this industry is that you don't have to use your own money. I can see where you are coming from and that's certainly a noble way to do things but I just don't think it is practical.

@Kristopher Gomez Well said my friend. I just asked because a seller I had spoken to kind of brought this up, and also on Podcasts Josh has a very subtle negative attitude and demeanor towards wholesalers that are on the show. I think that some investors in this industry see themselves as above and "better than that" when speaking of wholesalers. I don't know what it is or when it started but I agree with you man we provide value and do a lot of stuff that we don't get credit for. I did something pretty similar for an older lady a few weeks ago and she decided not to sell to us even after all I've done. People don't see that side of the business though they only see what they want to see. very well put brother and I'm glad to hear that you are doing well!

1 Reply

Doug P.

Investor · Kitchener-Waterloo, Ontario · Member since 2008 · 1k+ posts · 1k+ votes

8y

@Chris K. Are you saying that PA has a law that says: "It is legal to not commit murder"? And thus it is only legal to not commit murder because there's a law that says it's OK not to kill people? That's a bizarre legal system you've got there!

@Michael Guzik If a seller is of the general opinion that wholesalers are scumbags you won't be able to change their mind. Same thing with sellers who think realtors are scum. That's usually the first question out of the mouths of FSBOs: "Are you a realtor?" They will only proceed when I assure them I'm not.

0 Reply

Mark Sewell

Investor · Houston, TX · Member since 2017 · 1k+ posts · 871 votes

8y

Originally posted by @Caleb Heimsoth:

It’s only unethical if you make it that. Assuming it’s not outright illegal in your state, people make it unethical by doing the following:

1. Lying to sellers by saying I’m a “cash buyer”. If you don’t have your own cash or are borrowing it from someone, this isn’t true. Tell them you have an end buyer.

2. Overestimating ARV and underestimating Repair's. This is probably a combination of lack of knowledge as much as unethical. If you're telling me there's 5k repairs and I can buy it for 80 and sell for 120, I know you're off somewhere.

This right here, brother, you nailed it.

I just find buyers that want to buy in a certain area, try to get to know then and understand what it is they want to invest in, and stay in contact. When something comes up, I invite them to come with me -- sometimes they can talk directly with the seller, and everything is out in the open that way. No games, no grab-***. We can run it through my LLC like a wholesale deal or if it is out of my ability to buy, I'll just hand it over to them and let them run with it. They can pay me a modest fee.

Not really all that worried about anybody going around me -- if it happens, it will only happen once. If I am really delivering value, then it won't happen even once.

I learn a lot, BTW, by doing this, because some of the guys I work with have a LOT of experience. And I get to benefit from their credibility by association. I don't care who you are, you cannot buy everything, so it makes sense to run in herds.

Whatever your opinion is, there are good wholesalers out there (relatively few) and there are some that are still lacking in the integrity and credibility department.

1 Reply

Doug P.

Investor · Kitchener-Waterloo, Ontario · Member since 2008 · 1k+ posts · 1k+ votes

8y

@Mark Sewell If you're passing a deal on to someone you introduced to the seller and they pay you a fee, you are by definition, brokering without a license.

1 Reply

Mark Sewell

Investor · Houston, TX · Member since 2017 · 1k+ posts · 871 votes

8y

@Doug Pretorius, fair point, but how is it then that investors are able to pay a bird-dog? A subtle difference, but I'm not acting as an intermediary, and I am not directly involved in any negotiations in those instances.

0 Reply

Karen MargraveBusiness Member

Moderator

Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes

8y

@Jay Hinrichs What interview with the Oregon regulators? Are you in trouble again?

0 Reply

Doug P.

Investor · Kitchener-Waterloo, Ontario · Member since 2008 · 1k+ posts · 1k+ votes

8y

@Mark Sewell No idea, never paid a bird dog before (shrug).

0 Reply

Wholesaling in unethical... why or why not?

Wholesaling in unethical... why or why not?

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