This is a topic that has certainly been kicked around quite a lot.
The main theme that I notice every time is that those who call themselves "wholesalers" (but are actually assignors) tend to push the conversation towards whether or not the practice is legal, even though the topic usually starts out concerning whether it is ethical. I think there is a pretty obvious reason for that.
That issue aside, I think the answer to the question of ethics is fairly simple:
a) If you tell a seller that you are going to buy their house, from your marketing pieces all the way to the execution of contract, but you have no intention of actually buying it, you are lying and, last time I checked, lying is unethical.
b) If you explain to a seller that you have access to cash buyers who have no way of knowing about their house otherwise, and you intend to solve their problem by putting their home under contract and then assigning the contract to one of these buyers, then you are solving people's problems in an ethical manner and bravo to you; you are adding value and making money doing so.
Many of you will say that sellers won't work with you unless you tell them that you are a cash buyer so you have no choice. If that's your excuse to purposefully lie to people, and you think that it therefore makes it okay, then you, in my opinion, are unethical. You always have a choice. If you believe that it becomes okay to lie to someone as long as the end result is that you are solving their problem, then your core principals need to be re-examined.
Bottom line is this: If you've never bought a house with cash, or even if you have but you have no intention of buying the one in question, then to represent otherwise is an intentional lie, and is therefore unethical.
I think that @Doug P. put it perfectly in his first post on page 1 of this thread, and the number of votes he received is a good indication of where a lot of self-proclaimed "wholesalers" stand on this topic.
Originally posted by @Doug Pretorius:
@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.
The perceived need to represent yourself as a cash-buyer, and the ethical justification that it's okay to do this even if it is a lie because you're solving their problem, is a slippery slope. Next thing you know, you're so used to misrepresenting what it is that you actually do, that you're advising others on a web forum to lie to their friends and family about what they do. What's perhaps even more troubling is that this advice got 19 votes! Come on people.
Now, if you actually do buy houses, but you also assign ones that don't fit your specific criteria or when you have too many to handle yourself, then you are not lying, and you are not unethical in my opinion. If you also flip houses yourself, then saying so to your friends and family is obviously not a lie. However, if all you do is assign contracts from sellers whom you originally told that you buy houses, you are a liar, plain and simple. Don't lie to your friends and family too just to make them think you're a rock star...
Lastly, if you are actually wholesaling, meaning that you close on the house with your own money, turn around, and resell it at a profit, then stating in your marketing and in person that you buy houses is perfectly fine because it is not a lie, and this thread doesn't really even apply to your model.
No question I just p'd off a lot of people but, at least in my mind, the line between ethical and unethical is pretty clear.