Attention Wholesalers: Beware!!!
Wholesaler · Jacksonville, FL · Member since 2016 · 42 posts · 120 votes
Be careful when discussing or posting wholesale deals on Bigger Pockets' forums. Myself and several other wholesalers in my area have gotten complained on to the Florida DBPR and after looking into it we determined that ALL of the complaints came from upset brokers who saw our posts in Bigger Pockets. Everything I do is legal and checked by my attorney, but some people have nothing better to do than make trouble for you. I am in no way trying to start a discussion about the legalities of wholesaling. The point is that even if you are doing everything legally, a complaint to the licensing board can cost you unnecessary legal fees and time. Proceed with caution in this and any other forum when discussing or posting your deals. Wishing you all much success!
@Jay Hinrichs you know we agree more than we disagree but I just have to jump in.
Not all wholesalers lie to their buyers
Many real estate agents lie about how much they can get sellers. Just to get the listing.
Many real estate agents leave desperate sellers hanging just as some wholesalers do.
Most deals I have wholesaled were deals most agents wouldn't do or couldn't do.
PS Is that the Heros Home logo? keep me updated on the 501 (c) (3) status
@Chris Martin We all know brokers can sell interests in real estate "for another", that's the definition of brokering. But you are saying that the owner of that interest can not sell their own interest. If a broker can sell their own interest just because they're a broker, that is totally insane.
That is the definition of favoring one group of private citizens over another. Wholesalers should get the ACLU involved in challenging that legislation.
@John Thedford Get real John. You're saying that assignment law exists for YOU personally to have the right to assign contracts you are a party to however you like, just because you have a license. While anyone who's a party to a contract who isn't licensed, can't assign their own interest!
You keep telling us that it is illegal for the owner of a real estate interest to advertise or assign their own interest. And yet you are also telling us that you put in every contract that you can assign your own interest wherever you like.
In other words, you are using your license as a shield to allow you to break the law that you are using to bash @Jason Palmer and every other wholesaler here.
Hmmm. How to explain.
You: "There's no question at all in any state that you can advertise and sell what you own. In the case of wholesaling, that is the interest you have as a principal in a contract."
Me: "Mostly true, selling what you own is legal. Realize, though, that some things are regulated..." I quote NC state law that supports your view. I also state OH and FL that don't and hence your statement isn't accurate.
You: "...But you are saying that the owner of that interest can not sell their own interest. If a broker can sell their own interest just because they're a broker, that is totally insane."
In NC, if I want to build my own house to rent out, I can't, legally. That's insane too, right? By law I MUST be a general contractor, even though I will OWN the building. A on the other hand, "who undertakes to superintend or manage, on his own behalf or for any person, firm, or corporation" (bold emphasis mine) can build his own. In your words: "That is the definition of favoring one group of private citizens over another. Wholesalers should get the ACLU involved in challenging that legislation." Well, what about anyone building rental houses? The law favors licensed contractors. Will the ACLU get involved and put and end to that favoritism?
People have general contractor's licenses and can build for themselves and others. People have law licenses and can practice for themselves and for others. I'm not licensed so I can't practice law, . Insane, right? But for some reason, you think real estate licenses apply differently... it's just interesting to me to see your view in context of this discussion.
In a nutshell, I play the game by the defined rules. A LOT of people (like people in default) didn't like the rules (banking, real estate, equity skimming, etc.) in 2008-2010 and that's when many states changed their laws. Some people on here say that realtors and real estate brokers initiated the changes when in reality the mass foreclosures in states like OH and FL caused regulators to rethink their outdated laws.
In NC, it is . Is that insane? Or using your words "totally insane"? That's the .
This is my last post here.
Disclaimer: I am not a legislator or elected official and don't make laws that I abide by.
@Chris Martin The lawyer analogy is a good one. You do not need to be a lawyer to represent yourself. You only need to be a lawyer to "represent others". Same with real estate. You can sell your own interest without a license. You can sell "for others" with a license.
The Florida statutes also make it clear that "real property" does not only mean the title. It means any interest created by a lease, purchase contract or option.
So until the NAR successfully lobbies the state to make it illegal to sell your own interest in real property. Wholesalers can continue to buy and sell their own interests.
The real issue is how much whining from @John Thedford do they want to deal with, LOL!
@Chris Martin The funny thing is that the credit crisis wasn't caused by banks or investors or wholesalers or realtors. It was caused by the government. The government insisted that banks lend to people that had no business owning property so that prices would keep going up and the tax gravy train would continue. Eventually the house of cards collapsed and nearly took the global economy with it.
@Matthew Olszak Maybe you're new but it's common practice among agents to start by lying that they have a buyer, then take the listing at a price they know the house won't sell for to milk it for buyer and seller leads, all the while telling the seller a sob story about how "the market has turned" or "things are just slow right now" and they need to lower the price. Over and over again until either they do eventually come down to the price the agent should have listed for in the first place, or the listing expires, all while the agent has sold other houses and generated more listings off of that one.
That's a pretty bold accusation you're making. Can you provide any proof or empirical evidence to support these statements?
How does that saying go.. snitches end up in ditches. lol
How bout everyone mind their own damn business. Let people make a buck and everyone else do them. I cant believe the people on BP are reporting other investors. Thats a shame. This is a place of learning and developing for all RE investors not just agents and brokers. We are all here to grow and expand. Period. To each their own.
@Matthew Olszak Maybe you're new but it's common practice among agents to start by lying that they have a buyer, then take the listing at a price they know the house won't sell for to milk it for buyer and seller leads, all the while telling the seller a sob story about how "the market has turned" or "things are just slow right now" and they need to lower the price. Over and over again until either they do eventually come down to the price the agent should have listed for in the first place, or the listing expires, all while the agent has sold other houses and generated more listings off of that one.
That's a pretty bold accusation you're making. Can you provide any proof or empirical evidence to support these statements?
He is trolling. Ignore!
@Matthew Olszak Maybe you're new but it's common practice among agents to start by lying that they have a buyer, then take the listing at a price they know the house won't sell for to milk it for buyer and seller leads, all the while telling the seller a sob story about how "the market has turned" or "things are just slow right now" and they need to lower the price. Over and over again until either they do eventually come down to the price the agent should have listed for in the first place, or the listing expires, all while the agent has sold other houses and generated more listings off of that one.
That's a pretty bold accusation you're making. Can you provide any proof or empirical evidence to support these statements?
@Todd in response to your comment "That's a pretty bold accusation you're making. Can you provide any proof or empirical evidence to support these statements?"
Here's what actually happened:
I got a call last thursday from a potential seller that went off market. The agent had the property at $399,900. No offers. I looked at comps (sold within the last 90 days) and all three comps put her place at about $340,00. Doesn't the agent realize that the buyer has to have an appraisal and the appraiser is going to use "Solds", and not use wishful thinking? Why deceive the seller? It gives false hope.
Rather than argue with the seller who was convinced her property is worth $399,900 (I could hear the disappointment in her voice) I sent her to a wholesaler. :-)
@Andrew LeBaron What are your thoughts on all of this brother?
Still waiting on an answer to my question from a few hundred posts ago...
Do the non-wholesalers 100% of the time offer 100% of what they're willing to pay to a seller?
On a related note, at least here in Ohio, the marketing issue really comes down to publicly advertising. My guess is that the same is true in FL.
Great thread. This is exactly why I got licensed.
If you're unsure about your state's wholesaling laws and really want to flip properties without a license then learn how to leverage OPM (other people's money), close THEN resell when you have legal instead of equitable title. You can negotiate the terms with the private lender so you pay them any accrued interest when you resell the property (if you're strapped for cash). If you have a great deal then it shouldn't take that long to resell. Just make ABSOLUTELY SURE you follow laws regarding soliciting for private money. There are many resources and threads here on BP that discuss the topic of private money but always check with an attorney first.
You can also use an equity partner - 50% of something is better than 100% of nothing. Here in Florida partners in a real estate partnership are exempt from licensure if selling property owned by the partnership provided the partner receives a share of the profits in proportion to their interest in the partnership. For example, a 40% partner may receive 40% of the profits of the business. A real estate license is required if the 40% partner received more than 40% of the profits.
Just my 2 cents. =)
Great thread. This is exactly why I got licensed.
If you're unsure about your state's wholesaling laws and really want to flip properties without a license then learn how to leverage OPM (other people's money), close THEN resell when you have legal instead of equitable title. You can negotiate the terms with the private lender so you pay them any accrued interest when you resell the property (if you're strapped for cash). If you have a great deal then it shouldn't take that long to resell. Just make ABSOLUTELY SURE you follow laws regarding soliciting for private money. There are many resources and threads here on BP that discuss the topic of private money but always check with an attorney first.
You can also use an equity partner - 50% of something is better than 100% of nothing. Here in Florida partners in a real estate partnership are exempt from licensure if selling property owned by the partnership provided the partner receives a share of the profits in proportion to their interest in the partnership. For example, a 40% partner may receive 40% of the profits of the business. A real estate license is required if the 40% partner received more than 40% of the profits.
Just my 2 cents. =)
Even 1% ownership allows you to market the property. The OP appears to be marketing property, not the contract. I got a call from DBPR today. They watch BP for illegal brokering. They mentioned this thread to me. Other ideas are to buy a non-refundable option. You CAN market those. However, if the contract stipulates the EMD is refundable--BROKERING! They also state the EMD must be substantial (clarify that please DBPR).
Didn't know about the option fee in a non-refundable option.
Thanks, @John Thedford
If you want to see who might have a cease and desist go here:
https://www.myfloridalicense.com/sto/unlicensedact...
If you want to see if an agent has had problems go here:
www.myfloridalicense.com
How does that saying go.. snitches end up in ditches. lol
How bout everyone mind their own damn business. Let people make a buck and everyone else do them. I cant believe the people on BP are reporting other investors. Thats a shame. This is a place of learning and developing for all RE investors not just agents and brokers. We are all here to grow and expand. Period. To each their own.
Does that go for everything? Should I "mind my own damn business" if I see someone running a ponzi scheme...or stealing credit cards. What about if I see a hit and run or other crime.
The law is not just something you turn on an off. And as a citizen your responsibilities dont just turn on and off either. Shame on you for turning a blind eye to wrongdoing. If you want to argue it is legal or the law should be changed to make it legal then fine, but you didnt do that. You are advocating that people turn a blind eye to something that is illegal, that is wrong, regardless of it is wholesaling or anything more serious.
That's a pretty bold accusation you're making. Can you provide any proof or empirical evidence to support these statements?
You need look no further than right here on biggerpockets. Lying to sellers is regularly recommended as a good way to get leads as an agent. Here are a couple examples:
https://www.biggerpockets.com/forums/311/topics/322484-cold-calling In this thread 2 agents recommend telling potential sellers that you have people interested in the area, even though you don't.
https://www.biggerpockets.com/forums/311/topics/442419-are-open-houses-worth-it In this thread a Realtor admits that doing open houses is primarily to appear to the seller to be working and to generate other leads and exposure for his business.
https://www.biggerpockets.com/forums/21/topics/248195-agents-how-do-you-not-waste-your-time-with-an-unrealistic-seller In this thread some advocate taking an overpriced listing and relying on the market and life to force the seller to drop their price. Others recommend taking the overpriced listing and charging the seller for marketing. A few actually recommend not taking the listing.
https://www.biggerpockets.com/forums/621/topics/408029-case-study-how-to-steal-an-overpriced-high-dom-property In this interesting thread Wes describes how listings agents who lie to sellers about the price can create a buying opportunity for you.
@John Nachtigall Yup that goes for EVERYTHING. Mind your own business.
IF this is "legal" why are cease and desist letters being issued? Here are a few "ex" wholesalers:
https://www.myfloridalicense.com/sto/unlicensedact...
Just so you know, a cease & desist is just a "im going to sue you" threat.. doesnt mean the guy trying to sue you is right, and in many cases hes wrong otherwise if he was so sure he would win the case he would've already sue you... got some cease & desist in other fields, most were just to intimidate me and a simple "go F yourself" solved the problem. in other cases where I was wrong, I simply stopped.
IF this is "legal" why are cease and desist letters being issued? Here are a few "ex" wholesalers:
https://www.myfloridalicense.com/sto/unlicensedact...
Just so you know, a cease & desist is just a "im going to sue you" threat.. doesnt mean the guy trying to sue you is right, and in many cases hes wrong otherwise if he was so sure he would win the case he would've already sue you... got some cease & desist in other fields, most were just to intimidate me and a simple "go F yourself" solved the problem. in other cases where I was wrong, I simply stopped.
These are from state regulators who have the power to submit to the prosecutor to file charges if they desire. Entirely different than getting one from an attorney.
@John Nachtigall Yup that goes for EVERYTHING. Mind your own business.
No, I will not. I will report any law breaking I see
That's a pretty bold accusation you're making. Can you provide any proof or empirical evidence to support these statements?
You need look no further than right here on biggerpockets. Lying to sellers is regularly recommended as a good way to get leads as an agent. Here are a couple examples:
https://www.biggerpockets.com/forums/311/topics/322484-cold-calling In this thread 2 agents recommend telling potential sellers that you have people interested in the area, even though you don't.
https://www.biggerpockets.com/forums/311/topics/442419-are-open-houses-worth-it In this thread a Realtor admits that doing open houses is primarily to appear to the seller to be working and to generate other leads and exposure for his business.
https://www.biggerpockets.com/forums/21/topics/248195-agents-how-do-you-not-waste-your-time-with-an-unrealistic-seller In this thread some advocate taking an overpriced listing and relying on the market and life to force the seller to drop their price. Others recommend taking the overpriced listing and charging the seller for marketing. A few actually recommend not taking the listing.
https://www.biggerpockets.com/forums/621/topics/408029-case-study-how-to-steal-an-overpriced-high-dom-property In this interesting thread Wes describes how listings agents who lie to sellers about the price can create a buying opportunity for you.
I certainly don't disagree that this may be done by some unethical people and it is unfortunate that it happens (and apparently some even promote it) but to say it is "common practice" is untrue. There are bad apples in all businesses.
@Todd Burton Sadly in my experience it's the other way around. Very few agents I've met are trustworthy. I have a personal experience to illustrate:
I had already been buying houses on terms (lease options, contract for deed, subject to etc.) for a few years so I knew the percentages of FSBOs open to these kinds of deals. And I wanted to expand into buying homes listed with agents. So I talked to several and they all told me the same thing: "I sell 100% of the listings I take and none of my sellers would ever consider a sale on terms."
I tried a few buyers agents out but none of them were willing to do written offers. A few made verbal offers to the listing agents, but gave up after getting the same story the listing agents gave me.
So I decided to run a little experiment.
I wrote offers on 700 listed homes and sent them direct to the listing agents. Without exception every single agent told me the same thing: "Sorry. The seller has rejected your offer." Nothing in writing of course, only a verbal rejection from the agent.
Not convinced, I called the sellers myself. Not even one of them had actually received my offer. All 700 agents had lied.
Needless to say I haven't tried to do deals with agents since.
@Todd Burton Sadly in my experience it's the other way around. Very few agents I've met are trustworthy. I have a personal experience to illustrate:
I had already been buying houses on terms (lease options, contract for deed, subject to etc.) for a few years so I knew the percentages of FSBOs open to these kinds of deals. And I wanted to expand into buying homes listed with agents. So I talked to several and they all told me the same thing: "I sell 100% of the listings I take and none of my sellers would ever consider a sale on terms."
I tried a few buyers agents out but none of them were willing to do written offers. A few made verbal offers to the listing agents, but gave up after getting the same story the listing agents gave me.
So I decided to run a little experiment.
I wrote offers on 700 listed homes and sent them direct to the listing agents. Without exception every single agent told me the same thing: "Sorry. The seller has rejected your offer." Nothing in writing of course, only a verbal rejection from the agent.
Not convinced, I called the sellers myself. Not even one of them had actually received my offer. All 700 agents had lied.
Needless to say I haven't tried to do deals with agents since.
I'm sorry to hear that. By law, agents are required to present any offer they receive. The only exception is if the seller has specifically told them to reject that type of offer. You could file ethics complaints against them but I suspect you neither have the time or desire to do so on 700 agents! For future offers, I would recommend you put language in your offer that requires the agent to provide a written response signed by the seller.