Why do wholesalers get a bad rap?

7 Replies

I get a number of updates from various wholesalers in a few different markets. Often I'm looking at the listings and thinking "man, this sounds like a great situation for a person with defined knowledge of taking that and turning it into a diamond." The numbers seem great, the wholesalers list out renovations needed, the projected ARV after all things are considered. It looks like in many ways they start things off right for the right investor.

So why then do I always seem to hear people refer to wholesalers as a last resort? I realize there is more upside if you source your own properties through your own means, but looking at wholesaler listings, there's still plenty of upside there too. So why the bad rap?

Originally posted by @Matt K. :

The numbers typically are BS, they're similar to the stereotype of a used car dealer...

BS in that their projections on renovations needed is under-estimated? ARV is over-estimated? Current value of property is not in line with reality? There *are* good wholesalers though, right?

I'm focusing on wholesales for my first year to build cash. I will be spending $5k a month on advertising and making between 20-40 appointments to deal with sellers. I bet the average investor doesn't put forth that much effort. So when I have a house for sale- the next investor has to do there homework on ARV and repairs. I won't put forth those numbers. It is incumbent upon them. Also, why do I want to get stuck with a poor risk that I can't wholesale? There should still be worthwhile profit margin left.

Originally posted by @Bob Chinavare :

I'm focusing on wholesales for my first year to build cash. I will be spending $5k a month on advertising and making between 20-40 appointments to deal with sellers. I bet the average investor doesn't put forth that much effort. So when I have a house for sale- the next investor has to do there homework on ARV and repairs. I won't put forth those numbers. It is incumbent upon them. Also, why do I want to get stuck with a poor risk that I can't wholesale? There should still be worthwhile profit margin left.

Don't get me wrong, I take all projections in a wholesaler listing with a grain of salt and assume that no deal would be entered into without first running my own numbers... but that goes for everything when it involves an investor's money, right? That's a given IMO but I suppose some people don't do that and end up at the mercy of someone else's optimistic math.

Originally posted by @Jason Howell :
Originally posted by @Matt K.:

The numbers typically are BS, they're similar to the stereotype of a used car dealer...

BS in that their projections on renovations needed is under-estimated? ARV is over-estimated? Current value of property is not in line with reality? There *are* good wholesalers though, right?

 like said below, they aren't good at calc costs... they are good at marketing though. They sale a dream and that might not mesh with actual market numbers... 

But like in life, there's good and bad ones. Not all are bad, but plenty waste everyone's time and get deals under contract they can't close. There are also plenty good ones you'll never hear about because they have no problem unloading w/ their current buyers list...

Networking is huge, if you have deals and are reliable... you can be successful. But they have to be deals, not deals w/ wrong numbers...

Most wholesalers are hustlers by nature otherwise they would not be in the business.

They start out deep in debt, no savings and are looking for a easy path to financial success. It does not pan out that way and many are forced to become somewhat less than scrupulous to succeed. It is simply the nature of the business. They are always on the hustle.

Those that become successful and hone their reputations may be better but most will never achieve that level of success or are so ingrained in the deceptions of the business they are unable or not interested in change.