I got a deal what now??

30 Replies

Hey BP Community,

We got our first wholesale deal and now are scrambling to find out what to do next. Can anyone here give us any advice as far as where we should go after finding our first deal and how to close the sale? We are open to either exit strategy for a wholesale deal. Thanks again!!

Updated almost 2 years ago

Update to this post: Originally we had a deal we were looking to assign a contract for. Since we are not experienced within the deal we decided to let it pass but do want to learn from this. Any advice on getting started or how to properly go through a deal would be appreciated. We are looking to learn and thrive in this business and before we do that we want to be sure on how to go through different exit strategies! Any advice would be appreciated.

@Nathan Smith Congrats on your first deal! Can you be a little more specific about what advice you need? Do you have a signed contract that you’ve taken to a title company? Are you looking for advice on finding a buyer? Is the title clear? Are you asking if you should assign or double close?

Close on the deal like you represented you would....0r did you LIE to the seller? Most unlicensed brokers do!

Originally posted by @John Thedford :

Close on the deal like you represented you would....0r did you LIE to the seller? Most unlicensed brokers do!

 Did not lie to the seller just seeing what our options would be for when we close the wholesale deal to our end buyer. 

Originally posted by @Lydia T. :

@Nathan Smith Congrats on your first deal! Can you be a little more specific about what advice you need? Do you have a signed contract that you’ve taken to a title company? Are you looking for advice on finding a buyer? Is the title clear? Are you asking if you should assign or double close?

 Thanks!! We are more so looking for advice on finding our end buyer and seeing if we should assign or double close the contract! Thanks again!!

@Nathan Smith The choice is yours, be aware that if you double close you will need the funding to close your side of the deal before you can sell to your end buyer. Also be prepared to pay closing costs when you buy. Typically double closes are done when a substantial amount of money is being made by the wholesaler. Otherwise keep it simple and do an assignment. Hope this helps!

Originally posted by @John Thedford :

Doing double closes to hide unreasonable fees means the seller got screwed. Unlicensed brokers typically screw over sellers and then brag they are performing a "service". Taking advice from other unlicensed brokers is like asking a prostitute how to avoid getting arrested. Consider your sources of information LOL!

 John I am just looking to learn. I want to do things correctly and make sure all parties involved leave happy!! Let me know if there is any advice you could give a newbie. Thanks again!!

@Nathan Smith , you are trying to wholesale (assign a contract) without knowing what to do next?  I'm hearing more and more of "no clue as to exit strategy/what to do next?" coming not just from BP'ers, but throughout other real estate investment circles.  

That's exactly the same thing I was hearing during the 2006--2007 time of "hey, look at me, I'm a flipper, just like on TV!"

Nathan, you need to have AT LEAST one exit strategy already in place BEFORE you even make an offer on a property.  

I'm not here to debate the pros/cons of 'wholesaling,'  but I can tell you that I have seen a distraught and upset seller leave an 'assignment' closing table to 'get a breath of fresh air' and come back with a GUN. (9mm as I recall). 

Do everyone a favor--close your contract with the seller, then go to another room and close with your buyer.  That's much cleaner and safer.

The way to ETHICALLY wholesale is BE LICENSED or CLOSE and THEN RESELL. Misleading sellers, using BS escape clauses---those are the favorites of dbag unlicensed brokers. Why do "wholesalers" have such a bad name? See previous sentence. Last but not least, ripping tens of thousands of dollars over and above what it would cost if listed with an agent is NOT a service. I see it every day. If the sellers KNEW what is going on, are they going to be happy or mad? 

@Nathan Smith Take this as positive criticism.  You need to have at least ONE exit strategy in place before you go putting things under contract. Your post makes me wonder if you even know how to run the numbers. 

If you want to "wholesale" I assume that means you want to pass the deal on to another investor for a profit. So first, you need to find what other investors are looking for and what is a "deal" to them. 

Originally posted by @Lydia T. :

@Nathan Smith Congrats on your first deal! Can you be a little more specific about what advice you need? Do you have a signed contract that you’ve taken to a title company? Are you looking for advice on finding a buyer? Is the title clear? Are you asking if you should assign or double close?

 As Lydia said... we need more info.

What are your numbers?

What is the ARV, what are the cost of repairs?

More importantly...

HOW did you find the ARV and what repairs does it need?

Wholesaling is easy WHEN you have a good deal. Now the challenge for a lot of newbies is finding a deal that is ACTUALLY a good deal.

So please do not listen to anyone here UNTIL you tell us what the numbers are. Based on said numbers can anyone give you actual feasible advise.

For good sakes man.. DO NOT CLOSE until you know you have a good deal. DO NOT LISTEN to that advise... yet.

So start by spilling it.

ARV

As Is value

COR

All ears bud.

Congrats.. well done so far

Originally posted by @John Thedford :

The way to ETHICALLY wholesale is BE LICENSED or CLOSE and THEN RESELL. Misleading sellers, using BS escape clauses---those are the favorites of dbag unlicensed brokers. Why do "wholesalers" have such a bad name? See previous sentence. Last but not least, ripping tens of thousands of dollars over and above what it would cost if listed with an agent is NOT a service. I see it every day. If the sellers KNEW what is going on, are they going to be happy or mad? 

 John, you like SO many others are confused what wholesaling is.

You think that wholesaling = lying to sellers, not disclosing info yada yada yada.

That, bud is a BAD wholesaler.

Now A wholesaler is when I tell the sellers, yo mami, I am not going to buy your house but I know other investors that could be very interested. You don't need to vet them as we already did, we will be assigning the contract for $X0000,00 dollars, and it really is a great choice if you want a higher offer we could give you if we were to flip this property. So I will give you 2 offers. One offer for us to buy it and flip it and an other offer if we were to wholesale it.

We will let you decide.

And you know what happens?

So PLEASE spare me all that wholesaling hate when you are simply not educated of what wholesaling is and what it can do for sellers.

We helped one mother's sick child once as they needed funding for a medical procedure. Selling it with an agent would simply take too long, and in fact it wouldn't even be possible because their house was in disrepair.

THIS is the review

I desperately needed to sell my house and my desperation was quite obvious. Jerryll’s offer was $20K higher than the competition and I told him what my previous offers were. He could have simply offered me $1000,- more, but he didn’t. Really honest company.


So yeah.. stop.. please stop.

@Jerryll Noorden Well said!!! I am so sick of all these trolls that spend all their time spreading negativity and disparaging wholesalers. As with any profession there are bad apples but that doesnt justify blacklisting all wholesalers. You are a great example of a wholesaler who does things the right way! 🙌🏽

Originally posted by @Lydia T. :

@Jerryll Noorden Well said!!! I am so sick of all these trolls that spend all their time spreading negativity and disparaging wholesalers. As with any profession there are bad apples but that doesnt justify blacklisting all wholesalers. You are a great example of a wholesaler who does things the right way! 🙌🏽

 Hell yeah. 

:))

@Nathan Smith market on Craig’s list for cash buyers (Rehabber’s) or other local investors. Put it on Face book that you have a property under contract and are ready to assign

@Jerryll Noorden

Why do states such as FL and CO refer to the "customers" or these operators as VICTIMS? 
Here is what CO has to say about the practice. IF IT WAS A LEGITIMATE SERVICE-THE STATES WOULD LICENSE THE PRACTICE. Instead, states are PROHIBITING many of the practices UNLICENSED BROKERS are using. You don't have to convince me of anything as I have met LOTS of VICTIMS of these fraudulent operators.

Consumer Advisory: Long-term Home Ownership Concerns (Wholesaling/Assigning Transactions and Distressed Rescue Transactions).

Colorado Department of Regulatory Agencies sent this bulletin at 12/19/2018 02:04 PM MST

Having trouble viewing this email? View it as a Web page.
Consumer Advisory: Long-term Home Ownership Concerns(Wholesaling/Assigning Transactions and Distressed Rescue Transactions).
The Division of Real Estate is seeing an uptick in cases involving two types of cases involving long-term home ownership: Wholesaling/Assigning Transactions and Distressed Rescue Transactions. Wholesaling/Assigning Transactions Investors and real estate brokers are targeting people with home ownership of over 20 years. This targeting translates to people over the age of 50 who are close to paying down their mortgage and holding equity in their property. The investor will offer the following:
  • Cash transaction;
  • A quick sale closing with no inspection; and
  • You can leave behind any items you don’t want.
The problems begin when the homeowner is elderly, alone, and doesn’t know the true market value of their property:
  • They may have purchased their property over 20 years ago for $50,000, $100,000, or maybe $200,000.
  • That same property now could have a market value of $300,000, $400,000 or even $500,000.
  • The idea that they purchased the property 20 years ago for $120,000 and are now being offered $220,000 sounds appealing to these homeowners – their mortgage might be paid off and they will make $100,000 – sounds good right?
  • They don’t realize that an investor or real estate broker who knows the true market value of the property may be taking advantage of them by actively misleading the homeowner as to the true market value.

The problems arise when the investor or real estate broker:

  • Drives down the property value in the seller’s mind by showing them comparable properties that aren’t really comparable.
  • Talks to the homeowner about all of the deferred maintenance that the property needs (which may or may not be true).
  • Allows the homeowner to leave items behind (What is that “convenience” worth - the costs of renting a dumpster, hiring two-three workers for a day to unload your house? Is it worth a homeowner giving up $20,000 - $50,000 - $100,000 – or more of their equity?)
  • Fails to tell the homeowner that they are actively marketing the property for market value and that the investor or real estate broker plans to assign their rights in their contract with the homeowner to another investor/buyer.
  • Fails to tell the homeowner that they intend to make a profit by accomplishing an assignment of the contract.
  • Fails to tell the homeowner when the contract is assigned to a different investor/buyer.
Investigated Case Example

Below is an example of a case that we investigated where the broker involved in the deal was referred criminally and her real estate license was revoked.

The victim had the misfortune of being on her front porch when an “investor” and his real estate partner approached her and told her they used to live in the neighborhood and wanted to move back.

They figured out her weaknesses and used them against her.

  • After “working” on her for a few days, the investor and real estate agent had a meeting with her that lasted hours. At the end of the meeting they had talked her into a purchase price of $200,000 for a property she didn’t even plan on selling.
  • At the same time, they had already assigned the contract to a second investor for $300,000 – with the agreement that the second investor would pay a $100,000 assignment fee to the original investor and real estate broker.
  • The second investor sold the property to a third investor for $360,000 two weeks after the closing.
  • Finally, the third investor held the property for eight months and sold it for $520,000.

That wouldn’t happen to any of us right? Think again. This type of thing can happen to anyone – young, old, rich, poor, no education, or highly educated. The reason it works is because people who perpetrate fraud are good at what they do – separating you from your money.

  • Unfortunately, some of our victims became victims because they responded to an unsolicited mailer, phone call, or knock on the door. Once the “investor” makes contact with someone, they start “working” on them. They are professionals at getting close and gaining trust.
  • They are charming and know how to obtain information about you that will help in their dealings with you. In just a few short conversations they will find out private information about you and then use it against you.
Things to Keep In Mind
  • Be wary if someone approaches you about something you weren’t even thinking about doing.
  • If you want to sell your property, you should contact someone you have been referred to by family, friends, or do research on real estate brokers working in your neighborhood.
  • Go to our website and see if the person has a real estate license and if they have any disciplinary history – dora.colorado.gov/dre
  • Go to the City and County of Denver website to check on neighborhood sales – denvergov.org
    • Click Search Property Information, then enter your address and click Search. In the Results link click on your address where there are various tabs and click on Neighborhood Sales.
  • If you have a hard time with technology, you can always ask friends or family members to help you navigate the web to do some research about property values in your area.

If you do find yourself entertaining an offer from an unsolicited investor:

  • Ask to obtain, and keep, a list of the comparable property sales in your neighborhood the investor used to come up with their purchase price offer.
  • Always keep someone else in the loop – your children, good friends, or someone you trust.
  • Always know that you can seek legal advice – in the end, it might be worth the money you spend on a consultation with an attorney.
  • Review the contract closely to see if it is assignable. Inquire into why it is assignable, for instance: to whom it is assigned and why, and how much the new buyer is paying the original buyer - AKA – an assignment fee.
  • Do not sign an assignable contract until you have had the opportunity to investigate the true value of your property and the legal implications with an attorney.
  • Take responsibility for being informed about the value of your property and the contracts that you areconsidering signing.
Distressed Rescue Transactions

Investors and real estate brokers are approaching distressed homeowners (those behind in their payments, facing foreclosure, or experiencing a medical issue). They offer the homeowner an “out” by agreeing to make the mortgage payments for them.

Problems arise when the investor does not explain how this will be accomplished. The unscrupulous investor will:

  • Have the homeowner sign a Quit Claim Deed in which the homeowner signs over their ownership in the property.
  • Fail to explain to the homeowner that they, the homeowner, are still responsible for the mortgage.
  • Fail to warn the homeowner that they could be violating their “due on sale clause” with their lender.

The homeowner is usually elderly or part of an at-risk population (English isn’t their first language, disability of some kind, etc.).

The Division advises the following when it comes to these types of rescue transactions:

  • Don’t sign any documents or a deed to anyone until you have had a chance to talk with your lender and an attorney about your mortgage obligations and your legal rights.
  • Colorado has a Foreclosure Protection Act that affords you certain rights when you are financially distressed.
  • It’s best to take proactive steps when you first start having financial problems, and here are some resources that you can contact:
  • Colorado Housing Connects – 
  • Colorado Foreclosure Hotline – 
  • Colorado Bar Association “Find-a-Lawyer” – 
  • Colorado Legal Services – 
  • Disability Law Colorado (Formerly The Legal Center for People with Disabilities and Older People) – 
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@Jerryll Noorden

The previous post does not take into account the illegality of many unlicensed brokers' actions. I have personally reported DOZENS who have gotten cease and desist letters from the state for brokering without a license. I talked with one idiot unlicensed broker and when I looked him up he had a criminal rap sheet a mile long. These are the kinds of people that are not licensed. They could not get one.....so they skirt the laws to broker illegally.

Originally posted by @John Thedford :

@Jerryll Noorden

Why do states such as FL and CO refer to the "customers" or these operators as VICTIMS? 
Here is what CO has to say about the practice. IF IT WAS A LEGITIMATE SERVICE-THE STATES WOULD LICENSE THE PRACTICE. Instead, states are PROHIBITING many of the practices UNLICENSED BROKERS are using. You don't have to convince me of anything as I have met LOTS of VICTIMS of these fraudulent operators.

Consumer Advisory: Long-term Home Ownership Concerns (Wholesaling/Assigning Transactions and Distressed Rescue Transactions).

Colorado Department of Regulatory Agencies sent this bulletin at 12/19/2018 02:04 PM MST

Having trouble viewing this email? View it as a Web page.
Consumer Advisory: Long-term Home Ownership Concerns(Wholesaling/Assigning Transactions and Distressed Rescue Transactions).
The Division of Real Estate is seeing an uptick in cases involving two types of cases involving long-term home ownership: Wholesaling/Assigning Transactions and Distressed Rescue Transactions. Wholesaling/Assigning Transactions Investors and real estate brokers are targeting people with home ownership of over 20 years. This targeting translates to people over the age of 50 who are close to paying down their mortgage and holding equity in their property. The investor will offer the following:
  • Cash transaction;
  • A quick sale closing with no inspection; and
  • You can leave behind any items you don’t want.
The problems begin when the homeowner is elderly, alone, and doesn’t know the true market value of their property:
  • They may have purchased their property over 20 years ago for $50,000, $100,000, or maybe $200,000.
  • That same property now could have a market value of $300,000, $400,000 or even $500,000.
  • The idea that they purchased the property 20 years ago for $120,000 and are now being offered $220,000 sounds appealing to these homeowners – their mortgage might be paid off and they will make $100,000 – sounds good right?
  • They don’t realize that an investor or real estate broker who knows the true market value of the property may be taking advantage of them by actively misleading the homeowner as to the true market value.

The problems arise when the investor or real estate broker:

  • Drives down the property value in the seller’s mind by showing them comparable properties that aren’t really comparable.
  • Talks to the homeowner about all of the deferred maintenance that the property needs (which may or may not be true).
  • Allows the homeowner to leave items behind (What is that “convenience” worth - the costs of renting a dumpster, hiring two-three workers for a day to unload your house? Is it worth a homeowner giving up $20,000 - $50,000 - $100,000 – or more of their equity?)
  • Fails to tell the homeowner that they are actively marketing the property for market value and that the investor or real estate broker plans to assign their rights in their contract with the homeowner to another investor/buyer.
  • Fails to tell the homeowner that they intend to make a profit by accomplishing an assignment of the contract.
  • Fails to tell the homeowner when the contract is assigned to a different investor/buyer.
Investigated Case Example

Below is an example of a case that we investigated where the broker involved in the deal was referred criminally and her real estate license was revoked.

The victim had the misfortune of being on her front porch when an “investor” and his real estate partner approached her and told her they used to live in the neighborhood and wanted to move back.

They figured out her weaknesses and used them against her.

  • After “working” on her for a few days, the investor and real estate agent had a meeting with her that lasted hours. At the end of the meeting they had talked her into a purchase price of $200,000 for a property she didn’t even plan on selling.
  • At the same time, they had already assigned the contract to a second investor for $300,000 – with the agreement that the second investor would pay a $100,000 assignment fee to the original investor and real estate broker.
  • The second investor sold the property to a third investor for $360,000 two weeks after the closing.
  • Finally, the third investor held the property for eight months and sold it for $520,000.

That wouldn’t happen to any of us right? Think again. This type of thing can happen to anyone – young, old, rich, poor, no education, or highly educated. The reason it works is because people who perpetrate fraud are good at what they do – separating you from your money.

  • Unfortunately, some of our victims became victims because they responded to an unsolicited mailer, phone call, or knock on the door. Once the “investor” makes contact with someone, they start “working” on them. They are professionals at getting close and gaining trust.
  • They are charming and know how to obtain information about you that will help in their dealings with you. In just a few short conversations they will find out private information about you and then use it against you.
Things to Keep In Mind
  • Be wary if someone approaches you about something you weren’t even thinking about doing.
  • If you want to sell your property, you should contact someone you have been referred to by family, friends, or do research on real estate brokers working in your neighborhood.
  • Go to our website and see if the person has a real estate license and if they have any disciplinary history – dora.colorado.gov/dre
  • Go to the City and County of Denver website to check on neighborhood sales – denvergov.org
    • Click Search Property Information, then enter your address and click Search. In the Results link click on your address where there are various tabs and click on Neighborhood Sales.
  • If you have a hard time with technology, you can always ask friends or family members to help you navigate the web to do some research about property values in your area.

If you do find yourself entertaining an offer from an unsolicited investor:

  • Ask to obtain, and keep, a list of the comparable property sales in your neighborhood the investor used to come up with their purchase price offer.
  • Always keep someone else in the loop – your children, good friends, or someone you trust.
  • Always know that you can seek legal advice – in the end, it might be worth the money you spend on a consultation with an attorney.
  • Review the contract closely to see if it is assignable. Inquire into why it is assignable, for instance: to whom it is assigned and why, and how much the new buyer is paying the original buyer - AKA – an assignment fee.
  • Do not sign an assignable contract until you have had the opportunity to investigate the true value of your property and the legal implications with an attorney.
  • Take responsibility for being informed about the value of your property and the contracts that you areconsidering signing.
Distressed Rescue Transactions

Investors and real estate brokers are approaching distressed homeowners (those behind in their payments, facing foreclosure, or experiencing a medical issue). They offer the homeowner an “out” by agreeing to make the mortgage payments for them.

Problems arise when the investor does not explain how this will be accomplished. The unscrupulous investor will:

  • Have the homeowner sign a Quit Claim Deed in which the homeowner signs over their ownership in the property.
  • Fail to explain to the homeowner that they, the homeowner, are still responsible for the mortgage.
  • Fail to warn the homeowner that they could be violating their “due on sale clause” with their lender.

The homeowner is usually elderly or part of an at-risk population (English isn’t their first language, disability of some kind, etc.).

The Division advises the following when it comes to these types of rescue transactions:

  • Don’t sign any documents or a deed to anyone until you have had a chance to talk with your lender and an attorney about your mortgage obligations and your legal rights.
  • Colorado has a Foreclosure Protection Act that affords you certain rights when you are financially distressed.
  • It’s best to take proactive steps when you first start having financial problems, and here are some resources that you can contact:
  • Colorado Housing Connects – 
  • Colorado Foreclosure Hotline – 
  • Colorado Bar Association “Find-a-Lawyer” – 
  • Colorado Legal Services – 
  • Disability Law Colorado (Formerly The Legal Center for People with Disabilities and Older People) – 
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 I will leave it to someone else to read all that. I know it is disrespectful to do that to you because if you put effort into it I should put effort reading this seriously. So when I say I am not going to take trouble to read it it is simply because of this fact.

I DO NOT CARE WHAT ANYONE SAYS.

Everyone that says this simply is wrong.

Do wholesalers often lie and do it the bad way? Sure. 

Again that is a BAD wholeslaer.

Do people kill eachother? Fight? Lie? yes. Are people bad? People as a species.. are they bad? No. People are people.

So that is why I am not going to entertain a discussion on this because YOU my friend are simply wrong here... trust me!.. and entertaining this, will give you the falls impression this is up for debate or argument.

It is not.. as this is not an opinion.. this is fact. You are wrong! Period!

Did not see your second reply.

To address that one..

Dude seriously.. you are not understanding me.

I am not debating the fact that most wholeslaers do it wrong. Yes THOSE are bad people and they sokmonkiebutt.

BUT, are you telling me that I am a douchbag? Because I wholesale too. And I am praised by all my customers for it.

See my point? You are confused between what wholesaling is, and those that do it the wrong way.

Originally posted by @Jerryll Noorden :
Originally posted by @John Thedford:

@Jerryll Noorden

Why do states such as FL and CO refer to the "customers" or these operators as VICTIMS? 
Here is what CO has to say about the practice. IF IT WAS A LEGITIMATE SERVICE-THE STATES WOULD LICENSE THE PRACTICE. Instead, states are PROHIBITING many of the practices UNLICENSED BROKERS are using. You don't have to convince me of anything as I have met LOTS of VICTIMS of these fraudulent operators.

Consumer Advisory: Long-term Home Ownership Concerns (Wholesaling/Assigning Transactions and Distressed Rescue Transactions).

Colorado Department of Regulatory Agencies sent this bulletin at 12/19/2018 02:04 PM MST

Having trouble viewing this email? View it as a Web page.
Consumer Advisory: Long-term Home Ownership Concerns(Wholesaling/Assigning Transactions and Distressed Rescue Transactions).
The Division of Real Estate is seeing an uptick in cases involving two types of cases involving long-term home ownership: Wholesaling/Assigning Transactions and Distressed Rescue Transactions. Wholesaling/Assigning Transactions Investors and real estate brokers are targeting people with home ownership of over 20 years. This targeting translates to people over the age of 50 who are close to paying down their mortgage and holding equity in their property. The investor will offer the following:
  • Cash transaction;
  • A quick sale closing with no inspection; and
  • You can leave behind any items you don’t want.
The problems begin when the homeowner is elderly, alone, and doesn’t know the true market value of their property:
  • They may have purchased their property over 20 years ago for $50,000, $100,000, or maybe $200,000.
  • That same property now could have a market value of $300,000, $400,000 or even $500,000.
  • The idea that they purchased the property 20 years ago for $120,000 and are now being offered $220,000 sounds appealing to these homeowners – their mortgage might be paid off and they will make $100,000 – sounds good right?
  • They don’t realize that an investor or real estate broker who knows the true market value of the property may be taking advantage of them by actively misleading the homeowner as to the true market value.

The problems arise when the investor or real estate broker:

  • Drives down the property value in the seller’s mind by showing them comparable properties that aren’t really comparable.
  • Talks to the homeowner about all of the deferred maintenance that the property needs (which may or may not be true).
  • Allows the homeowner to leave items behind (What is that “convenience” worth - the costs of renting a dumpster, hiring two-three workers for a day to unload your house? Is it worth a homeowner giving up $20,000 - $50,000 - $100,000 – or more of their equity?)
  • Fails to tell the homeowner that they are actively marketing the property for market value and that the investor or real estate broker plans to assign their rights in their contract with the homeowner to another investor/buyer.
  • Fails to tell the homeowner that they intend to make a profit by accomplishing an assignment of the contract.
  • Fails to tell the homeowner when the contract is assigned to a different investor/buyer.
Investigated Case Example

Below is an example of a case that we investigated where the broker involved in the deal was referred criminally and her real estate license was revoked.

The victim had the misfortune of being on her front porch when an “investor” and his real estate partner approached her and told her they used to live in the neighborhood and wanted to move back.

They figured out her weaknesses and used them against her.

  • After “working” on her for a few days, the investor and real estate agent had a meeting with her that lasted hours. At the end of the meeting they had talked her into a purchase price of $200,000 for a property she didn’t even plan on selling.
  • At the same time, they had already assigned the contract to a second investor for $300,000 – with the agreement that the second investor would pay a $100,000 assignment fee to the original investor and real estate broker.
  • The second investor sold the property to a third investor for $360,000 two weeks after the closing.
  • Finally, the third investor held the property for eight months and sold it for $520,000.

That wouldn’t happen to any of us right? Think again. This type of thing can happen to anyone – young, old, rich, poor, no education, or highly educated. The reason it works is because people who perpetrate fraud are good at what they do – separating you from your money.

  • Unfortunately, some of our victims became victims because they responded to an unsolicited mailer, phone call, or knock on the door. Once the “investor” makes contact with someone, they start “working” on them. They are professionals at getting close and gaining trust.
  • They are charming and know how to obtain information about you that will help in their dealings with you. In just a few short conversations they will find out private information about you and then use it against you.
Things to Keep In Mind
  • Be wary if someone approaches you about something you weren’t even thinking about doing.
  • If you want to sell your property, you should contact someone you have been referred to by family, friends, or do research on real estate brokers working in your neighborhood.
  • Go to our website and see if the person has a real estate license and if they have any disciplinary history – dora.colorado.gov/dre
  • Go to the City and County of Denver website to check on neighborhood sales – denvergov.org
    • Click Search Property Information, then enter your address and click Search. In the Results link click on your address where there are various tabs and click on Neighborhood Sales.
  • If you have a hard time with technology, you can always ask friends or family members to help you navigate the web to do some research about property values in your area.

If you do find yourself entertaining an offer from an unsolicited investor:

  • Ask to obtain, and keep, a list of the comparable property sales in your neighborhood the investor used to come up with their purchase price offer.
  • Always keep someone else in the loop – your children, good friends, or someone you trust.
  • Always know that you can seek legal advice – in the end, it might be worth the money you spend on a consultation with an attorney.
  • Review the contract closely to see if it is assignable. Inquire into why it is assignable, for instance: to whom it is assigned and why, and how much the new buyer is paying the original buyer - AKA – an assignment fee.
  • Do not sign an assignable contract until you have had the opportunity to investigate the true value of your property and the legal implications with an attorney.
  • Take responsibility for being informed about the value of your property and the contracts that you areconsidering signing.
Distressed Rescue Transactions

Investors and real estate brokers are approaching distressed homeowners (those behind in their payments, facing foreclosure, or experiencing a medical issue). They offer the homeowner an “out” by agreeing to make the mortgage payments for them.

Problems arise when the investor does not explain how this will be accomplished. The unscrupulous investor will:

  • Have the homeowner sign a Quit Claim Deed in which the homeowner signs over their ownership in the property.
  • Fail to explain to the homeowner that they, the homeowner, are still responsible for the mortgage.
  • Fail to warn the homeowner that they could be violating their “due on sale clause” with their lender.

The homeowner is usually elderly or part of an at-risk population (English isn’t their first language, disability of some kind, etc.).

The Division advises the following when it comes to these types of rescue transactions:

  • Don’t sign any documents or a deed to anyone until you have had a chance to talk with your lender and an attorney about your mortgage obligations and your legal rights.
  • Colorado has a Foreclosure Protection Act that affords you certain rights when you are financially distressed.
  • It’s best to take proactive steps when you first start having financial problems, and here are some resources that you can contact:
  • Colorado Housing Connects – 
  • Colorado Foreclosure Hotline – 
  • Colorado Bar Association “Find-a-Lawyer” – 
  • Colorado Legal Services – 
  • Disability Law Colorado (Formerly The Legal Center for People with Disabilities and Older People) – 
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 I will leave it to someone else to read all that. I know it is disrespectful to do that to you because if you put effort into it I should put effort reading this seriously. So when I say I am not going to take trouble to read it it is simply because of this fact.

I DO NOT CARE WHAT ANYONE SAYS.

Everyone that says this simply is wrong.

Do wholesalers often lie and do it the bad way? Sure. 

Again that is a BAD wholeslaer.

Do people kill eachother? Fight? Lie? yes. Are people bad? People as a species.. are they bad? No. People are people.

So that is why I am not going to entertain a discussion on this because YOU my friend are simply wrong here... trust me!.. and entertaining this, will give you the falls impression this is up for debate or argument.

It is not.. as this is not an opinion.. this is fact. You are wrong! Period!

 funny!!!---THE STATE OF CO states there are VICTIMS of these types of operators and you state I am wrong? OR is it the State of CO and FL that are wrong...or other states that are regulating the practice? If there were NO issues why would states be publishing PSA's? 

Originally posted by @John Thedford :
Originally posted by @Jerryll Noorden:
Originally posted by @John Thedford:

@Jerryll Noorden

Why do states such as FL and CO refer to the "customers" or these operators as VICTIMS? 
Here is what CO has to say about the practice. IF IT WAS A LEGITIMATE SERVICE-THE STATES WOULD LICENSE THE PRACTICE. Instead, states are PROHIBITING many of the practices UNLICENSED BROKERS are using. You don't have to convince me of anything as I have met LOTS of VICTIMS of these fraudulent operators.

Consumer Advisory: Long-term Home Ownership Concerns (Wholesaling/Assigning Transactions and Distressed Rescue Transactions).

Colorado Department of Regulatory Agencies sent this bulletin at 12/19/2018 02:04 PM MST

Having trouble viewing this email? View it as a Web page.
Consumer Advisory: Long-term Home Ownership Concerns(Wholesaling/Assigning Transactions and Distressed Rescue Transactions).
The Division of Real Estate is seeing an uptick in cases involving two types of cases involving long-term home ownership: Wholesaling/Assigning Transactions and Distressed Rescue Transactions. Wholesaling/Assigning Transactions Investors and real estate brokers are targeting people with home ownership of over 20 years. This targeting translates to people over the age of 50 who are close to paying down their mortgage and holding equity in their property. The investor will offer the following:
  • Cash transaction;
  • A quick sale closing with no inspection; and
  • You can leave behind any items you don’t want.
The problems begin when the homeowner is elderly, alone, and doesn’t know the true market value of their property:
  • They may have purchased their property over 20 years ago for $50,000, $100,000, or maybe $200,000.
  • That same property now could have a market value of $300,000, $400,000 or even $500,000.
  • The idea that they purchased the property 20 years ago for $120,000 and are now being offered $220,000 sounds appealing to these homeowners – their mortgage might be paid off and they will make $100,000 – sounds good right?
  • They don’t realize that an investor or real estate broker who knows the true market value of the property may be taking advantage of them by actively misleading the homeowner as to the true market value.

The problems arise when the investor or real estate broker:

  • Drives down the property value in the seller’s mind by showing them comparable properties that aren’t really comparable.
  • Talks to the homeowner about all of the deferred maintenance that the property needs (which may or may not be true).
  • Allows the homeowner to leave items behind (What is that “convenience” worth - the costs of renting a dumpster, hiring two-three workers for a day to unload your house? Is it worth a homeowner giving up $20,000 - $50,000 - $100,000 – or more of their equity?)
  • Fails to tell the homeowner that they are actively marketing the property for market value and that the investor or real estate broker plans to assign their rights in their contract with the homeowner to another investor/buyer.
  • Fails to tell the homeowner that they intend to make a profit by accomplishing an assignment of the contract.
  • Fails to tell the homeowner when the contract is assigned to a different investor/buyer.
Investigated Case Example

Below is an example of a case that we investigated where the broker involved in the deal was referred criminally and her real estate license was revoked.

The victim had the misfortune of being on her front porch when an “investor” and his real estate partner approached her and told her they used to live in the neighborhood and wanted to move back.

They figured out her weaknesses and used them against her.

  • After “working” on her for a few days, the investor and real estate agent had a meeting with her that lasted hours. At the end of the meeting they had talked her into a purchase price of $200,000 for a property she didn’t even plan on selling.
  • At the same time, they had already assigned the contract to a second investor for $300,000 – with the agreement that the second investor would pay a $100,000 assignment fee to the original investor and real estate broker.
  • The second investor sold the property to a third investor for $360,000 two weeks after the closing.
  • Finally, the third investor held the property for eight months and sold it for $520,000.

That wouldn’t happen to any of us right? Think again. This type of thing can happen to anyone – young, old, rich, poor, no education, or highly educated. The reason it works is because people who perpetrate fraud are good at what they do – separating you from your money.

  • Unfortunately, some of our victims became victims because they responded to an unsolicited mailer, phone call, or knock on the door. Once the “investor” makes contact with someone, they start “working” on them. They are professionals at getting close and gaining trust.
  • They are charming and know how to obtain information about you that will help in their dealings with you. In just a few short conversations they will find out private information about you and then use it against you.
Things to Keep In Mind
  • Be wary if someone approaches you about something you weren’t even thinking about doing.
  • If you want to sell your property, you should contact someone you have been referred to by family, friends, or do research on real estate brokers working in your neighborhood.
  • Go to our website and see if the person has a real estate license and if they have any disciplinary history – dora.colorado.gov/dre
  • Go to the City and County of Denver website to check on neighborhood sales – denvergov.org
    • Click Search Property Information, then enter your address and click Search. In the Results link click on your address where there are various tabs and click on Neighborhood Sales.
  • If you have a hard time with technology, you can always ask friends or family members to help you navigate the web to do some research about property values in your area.

If you do find yourself entertaining an offer from an unsolicited investor:

  • Ask to obtain, and keep, a list of the comparable property sales in your neighborhood the investor used to come up with their purchase price offer.
  • Always keep someone else in the loop – your children, good friends, or someone you trust.
  • Always know that you can seek legal advice – in the end, it might be worth the money you spend on a consultation with an attorney.
  • Review the contract closely to see if it is assignable. Inquire into why it is assignable, for instance: to whom it is assigned and why, and how much the new buyer is paying the original buyer - AKA – an assignment fee.
  • Do not sign an assignable contract until you have had the opportunity to investigate the true value of your property and the legal implications with an attorney.
  • Take responsibility for being informed about the value of your property and the contracts that you areconsidering signing.
Distressed Rescue Transactions

Investors and real estate brokers are approaching distressed homeowners (those behind in their payments, facing foreclosure, or experiencing a medical issue). They offer the homeowner an “out” by agreeing to make the mortgage payments for them.

Problems arise when the investor does not explain how this will be accomplished. The unscrupulous investor will:

  • Have the homeowner sign a Quit Claim Deed in which the homeowner signs over their ownership in the property.
  • Fail to explain to the homeowner that they, the homeowner, are still responsible for the mortgage.
  • Fail to warn the homeowner that they could be violating their “due on sale clause” with their lender.

The homeowner is usually elderly or part of an at-risk population (English isn’t their first language, disability of some kind, etc.).

The Division advises the following when it comes to these types of rescue transactions:

  • Don’t sign any documents or a deed to anyone until you have had a chance to talk with your lender and an attorney about your mortgage obligations and your legal rights.
  • Colorado has a Foreclosure Protection Act that affords you certain rights when you are financially distressed.
  • It’s best to take proactive steps when you first start having financial problems, and here are some resources that you can contact:
  • Colorado Housing Connects – 
  • Colorado Foreclosure Hotline – 
  • Colorado Bar Association “Find-a-Lawyer” – 
  • Colorado Legal Services – 
  • Disability Law Colorado (Formerly The Legal Center for People with Disabilities and Older People) – 
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 I will leave it to someone else to read all that. I know it is disrespectful to do that to you because if you put effort into it I should put effort reading this seriously. So when I say I am not going to take trouble to read it it is simply because of this fact.

I DO NOT CARE WHAT ANYONE SAYS.

Everyone that says this simply is wrong.

Do wholesalers often lie and do it the bad way? Sure. 

Again that is a BAD wholeslaer.

Do people kill eachother? Fight? Lie? yes. Are people bad? People as a species.. are they bad? No. People are people.

So that is why I am not going to entertain a discussion on this because YOU my friend are simply wrong here... trust me!.. and entertaining this, will give you the falls impression this is up for debate or argument.

It is not.. as this is not an opinion.. this is fact. You are wrong! Period!

 funny!!!---THE STATE OF CO states there are VICTIMS of these types of operators and you state I am wrong? OR is it the State of CO and FL that are wrong...or other states that are regulating the practice? If there were NO issues why would states be publishing PSA's? 

 so stubborn.

Trump is president. Does this mean he is right?

Mexicans are then rapists. He is the government.

Dude.. not because people say something is so, means it IS so.

Yes, THEY ARE WRONG.

Now how about we agree to disagree?

Originally posted by @John Thedford :

Last but not least, ripping tens of thousands of dollars over and above what it would cost if listed with an agent is NOT a service. I see it every day. If the sellers KNEW what is going on, are they going to be happy or mad? 

You're kidding, right? Ripping 10's of thousands of dollars from sellers? The difference between you brokers and us is that you decided to get a license to do exactly what we do without a license. 

Let's take the magic $100k sale price that every guru loves to use.

Broker gets 4-6% and pays no closing costs, or even has to deal with the closing 100,000 x 6% =  $6,000 for the realtor

Wholesaler on that deal estimates comps, repairs, etc. Then has to market to his buyers' list (or make one), offers to pay closing costs for the seller. A good wholesaler will also pay for Title searches etc (If he values his buyers' list)

So the wholesaler makes maybe $5k on that deal and has maybe $1500 out of that in paying closing costs? 

Often cases a wholesaler helps a distressed buyer sell fast when their POS house won't pass a tradition inspection required by a bank/lender for a traditional sale to a home buyer. Maybe the house needs a C/O and can't get one, etc etc. The list goes on. 

As a broker, what do you do when an FHA or VA appraisal comes in low? We all know that sticks to that property for another similar buyers for 6+ months. Now your seller is at the mercy of that. Do you stop marketing or accepting offers on FHA/VA Loans? No. Why? Because most brokers just want money.

Can you and your fancy license help people like that? No. You just want your 4-6%. Instead of you being stubborn about wholesalers and cash buyers, why don't you find a way to help them and work with them to ultimately help sellers out? 

There are good brokers and bad brokers. There are good wholesalers and bad wholesalers. Period. Lets all just figure out how to work together. It's not that hard.