What if real estate agents knew about wholesaling?
AL · Member since 2010 · 522 posts · 31 votes
What if real estate agents knew about wholesaling?
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Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
14yI'd be willing to bet my house (all of them, actually) that the median income for people who decide to pursue wholesaling is $0.
Had those same individuals decided to become agents, the majority of them would likely make at least a little bit of money.
The only benefit wholesaling has (if you're not in the top 1% of wholesalers, that is), is that it can lead into more lucrative investing activities.
And to clarify, I'm exempting the top 1% of wholesalers here -- they likely make enough that wholesaling is a successful business in and of itself. But, they have business skills and personality traits that few others have.
47 Replies
- Residential Real Estate Broker · Algonquin, IL · Member since 2012 · 52 posts · 6 votes14y
I'm sure a lot of agents know how a wholesaler makes money. I have wholesaled property in the past and still decided to become an agent. I don't think it is any big secret how wholesaling works. Some people choose to make money in different ways. There are many different ways to make money in real estate and not many people if any do them all.
- Investor · Rancho Cucamonga, CA · Member since 2008 · 1k+ posts · 684 votes14y
Being an RE agent is not very similar to a RE wholesaler. I would guarantee there are 10x probably 100x more successful real estate agents then wholesalers. So maybe if wholesalers figure out how RE agents make money they should watch out or everyone might become a real estate agent?
They attract different personalities and skill sets.
- Indianapolis, IN · Member since 2008 · 244 posts · 36 votes14y
Wholesaling is a different market, different niche. Takes a different type of hussler to be in this field. Most real estate agents are comfortable with being a retail or REO real estate agent
- Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes14y
A wholesaler returns are very small for the time invested (at least for me). You are running all around for a needle in a haystack to make a few k at best.
If you count the time you spend meeting people,talking on the phone,doing your mailers the returns aren't that great.It can be a good way for people with no cash to get in the investing game.
Now if you are a flipper and have excess deals and occasionally wholesale one off that is different.Time to time I might come across a really good commercial deal to wholesale but I don't do that all the time.
- Developer · Houston, TX · Member since 2008 · 488 posts · 121 votes14y
I could make 10x the money 10x faster with 10x less work and generate 10x more leads as a RE agent. Why people would rather wholesale than become a licensed agent is beyond me.
Having your license not only gives you the option to work with strictly investors, but also retail clients. So many friends, family friends, and family friends of friends have came to me for RE advice and I've made transactions out of it. You can't do that as a wholesaler.
- Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes14y
I'd be willing to bet my house (all of them, actually) that the median income for people who decide to pursue wholesaling is $0.
Had those same individuals decided to become agents, the majority of them would likely make at least a little bit of money.
The only benefit wholesaling has (if you're not in the top 1% of wholesalers, that is), is that it can lead into more lucrative investing activities.
And to clarify, I'm exempting the top 1% of wholesalers here -- they likely make enough that wholesaling is a successful business in and of itself. But, they have business skills and personality traits that few others have.
- Lexington, KY · Member since 2009 · 2k+ posts · 1k+ votes14y
I have never been under the impression that real estate agents are somehow unaware of the secretive operations of wholesalers. In my opinion, it is not that agents do not know or understand wholesaling and how wholesalers make money, it is that they are not threatened by wholesalers, since the bulk of them are ineffective (like J was alluding to). Also, like the others have pointed out, the two focus on different areas, different clientele and different niches. I do not see the modern day real estate agent going away or taking a back seat to wholesalers any time soon.
- Residential Real Estate Agent · Costa Mesa, CA · Member since 2008 · 1k+ posts · 380 votes14y
I'm aware of how wholesalers talk about making money. Very few of them actually do it. Same goes for agents... except agents have to lie, cheat and deceive within a set of state mandated rules. Wholesalers aren't limited by this... and are thus afforded more... shall we say... creativity.
- Laguna Beach, CA · Member since 2011 · 1 post · 4 votes14y
why anyone would want to be realtor in todays market is beyond. one guy said he makes 10x more money being a realtor. if an average assigment for a wholesaler is 10k that means you would be making 100k a month as a realtor. please. lets stop right there.
Originally posted by Joel Owens:
A wholesaler returns are very small for the time invested (at least for me). You are running all around for a needle in a haystack to make a few k at best.If you count the time you spend meeting people,talking on the phone,doing your mailers the returns aren't that great.It can be a good way for people with no cash to get in the investing game.
your lack luster performance as a wholesaler doesn't even resonate to what a mediocre wholesaler would take home.
that "few k at best" your talking about. thats what should be spent on marketing alone for the month. because that "few k at best" invested in the mailers u say dont work will put 34k in my pocket off of 2 deals alone. im just being modest. a good wholesaler will flip 4+ per mo an average of 10k per deal.
woman lie, men lie, numbers don't.
- Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes14y
So, Sean Fisher enlighten us. I totally agree with Joel Owens that the vast majority of people who claim to be wholesalers never do even one deal. IMHO, wholesaling is nothing more than unlicensed brokering. All the stuff around wholesaling - assignments, double closings, etc - is done just to avoid actually doing brokerage transactions without a license. But the net effect is exactly the same. You find a buyer, you find a seller, you hook them together and collect a fee.
Wholesaling seems like its a quick and easy way to make a payday with zero cash of your own. That's very attractive to people who want to get involved with real estate, have little cash, and could use some cash. So, its really easy for gurus to pitch wholesaling to people in that position. I do see some folks here in Denver that do wholesale deals. There are just a handful of them and they're not getting $10K assignment fees. If you're bring down four plus deals a month at $10K per deal I will say you are an outstandingly successful wholesaler. Not just in J Scott's top 1% but more like the top 0.1%.
- Investor · Rancho Cucamonga, CA · Member since 2008 · 1k+ posts · 684 votes14y
Originally posted by Sean Fisher:
that "few k at best" your talking about. thats what should be spent on marketing alone for the month. because that "few k at best" invested in the mailers u say dont work will put 34k in my pocket off of 2 deals alone. im just being modest. a good wholesaler will flip 4+ per mo an average of 10k per deal.So are you willing to back up your results? Can you show us the 48 deals you did in 2011 profiting over 480,000. This site allows you to upload stuff... I'll be waiting.
- Real Estate Consultant · Bloomfield, NJ · Member since 2010 · 2k+ posts · 1k+ votes14y
Originally posted by Jon Holdman:
All the stuff around wholesaling - assignments, double closings, etc - is done just to avoid actually doing brokerage transactions without a license.I agree. So did a judge who almost reported me to the state real estate commission 2 years ago when he got a hold of my assignment and cute $10 assignment fee. I've since gotten my license for the purpose of MLS access, access to retail buyers (for my rehabs) and to keep the courts off my a_ _.
Don't get me wrong, I would still do them (with a much larger assignment fee), but I would definitely change a few things to stay out of trouble.
- Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes14y
Ibrahim,
I can't imagine that a $10 assignment fee caused all that turmoil; I'm guessing the post above has a typo ...
- Portland, OR · Member since 2011 · 16 posts · 13 votes14y
I think the reality is the ones that are successful on either side have a misunderstanding about the other side of things. First let me preface this post with the fact that in 2011 I brought in just over $220k in assignment and double closing fees. With that said, I would consider myself to be a successful wholesaler. I am well established and not your typical fly by night deal. Unlike most "wholesalers" I am very picky on what I offer on and make sure that if I do make an offer, I am going to close the deal. I don't present bad deals to my buyers, most of which are repeat. I need to get a property at a good enough deal that I can make money and so can my investor, otherwise it doesn't work. Anyone who says they have an average fee of $10k per deal is either a liar or not doing many deals.
One of the most frustrating things for me is when someone tries to wholesale property and has no idea what they're doing. Unfortunately people read a book or attend a seminar and think they know everything or enough to jump right in. This is why wholesalers have a hard time dealing with some agents.
For me personally, the idea of being a retail agent is horrible because I probably have a misconception of what the job entails. I am sure successful retail agents think wholesaling would be awful as well.
- Landlord · Syracuse, NY · Member since 2011 · 120 posts · 96 votes14y
You're right, wholesaling is basically acting as an market-maker for the buyer and the seller, just like a real estate agent. Besides the realtor's lobby, I see no good reason why anybody should be prohibited by any test or fee from doing that. If they're no good, they'll get a bad reputation and people won't use them. It's all to protect their 7% commission.
- Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes14y
Craig Shute Technical detail, but "market maker" is a bad term to use since it is well known securities term. A MM is nothing like a wholesaler. The MM business is regulated (licensed, registered, meets capital requirements, etc.) and requires principal intervention via MM inventory to achieve regulatory requiremets for market stabilization, etc.
I tend to disagree with you that anyone should be allowed to broker real estate without a license. For the (big picture) general public interest, the license requirement is necessary. BTW, I've taken the RE license course, just not the "final" per my company's attorney recommendation and company LLC OA mandate. I am unlicensed by design although have bought, sold, and managed property FBO my company in a manner not unlike a licensed RE broker would do. All done legally.
- AL · Member since 2010 · 522 posts · 31 votes14y
Jake Kucheck So if I was to contact a Remax agent right now and tell them locate some deals for me to wholesale, that would be ok? Let's say I contact an agent to get comps and they ask me why I need the comps. I can honestly without any problem at all come out and tell that agent I am a wholesaler and that I buy and sell properties with other people's money. I can do that for real? Like everyone says, agents know what wholesaling is and all the talk that agents can make 10x more money 10x faster should not be a threat of any kind to a real estate agent. Right? I guess a wholesaler has nothing to lose by agents knowing how they make their money, especially since agents are so much more successful at what they do compared what wholesalers do. So the next time I deal with a buyers agent and they ask me how I will be buying the property, I can come clean and say I plan to get property under contract then assign the property over to another buyer for a big assignment fee. That OK right?
- AL · Member since 2010 · 522 posts · 31 votes14y
Danny Day Since agents are 10x much better at everything that wholesalers do, agents do not have to fear wholesalers coming on their turf out doing them in this real estate business. Correct? And the next time a buyers agent asks me how I plan to buy property I can be totally straight forward and tell them I will buy homes with other people's money the way wholesalers do. That's not going to be a problem is it? Like you said, you could make 10x the money 10x faster with 10x less work and generate 10x more leads as a RE agent. If that is the case, me being upfront about what I am really doing should not be an issue with an agent. Right?
- Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes14y
Originally posted by Antonio Bodley:
I can honestly without any problem at all come out and tell that agent I am a wholesaler and that I buy and sell properties with other people's money. I can do that for real?You can, but don't expect the agents to want to help you.
Most agents realize that most wholesalers are never going to close a deal, so coming to them and telling them that you're a wholesaler is no different than coming to them and saying, "I'd like you to spend time helping me; there is a 90% chance I'll never actually make an offer that is accepted and even if I do, there's a 90% chance I'll back out of it before it closes. Will you help me?"
An agent would have to be pretty desperate to agree to help you under those conditions. And again, there is a small percentage of wholesalers who are successful, but very few of them are ever going to approach an agent blindly asking for help.
- Investor · Rancho Cucamonga, CA · Member since 2008 · 1k+ posts · 684 votes14y
A real estate agent's goal is to make money as easily as possible. Most agents don't like working with investors because most are picky, flaky and cheap.
If you tell an agent, if you bring me a deal that needs work or has a motivated Seller:
1.) I will go look at it and give you a cash price within 4 hours
2.) I will remove contingencies immediately and give you a 10% deposit
3.) Follow through and do what you committed tooThey don't really care what you do with the property after that. They care first of all that they got paid as easy as possible, second of all that they don't look bad to the Seller or other agent.
In my experience, many agents are happy if I make money that means I will keep buying more. Sure some try to do it themselves but the market is big enough where they are welcome too. It's not as easy (or as cheap) as it looks.
- Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes14y
Originally posted by Antonio Bodley:
Danny Day Since agents are 10x much better at everything that wholesalers do, agents do not have to fear wholesalers coming on their turf out doing them in this real estate business. Correct? And the next time a buyers agent asks me how I plan to buy property I can be totally straight forward and tell them I will buy homes with other people's money the way wholesalers do.Btw, I don't know any real estate agents who "fear" wholesalers. What is there to fear? Most wholesalers will never do a single deal. And the ones that do most certainly won't be taking food out of the mouths of agents.
As for telling them you'll be buying property with other people's money, I'm pretty sure that won't phase them -- I'm guessing that 99% of all real estate transactions are done with other people's money... :)
- Lexington, KY · Member since 2009 · 2k+ posts · 1k+ votes14y
I am beyond confused by some of the posts in this discussion. First the idea that real estate agents are uninformed about wholesales is brought up...I think we can all agree that this is not the case. Now we have the idea that real estate agents "fear" wholesalers...seriously? As an investor and a real estate agent I have never considered wholesalers as competition (I rarely think about them at all, other than dismissing the terrible deals several have brought me). I do not know of a single successful wholesaler in my area (and I have had quite a few try to wholesale properties to me). This is not to say that it is impossible to be a wholesaler, because as you can see from several people on BP, it is quite possible. But to even consider that wholesaling is somehow a threat to real estate agents is outrageous. And for those saying that wholesalers generally make more money, take any market and compare the average income from the real estate agents and the wholesalers...I bet I know what you will find.
- 14yChris ClothierBusiness MemberRental Property Investor · memphis, TN · Member since 2009 · 2k+ posts · 3k+ votes
I have to agree with James about being confused by a lot of the posts on here and where the discussion ended up going. The reality is that the best "workers', however you want to define that work, will rise to the top of any profession. What someone earns in a profession is all relative to where they live and how hard they work. There are agents on here, some posting in this site, whom I am sure would run circles around most real estate professionals no matter what name they use i.e. agent, wholesaler, retailer, flipper, etc..., when it comes to earnings per activity. I know of only two or three really good wholesalers in this industry and I only know them because I am a consistent buyer of their property. I also know some good agents and I would only know them for the same reason, I buy their properties. On both sides of the question I know there a great deal more who are simply taking up space and wasting time (and blowing a lot of smoke about how good they are at what they do).
- Developer · Houston, TX · Member since 2008 · 488 posts · 121 votes14y
J Scott and James took the words right out of my mouth. I've had plenty of wholesalers want to work with me, the problem is that I do not have the time to do it. It really has no benefit for me to work with them. Yes, I am friends with a few wholesalers in Houston who do close deals. Yes, I will send people who want to flip / rehab properties to them. I noticed someone said the average wholesaler makes $10k per deal. I highly doubt that is the industry average. Maybe in CA where home prices are higher. In TX I think wholesalers are getting $5k if they find a nice deal. I'm not sure, I've never worked as one. As far as competition goes, wholesalers are not competition. Its comparing apples to oranges. I work with retail buyers, wholesalers work with niche markets and investors. I don't mind working with investors who I know will close deals. The key word there is close deals. Starting out I'd meet with everyone who called themselves an investor. I would open 15 houses, run comps, spend hours upon hours working with these people.. and guess what, they didn't close deals.
Agents care about people who are ready, willing, and able. The portion of those people are retail buyers. I'm not going to spend hours of my time trying to close a $30k deal, when I can spend the same amount of time trying to close a $300k deal, plain and simple.
Sean Fisher being a realtor in today's market is not as tough as you might think. I've sold over $1m in volume my 1st year as an agent, in a "down" market. I doubt any wholesaler is making $100k per year. I know plenty of agents who do, and hopefully this next year or two I'll be there with them.
Lots of fluff in this thread. The bottom line is that wholesalers and realtors serve different clients. Being licensed enables you to not only serve investors, but also retail clients, which means more $$$ in the long run.
- Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes14y
Wow, what an interesting read thus far, can you say CONFUSING!!!
Likely a liar, UNLESS they are working in markets like Southern CA. I can state (and prove) that I make a minimum of $10k per wholesale deal (and have made up to $40k on one deal) but my price points are hgher than in most markets, I am a rehabber by trade, so I know what a good deal is and how to get them, most wholesalers do not and that is the big difference.I too agree with Justin and others in that wholesalers do not cause fear in agents, I also agree that most wholesalers do not make much or any money, but that is not due to the strategy or profession, but due to lack of knowledge or ability.
If you want to be successful at wholesaling, you need to learn how the strategy is done properly which requires quite a bit of education and field work. This is true with anything, those who make money are those who learned and persevered.
Lets make sure the math is right first. Most agents get 3% of a deal and with $1m in deals, that would equate to $30k. even if you got both sides on all your deals, that would only total $60k on $1M in transactions. As to any wholesaler not being able to make $100k+, I disagfree, I made over that just in wholesaling alone last year and I do that on the side.It appears to me that there are lots of invalid opinions and perceptions on this topic, hopefully we can clear them all up here for all to learn from.
Great thread, keep it going. . .
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