Difference between wholesaler and realtor off-market deals

[Crystal An]

Hi BiggerPockets,

I'm aware that purchasing deals from wholesalers is risky. However, I'm wondering what the difference is between a deal from a wholesaler vs. an off-market deal from a realtor. Are off-market deals from realtors still regulated? 

If anyone does purchase from wholesalers, what "checks" do you have in place to protect yourself before you decide to close? Please let me know if you know of any resources out there that answers these questions already.

Thank you all in advance! 

[Will Barnard]

As the buyer in purchasing from a wholesaler:

1. Make sure you only pay into escrow and never direct to the wholesaler, they get paid when the deal closes, not before that.

2. Always get a title insurance policy and read the title prelim carefully. Make sure you also get the actual seller disclosures as well.

3. Never trust the ARV or the rehab figure from wholesalers, about 98% of the time, they are off to make the deal look better than it really is.

If you are buying from a licensed real estate agent via an "off market deal", there can be numerous reasons why it is off market / "pocket listing" but these may very well be changing real soon as NAR (National Association of Realtors) has passed a rule that will go into effect in January, 2020 that states that no "pocket listings" are allowed. The moment any advertising is done on a property by an agent, they must have it on the MLS within 1 day. This rule is really stupid and hopefully gets reversed as it only hurts real estate agents in the long run. I understand they are trying to protect agency but this rule hurts it in my opinion as it gives sellers less options when using a licensed realtor and more and more may very well go about it without an agent when they do not want it on the MLS or signs in the yard.