My Take on Every Thread in the Wholesaling Forum
Don KonipolBusiness Member
Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votesMy Take on Every Thread in the Wholesaling Forum
Most Popular Reply
Flipper/Rehabber · Phoenix, AZ · Member since 2018 · 269 posts · 152 votes
5y@Don Konipol
11. OP never responds, because advice on BP is not what they want to hear.
109 Replies
- Investor · Atlanta, GA · Member since 2020 · 253 posts · 240 votes5y
Originally posted by @Tony Kim:
Originally posted by @Matthew Olszak:
Originally posted by @Don Konipol:
@Don Konipol
There have been A LOT of assumptions made about my motives for posting the original post. Almost all are incorrect. The only motive was purely for humor. I just stated facts as to what various people habitually post. If it hits too close to home, we’ll maybe you need to look at why.
I do not dislike, or have any bias against people who are new to real estate and dream of an investing career, or to people who partake in the wholesaling arena. However, I do think it is pure laziness when someone doesn’t bother to find the answer to their questions, or to seek out education by searching the forums, blogs, and internet; instead asks a question expecting someone to provide a complete workable business plan and complete education for them in two posts. I also think it’s especially bad when the poster asks a question and then attacks those replying because he didn’t receive the answer he wished for.
As for my thoughts on “wholesaling”, well with 40 + years of mostly success experience as a real estate and mortgage note investor, fund manager, broker, etc., I can provide my personal opinion. So here goes….
1. Real estate wholesaling is not really wholesaling. Wholesaling anything requires purchasing goods in bulk at one price and selling in smaller quantities at a higher price per unit. Real estate “wholesalers” usually don’t complete the purchase or take title themselves, thereby failing the first part of the wholesaling definition. Further they rarely “buy in bulk” therefore missing the second part. What they are is unlicensed intermediaries.
2. The real estate brokerage profession has evolved into a model where the broker act as an agent for one of the principal parties, and as such has a fiduciary responsibility to that party as well as a duty of honesty to the other party. A “wholesaler” does not act as agent of the seller, or ultimate buyer for that matter. He owes no fiduciary obligation to the seller or buyer, and he probably owes no duty of honesty except for what is found in any commercial transaction.
3. As a result of #2 above the wholesaler does not provide a “service” to the seller, other than the service of being ready to purchase the sellers property at a below market price. In a general sense this can be a service in that it may provide liquidity to the seller, but it isn’t a service as in an agency or advisory relationship sense.
4. People with no capital are attracted to the wholesaling hype. The vast majority of people trying to wholesale fail miserably. Most “successful” wholesalers earn no more than a decent living.
5. A very few people are successful at creating a truly profitable wholesaling business. Most of these are the result of having a related business throwing off excess deals, such as owning a Homevestors franchise, and or spending $10,000 per month or more on marketing.
6. If the ibuying companies ever really get off the ground, wholesaling is finished. These guys offer the same price as wholesalers, or more, will actually close without having to find a buyer, and don’t need financing. If I had a wholesale operation I would be worried about them and not how real estate investors respond in a forum.
Let me know what you think….
Thank you especially for #'s 5 and 6. Yeah, everyone has the anecdotal "person I know who wholesales and makes $100k/mo", yet they fail to realize the marketing $$$'s that person incurred to get to that point (assuming its even true). Its certainly not the cost of 2 rolls of stamps and some notebook paper.
Just like Carvana and the like has interrupted the craigslist bottom-dweller catfish trying to lowball car sellers, and sometimes getting away with it, like you said ibuyers will be the end of wholesaling except for the most technologically inept homeowners, whom coincidentally need the most consumer protections real estate licensing provides.
Agree 100% with the above. It's still about taking advantage of folks that are not in tune with technology. 30 years ago, wholesalers must have had a field day.
Watch out for startups like Sundae.com. These types of VC companies might do to real estate wholesalers what Carvana has done to much of the used-car arbitragers. There are a lot of things that have contributed to the spike in used car prices and companies like Carvana are one of them. Companies like Sundae and the whole host of other VC backed wholesalers that are growing will only contribute to the astronomical rise in RE prices we are seeing and squeeze out the individual, unlicensed wholesaler.
I live in a market where all the VC backed wholesalers like offerpad, knock and all of those guys are and us little guys are doing just fine. A lot of people would rather work with a local person than some big faceless company. They also use a lot of bad tactics for example, offering a high price then waiting until the day before closing to fight for a reduction using inspection reports, and have a lot of bad reviews. I've had a few homeowners that were weighing using me versus the big guys and I'm able to make my case to them very easily. Additionally they do not have the same buying criteria that I do and tend to avoid the ugliest of the houses. Not really worried about them at all.
- 5yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Duane Alexander:
Originally posted by @Tony Kim:
Originally posted by @Matthew Olszak:
Originally posted by @Don Konipol:
@Don Konipol
There have been A LOT of assumptions made about my motives for posting the original post. Almost all are incorrect. The only motive was purely for humor. I just stated facts as to what various people habitually post. If it hits too close to home, we’ll maybe you need to look at why.
I do not dislike, or have any bias against people who are new to real estate and dream of an investing career, or to people who partake in the wholesaling arena. However, I do think it is pure laziness when someone doesn’t bother to find the answer to their questions, or to seek out education by searching the forums, blogs, and internet; instead asks a question expecting someone to provide a complete workable business plan and complete education for them in two posts. I also think it’s especially bad when the poster asks a question and then attacks those replying because he didn’t receive the answer he wished for.
As for my thoughts on “wholesaling”, well with 40 + years of mostly success experience as a real estate and mortgage note investor, fund manager, broker, etc., I can provide my personal opinion. So here goes….
1. Real estate wholesaling is not really wholesaling. Wholesaling anything requires purchasing goods in bulk at one price and selling in smaller quantities at a higher price per unit. Real estate “wholesalers” usually don’t complete the purchase or take title themselves, thereby failing the first part of the wholesaling definition. Further they rarely “buy in bulk” therefore missing the second part. What they are is unlicensed intermediaries.
2. The real estate brokerage profession has evolved into a model where the broker act as an agent for one of the principal parties, and as such has a fiduciary responsibility to that party as well as a duty of honesty to the other party. A “wholesaler” does not act as agent of the seller, or ultimate buyer for that matter. He owes no fiduciary obligation to the seller or buyer, and he probably owes no duty of honesty except for what is found in any commercial transaction.
3. As a result of #2 above the wholesaler does not provide a “service” to the seller, other than the service of being ready to purchase the sellers property at a below market price. In a general sense this can be a service in that it may provide liquidity to the seller, but it isn’t a service as in an agency or advisory relationship sense.
4. People with no capital are attracted to the wholesaling hype. The vast majority of people trying to wholesale fail miserably. Most “successful” wholesalers earn no more than a decent living.
5. A very few people are successful at creating a truly profitable wholesaling business. Most of these are the result of having a related business throwing off excess deals, such as owning a Homevestors franchise, and or spending $10,000 per month or more on marketing.
6. If the ibuying companies ever really get off the ground, wholesaling is finished. These guys offer the same price as wholesalers, or more, will actually close without having to find a buyer, and don’t need financing. If I had a wholesale operation I would be worried about them and not how real estate investors respond in a forum.
Let me know what you think….
Thank you especially for #'s 5 and 6. Yeah, everyone has the anecdotal "person I know who wholesales and makes $100k/mo", yet they fail to realize the marketing $$$'s that person incurred to get to that point (assuming its even true). Its certainly not the cost of 2 rolls of stamps and some notebook paper.
Just like Carvana and the like has interrupted the craigslist bottom-dweller catfish trying to lowball car sellers, and sometimes getting away with it, like you said ibuyers will be the end of wholesaling except for the most technologically inept homeowners, whom coincidentally need the most consumer protections real estate licensing provides.
Agree 100% with the above. It's still about taking advantage of folks that are not in tune with technology. 30 years ago, wholesalers must have had a field day.
Watch out for startups like Sundae.com. These types of VC companies might do to real estate wholesalers what Carvana has done to much of the used-car arbitragers. There are a lot of things that have contributed to the spike in used car prices and companies like Carvana are one of them. Companies like Sundae and the whole host of other VC backed wholesalers that are growing will only contribute to the astronomical rise in RE prices we are seeing and squeeze out the individual, unlicensed wholesaler.
I live in a market where all the VC backed wholesalers like offerpad, knock and all of those guys are and us little guys are doing just fine. A lot of people would rather work with a local person than some big faceless company. They also use a lot of bad tactics for example, offering a high price then waiting until the day before closing to fight for a reduction using inspection reports, and have a lot of bad reviews. I've had a few homeowners that were weighing using me versus the big guys and I'm able to make my case to them very easily. Additionally they do not have the same buying criteria that I do and tend to avoid the ugliest of the houses. Not really worried about them at all.
I agree the lower end C class or worse rental stock that is stock and trade for most wholesalers is not a target for most of the I buyers they like nicer newer product at least from what I have seen with the ones i talked to that tried to buy some of my Vegas stuff.
- 5yJennifer T.Pro MemberInvestor · New Orleans, LA · Member since 2014 · 1k+ posts · 944 votes
Originally posted by @Nick C.:
Duane I think you're taking this thread a little too personally.
Also the bit about realtors doing more cold calling/texting isn't remotely true, although it may help other wholesalers sleep at night. I get dozens of mailers/cold calls/texts from wholesalers every month, 0 from realtors. I don't think it's a NAR agenda, anyone is welcome to start a thread about realtors here on BP, maybe they're just not as annoying. I'm not hating on the marketing wholesalers are doing, I know it works for the ones doing a ton of it, but let's be honest about it.
I actually do get postcards from random realtors at least once a week. They go in the trash along with the pointless mailers I get from wholesalers. But I don't have an issue with that. People/companies are allowed to send junk mail.
However, I have NEVER received an unsolicited phone call or text from a realtor. But I get those from wholesalers all the time. That's one of the reasons I "hate" on wholesalers. I am on the Do Not Call List. Ergo, it's illegal to call or text me. Wholesalers who do that...certainly not saying they all do...are just as low-down scum as any other telemarketer who annoys people that do not want to be contacted and wastes their time.
Like anything else, I'm sure there are great wholesalers out there. And in fact, I bought my first non-owner occupied property from one. But the majority of my experiences with wholesalers is pretty negative.
- Investor · Austin, TX · Member since 2019 · 229 posts · 229 votes5y
Sheesh the hate for wholesale is real around here.
- Rental Property Investor · Carson, CA · Member since 2019 · 185 posts · 74 votes5y
@Don Konipol
Silly question but what is “OP”?
- Financial Advisor · Fort Wayne, IN · Member since 2020 · 19 posts · 3 votes5y
@BJ Marshall I would recommend trying to connect with them on a Wholesale Community: i.e wholesaling houses full time on FB.
- New to Real Estate · Jacksonville, FL · Member since 2021 · 22 posts · 7 votes5y
Good morning and good afternoon. I’ve seen a lot of positive comments and a lot of negative comments. So, I wanted to be the newbie, the rookie, the greenhorn “the hated wholesaler,” that would love to connect with someone that can be and would like to be a mentor, to me? I am open to help and advise from wholesalers, realtors, contractors, investors, and etc. I am serving in the military on active duty, currently stationed in Fort Worth. I wanted to be a wholesaler (legally) in the states where it’s legal of course. As of now, I am 4 years out from military retirement, so I am trying to better myself and my family. I am currently attending college as a 38 year old (yes, I know I’m old) for college, but I do plan on getting at least one degree while I serve. I am eager, interested, and willing to learn. I would love to establish a list of wholesalers, buyers, realtors, contractors and etc. As far as becoming a wholesaler, once I learn the way, (what to do and what not to do) and how to do it and how not to do it, and the legal in and outs. All I need is that first transaction, to know if I’m gonna be hooked or not. I don’t catch on fast, but I believe in learning from mistakes. Mistakes, to me, is always the best teacher, but I want to prepare as much as possible. Thank you all in advance for your time, patience and understanding and have a great weekend.
- Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes5y
Originally posted by @Duane Alexander:
Originally posted by @Jay Hinrichs:
Originally posted by @Duane Alexander:
Originally posted by @Jay Hinrichs:
Originally posted by @James Wise:
Originally posted by @Duane Alexander:
@Matthew Olszak because I literally just don’t have a need for it lol, it’s that simple.
I think it’s a very unfair assumption to assume a seller is not sharp just because they don’t want to use a realtor. Last month I got a deal from a guy who’s been investing in real estate for years. Has an expansive rental portfolio, residential and commercial. Showed up to my walkthrough in a Range Rover. His property had just went vacant and he just wanted to get rid of it because he didn’t have the time to manage a renovation. A week after that a lady who had been renting her former primary property for 20 years and just wanted to retire but was dealing with a tenant she couldn’t get rid of. This lady was also, gasp, a former realtor. Both of these people searched for and CONTACTED ME not the other way around. Why does a person making their own decisions need to be governed by some lobby? Who are you protecting them from, themselves?
Duane, he stated "most" not all sellers are not sharp when it comes to real estate transactions. Ask the average person and they have no clue how to properly work a CMA to come up with a property value, what disclosures are needed to sell a home, or the ins and outs of the transactions full circle. Judging from all your argumentative replies and justifications in this thread, it is safe to say you will do the same here on my post but let me take a shot anyways. . .
Your license is "REQUIRED" by law in GA to do what you are doing, end of story. Regardless if you hate NAR or think you don't need it, you are required to have a license to operate your business. One call from one person to the authorities and you will find out real quick I am correct. It is not "just a piece of paper" and comes with education, tools, and continued education. It also comes with a promise (from the licensee to provide a fiduciary duty to his/her clients. Spin it any way you want, but you have none. This is not to say you are unethical in any of your transactions as I have no personal knowledge of your dealings other than what you posted in this thread. You have stated you have worked with experienced investors and previous agents and that is fine, I can say with confidence that the majority of wholesale transactions from you or anyone else does NOT come from such sellers.
Wholesaling RE is NOT "investing", it is a marketing business and most perform it illegally - brokering without a license. I have said it at nasium throughout BP threads - wholesaling is like driving a car, the act of driving or wholesaling is not illegal in of itself, however, you can perform the operation of a car illegally (speeding, running red lights, driving while intoxicated, etc.) and you can perform wholesaling illegally by negotiating a price and contracting said price with a seller, marketing that property, locating a buyer and receiving a fee for it (that is brokering without a license). You can also wholesale legally by closing on the deal with your cash or borrowed cash, then find a buyer and selling, nothing illegal about that but most don't do it that way because they DONT have the money or borrowed funds, it cost to much to do two transactions, and a host of other reasons so they continue to illegally perform the transaction. There are several other ways to perform such transactions legally. I have wholesaled somewhere around 15 times or so, albeit almost a decade ago since my last one, and at no time did I ever violate the brokering laws in CA. I accomplished each transaction by finding the deal, already having real buyers ready to go, formed a trust and vested my offer in the name of my trust with myself as the trustee and once the offer was accepted, I named my buyer as the beneficiary. At closing, I simply filed paperwork firing myself as trustee and naming the buyer's new trustee for my fee. I sold my trust, never publicly marketed the property, and in all cases, the seller was a bank (REO property). Certainly the bank should be "sharp" to understand real estate values and they were the crooks to begin (who helped cause the crash of 07-08).
@Jerry Puckett mentioned my "The Truth About Wholesaling" thread and it is a long but good read. Especially the first 5 pages or so. Jerry was new then as he eluded to. He took my thread as a wholesale bashing campaign. After some explanations from me, he realized, as did most others, that the intent was to educate on how to do it right, not to bash. Yet so many come to BP with the inclination that wholesaling requires no capital, little effort and big riches. Most of us here know that is not true and just a pipe dream. Some may get frustrated with the same questions over and over and others get frustrated when the answers are met with arguments from an inexperienced party to a highly experienced party. It's like a patient (with zero medical education) arguing with a doctor on his/her prognosis because the patient googled it and paid to attend a webinar.
I am one of many that get frustrated with the high and mighty attitudes of some wholesalers who refuse to get licensed or refuse to listen to reason stating "they don't need a license". What is most frustrating (at least around here in So Cal) are the overly excessive greedy wholesalers who will lock contracts (and sometimes they are not even locked), mark up the price by $80k and attempt to rape someone, these people have no risk, put up little to no money and when they cant get that price, they send it back out with a "price reduction" email blast. They didn't get a price reduction from the seller, they just reduced their obnoxious price to a lower obnoxious price. Others show rehab numbers of $50k when in reality, its $100k (I know, I know, it is not the wholesalers responsibility to provide the rehab numbers - I fully disagree). Wholesalers (most, not all) want to take no responsibility, have nothing on the line, hold no duty to anyone but themselves, and expect glorious fees for it. This is frustrating to most experienced investors and when we attempt to educate them here on BP, were are called wholesale bashers.
- 5yAndrew PostellPro MemberLender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
@Scottie D. Mullins thanks for posting! Always great to hear from a fellow Texan. Bigger Pockets does have some good state specific forums and Texas is their most active forum. Feel free to post there if you ever need some more "local" advice about things.
Just to answer your question outright Robin & Cindy Carriger with DFW REI Club are a great resource. Reach out to them and see if you can stop by an upcoming meeting. Website is https://dfwreiclub.com/
- 5yJerry PuckettPro MemberWholesaler · Fort Worth, TX · Member since 2010 · 1k+ posts · 1k+ votes
Originally posted by @Will Barnard:
Originally posted by @Duane Alexander:
Originally posted by @Jay Hinrichs:
Originally posted by @Duane Alexander:
Originally posted by @Jay Hinrichs:
Originally posted by @James Wise:
Originally posted by @Duane Alexander:
@Matthew Olszak because I literally just don’t have a need for it lol, it’s that simple.
This is frustrating to most experienced investors and when we attempt to educate them here on BP, were are called wholesale bashers.
Will (by the way, nice to "see you", it's been a while!!), I agree with everything you've said, except for....maybe....the last sentence. You are far from a hater. Back then, true, I was unduly sensitive, and the entire site was different back then. You and many others came out of the woodwork to help and with my now experienced eyes I can see there was no hate, no bashing (of people) at all. You assaulted the bad practices being employed and it was an eye opener.
But the "haters" I see on the site are a different breed, not steeped in BP culture like you, Don and Jay. Some of these threads get very ugly, personal, and use stereotyping. They are not as careful as you to say "some wholesalers". Even the title of this post has "Every Thread on the wholesaling forum" when that isn't the truth, right? The saving grace is the clarification "My take". But if you're new to the site, how are you supposed to know? You see a guy with nearly 4000 posts and 80 up votes and what would lead a newbie to think that was humorous? @Brett Tvenge confirmed his remarks were not meant to be humorous (though I found them so having experienced the polar opposite over 10+ years).
He also brought up the issue of seasoned vs not seasoned. BP is very clear that all members are equal and it works hard to bring new and experienced alike. A new member reading the flaming and trolling going on....did anybody think for a moment that THAT is the reason folks aren't heard from again? Because of the bullying, taunting, flaming and trolling that may be humorous to the good 'ole boy club but not very welcoming to the newbie? I wonder what @Joshua D. would say? He's the one that worked so hard to bring this place together and it has always been a learning and networking site. The line between free speech and hate speech gets wobbly at times.
I took a break for a few years because of all the negativity even though I consider myself to be a Poster child for BP success. I used to refer people here quite frequently. Brag about BP in interviews and at conferences. Now I'm almost embarrassed to do so. Sometimes humor just isn't funny in the wrong place and I personally don't find humor at other's expense funny at all. Coming to the Wholesaling forum to crack jokes, parody, lampoon and stereotype potential wholesalers and openly insult those who engage in it is, in my opinion, not the best choice.
Maybe the pro forum would be a better place for that. Those of us who have utilized wholesaling successfully....maybe we ought to take greater responsibility for educating the new comers so we can tell them how hard it is, how much it costs, etc. I personally encourage those I engage with to get a license...if I had it all to do over again, that's what I would have done first. But I didn't, and there will be those who don't. Like Will, I would prefer they have the right tools and go about it just as honorably and professionally as possible.
Telling them all as a group, "you're irrelevant" ? That's just inflammatory.
I wish you all the very best
- New to Real Estate · Jacksonville, FL · Member since 2021 · 22 posts · 7 votes5y
@Andrew Postell Appreciate it Andrew. I will definitely checkout the DFW forum, and the local REI.
- Investor · Colorado Springs · Member since 2016 · 234 posts · 150 votes5y
LOL. Too funny!
- Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes5y
@Will Barnard
Good post will. You touched upon something I discussed in an earlier post in this thread. It really is a dilemma for a “wholesaler”. If they end up concluding the purchase themselves and then sell it to another buyer, they are a principal at the point of purchase, and hence owe no particular agency duty. If they “wholesale” the property, that is market the contract, etc without ever intending to close themselves, then depending on the state they may be deemed to be brokering without a license. An unlicensed intermediary. But If the wholesaler gets legal and obtains a license, he may, as you mentioned, owe the seller a fiduciary responsibility. It’s quite hard to defend getting the seller to accept $150k for his property and within a month flip the property for $200k. With a fiduciary responsibility and the above to happen, the licensed wholesaler would have had to disclose to the seller that his property was probably worth $50k more than he was selling for; that the wholesaler intended to market the property to buyers and make $50k mark up, and that by merely listing with a broker the seller could probably net more even after commission.
So, in states where the laws on wholesaling may be “nebulous” or not enforceable, the wholesaler may actually have less legal risk not being licensed!
A key factor here is the standard 6% commission. If a property can be sold thru MLS for say $200k, and the wholesaler is willing to pay $175K, then the borrower nets the same either way. Additional profit may be justified by a quicker close; a sure sale, etc. And this is exactly what the ibuyers offer, except that with them a seller knows they have the money and will to close, and do not have to flip it to an end buyer. That's why I believe ibuyers are a MUCH greater threat to wholesalers than they are to real estate brokers.
Finally, the legal and ethical responsibility of a real estate broker or agent has changed radically in the 40 plus years I’ve been involved in this industry. “Net listings” were the norm in some areas, local real estate associations barred discount brokers, and agents worked both sides of the equation representing both seller and buyer. Bottom line was brokers represented themselves, any benefit to the principals was merely incidental. I can’t imagine any broker operating like that now.
- Real Estate Broker · Coppell, TX · Member since 2011 · 5k+ posts · 4k+ votes5y
@Don Konipol Best post I've ever seen on BP. This brought a smile to my day.
- New to Real Estate · Joliet, IL · Member since 2021 · 89 posts · 135 votes5y
@Don Konipol spot on!
- Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes5y
Originally posted by @Jerry Puckett:
Originally posted by @Will Barnard:
Originally posted by @Duane Alexander:
Originally posted by @Jay Hinrichs:
Originally posted by @Duane Alexander:
Originally posted by @Jay Hinrichs:
Originally posted by @James Wise:
Originally posted by @Duane Alexander:
@Matthew Olszak because I literally just don’t have a need for it lol, it’s that simple.
This is frustrating to most experienced investors and when we attempt to educate them here on BP, were are called wholesale bashers.
Will (by the way, nice to "see you", it's been a while!!), I agree with everything you've said, except for....maybe....the last sentence. You are far from a hater. Back then, true, I was unduly sensitive, and the entire site was different back then. You and many others came out of the woodwork to help and with my now experienced eyes I can see there was no hate, no bashing (of people) at all. You assaulted the bad practices being employed and it was an eye opener.
But the "haters" I see on the site are a different breed, not steeped in BP culture like you, Don and Jay. Some of these threads get very ugly, personal, and use stereotyping. They are not as careful as you to say "some wholesalers". Even the title of this post has "Every Thread on the wholesaling forum" when that isn't the truth, right? The saving grace is the clarification "My take". But if you're new to the site, how are you supposed to know? You see a guy with nearly 4000 posts and 80 up votes and what would lead a newbie to think that was humorous? @Brett Tvenge confirmed his remarks were not meant to be humorous (though I found them so having experienced the polar opposite over 10+ years).
He also brought up the issue of seasoned vs not seasoned. BP is very clear that all members are equal and it works hard to bring new and experienced alike. A new member reading the flaming and trolling going on....did anybody think for a moment that THAT is the reason folks aren't heard from again? Because of the bullying, taunting, flaming and trolling that may be humorous to the good 'ole boy club but not very welcoming to the newbie? I wonder what @Joshua D. would say? He's the one that worked so hard to bring this place together and it has always been a learning and networking site. The line between free speech and hate speech gets wobbly at times.
I took a break for a few years because of all the negativity even though I consider myself to be a Poster child for BP success. I used to refer people here quite frequently. Brag about BP in interviews and at conferences. Now I'm almost embarrassed to do so. Sometimes humor just isn't funny in the wrong place and I personally don't find humor at other's expense funny at all. Coming to the Wholesaling forum to crack jokes, parody, lampoon and stereotype potential wholesalers and openly insult those who engage in it is, in my opinion, not the best choice.
Maybe the pro forum would be a better place for that. Those of us who have utilized wholesaling successfully....maybe we ought to take greater responsibility for educating the new comers so we can tell them how hard it is, how much it costs, etc. I personally encourage those I engage with to get a license...if I had it all to do over again, that's what I would have done first. But I didn't, and there will be those who don't. Like Will, I would prefer they have the right tools and go about it just as honorably and professionally as possible.
Telling them all as a group, "you're irrelevant" ? That's just inflammatory.
I wish you all the very best
Right back at you Jerry. Always nice to see you around the site. I hear what you are saying and the best I can offer on that is to "report" any post that you deem as flaming or attacking or any post that violates our forum rules. We moderators do our best to take them down but many slip through the cracks as the population of this site has grown so much. There are bad people in all areas and walks of life, something we have to deal with. I agree that new members may never come back after some comments returned to them and while that is disappointing, people need to have a tad thicker skin in the real estate industry. You get no after no and doors slammed in your face, you have the inevitable emotional rollercoaster throughout your career and those who stick with it and perceiver as you have, you end up with more ups than downs! Fact of life.
To those who violate the rules and attack others, I can only hope that their posts are reported to the moderator team and we handle them accordingly. That may be simply removing their post and issuing a warning, it could be a cooling off period, or it may even be permanent removal from the site. Those are the penalties BP has the power to process.
- Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes5y
Originally posted by @Don Konipol:
@Will Barnard
Good post will. You touched upon something I discussed in an earlier post in this thread. It really is a dilemma for a “wholesaler”. If they end up concluding the purchase themselves and then sell it to another buyer, they are a principal at the point of purchase, and hence owe no particular agency duty. If they “wholesale” the property, that is market the contract, etc without ever intending to close themselves, then depending on the state they may be deemed to be brokering without a license. An unlicensed intermediary. But If the wholesaler gets legal and obtains a license, he may, as you mentioned, owe the seller a fiduciary responsibility. It’s quite hard to defend getting the seller to accept $150k for his property and within a month flip the property for $200k. With a fiduciary responsibility and the above to happen, the licensed wholesaler would have had to disclose to the seller that his property was probably worth $50k more than he was selling for; that the wholesaler intended to market the property to buyers and make $50k mark up, and that by merely listing with a broker the seller could probably net more even after commission.
So, in states where the laws on wholesaling may be “nebulous” or not enforceable, the wholesaler may actually have less legal risk not being licensed!
A key factor here is the standard 6% commission. If a property can be sold thru MLS for say $200k, and the wholesaler is willing to pay $175K, then the borrower nets the same either way. Additional profit may be justified by a quicker close; a sure sale, etc. And this is exactly what the ibuyers offer, except that with them a seller knows they have the money and will to close, and do not have to flip it to an end buyer. That's why I believe ibuyers are a MUCH greater threat to wholesalers than they are to real estate brokers.
Finally, the legal and ethical responsibility of a real estate broker or agent has changed radically in the 40 plus years I’ve been involved in this industry. “Net listings” were the norm in some areas, local real estate associations barred discount brokers, and agents worked both sides of the equation representing both seller and buyer. Bottom line was brokers represented themselves, any benefit to the principals was merely incidental. I can’t imagine any broker operating like that now.
Valid points Don. I agree that many do not get a license for that very reason, they do not have to provide any fiduciary responsibility or provide all the legal disclosures agents must. Some argue it is NAR or the state real estate boards who just worry about their money and while these big operations who govern us do care about money, the intent was certainly to "protect" the public, albeit any government agency tends to bring a bazooka to a knife fight.
As for your comments on the actual licensed wholesalers and net listings, it is true and one of my pet peeves. Here in So Cal, the standard commission is now 5% and many have 4-4.5% now. But at the 5%, and when they rep both sides, making 5% from a $700k average transaction, the payday is handsome. What drives me crazy is that unlicensed wholesalers feel they are somehow entitled to much more than BOTH sides of a standard commission. In our current market environment that heavily favors sellers, getting a fee for more than 5% of the transaction total is not only greedy but gouging and can only be accomplished by taking more equity away form the seller or finding a rookie sucker buyer who overpays. In either case, it is not a win/win/win situation and that is unfortunate.
- 5yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Scottie D. Mullins:
@Andrew Postell Appreciate it Andrew. I will definitely checkout the DFW forum, and the local REI.
Just FYI state of Texas has a clear cut carve out for how to do wholesaling and stay within the regs.. do check it out. !!
- 5yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Will Barnard:
Originally posted by @Don Konipol:
@Will Barnard
Good post will. You touched upon something I discussed in an earlier post in this thread. It really is a dilemma for a “wholesaler”. If they end up concluding the purchase themselves and then sell it to another buyer, they are a principal at the point of purchase, and hence owe no particular agency duty. If they “wholesale” the property, that is market the contract, etc without ever intending to close themselves, then depending on the state they may be deemed to be brokering without a license. An unlicensed intermediary. But If the wholesaler gets legal and obtains a license, he may, as you mentioned, owe the seller a fiduciary responsibility. It’s quite hard to defend getting the seller to accept $150k for his property and within a month flip the property for $200k. With a fiduciary responsibility and the above to happen, the licensed wholesaler would have had to disclose to the seller that his property was probably worth $50k more than he was selling for; that the wholesaler intended to market the property to buyers and make $50k mark up, and that by merely listing with a broker the seller could probably net more even after commission.
So, in states where the laws on wholesaling may be “nebulous” or not enforceable, the wholesaler may actually have less legal risk not being licensed!
A key factor here is the standard 6% commission. If a property can be sold thru MLS for say $200k, and the wholesaler is willing to pay $175K, then the borrower nets the same either way. Additional profit may be justified by a quicker close; a sure sale, etc. And this is exactly what the ibuyers offer, except that with them a seller knows they have the money and will to close, and do not have to flip it to an end buyer. That's why I believe ibuyers are a MUCH greater threat to wholesalers than they are to real estate brokers.
Finally, the legal and ethical responsibility of a real estate broker or agent has changed radically in the 40 plus years I’ve been involved in this industry. “Net listings” were the norm in some areas, local real estate associations barred discount brokers, and agents worked both sides of the equation representing both seller and buyer. Bottom line was brokers represented themselves, any benefit to the principals was merely incidental. I can’t imagine any broker operating like that now.
Valid points Don. I agree that many do not get a license for that very reason, they do not have to provide any fiduciary responsibility or provide all the legal disclosures agents must. Some argue it is NAR or the state real estate boards who just worry about their money and while these big operations who govern us do care about money, the intent was certainly to "protect" the public, albeit any government agency tends to bring a bazooka to a knife fight.
As for your comments on the actual licensed wholesalers and net listings, it is true and one of my pet peeves. Here in So Cal, the standard commission is now 5% and many have 4-4.5% now. But at the 5%, and when they rep both sides, making 5% from a $700k average transaction, the payday is handsome. What drives me crazy is that unlicensed wholesalers feel they are somehow entitled to much more than BOTH sides of a standard commission. In our current market environment that heavily favors sellers, getting a fee for more than 5% of the transaction total is not only greedy but gouging and can only be accomplished by taking more equity away form the seller or finding a rookie sucker buyer who overpays. In either case, it is not a win/win/win situation and that is unfortunate.
If Nar had a problem with wholesalers you would see a viscous attack on them its not like they are hard to find :)
And lets face it also every state has a different take on this.. Texas has a clear carve out .. IL its flat illegal they clarified it IE for more than one house a year.. the rest of the states the regs read the exact same .. if you bringing two parties together for expectation of compensation that defines real estate brokerage activity and requires a license.. Its just the lack of enforcement has created the HOW TO GET RICH WITH no money SM and webinars and guru camps etc..
And some states could really give a rip from what I see .. so even though you would have these laws on the books they simply dont enforce them.. Kind of like whats happening in CA now in some cities not enforcing certain crimes.. its become a free for all. the crimes are still on the books but if no one enforces or arrest anyone and you see videos of folks walking into Walgreens and just walking out with stuff or in SF last week into Neiman marcus and raid it for high end leather goods.. you know those bags our women like that are 2 to 5k each I know you all have had to buy a few over the years right. !!!
- Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes5y
Originally posted by @Jay Hinrichs:
Originally posted by @Will Barnard:
Originally posted by @Don Konipol:
@Will Barnard
Good post will. You touched upon something I discussed in an earlier post in this thread. It really is a dilemma for a “wholesaler”. If they end up concluding the purchase themselves and then sell it to another buyer, they are a principal at the point of purchase, and hence owe no particular agency duty. If they “wholesale” the property, that is market the contract, etc without ever intending to close themselves, then depending on the state they may be deemed to be brokering without a license. An unlicensed intermediary. But If the wholesaler gets legal and obtains a license, he may, as you mentioned, owe the seller a fiduciary responsibility. It’s quite hard to defend getting the seller to accept $150k for his property and within a month flip the property for $200k. With a fiduciary responsibility and the above to happen, the licensed wholesaler would have had to disclose to the seller that his property was probably worth $50k more than he was selling for; that the wholesaler intended to market the property to buyers and make $50k mark up, and that by merely listing with a broker the seller could probably net more even after commission.
So, in states where the laws on wholesaling may be “nebulous” or not enforceable, the wholesaler may actually have less legal risk not being licensed!
A key factor here is the standard 6% commission. If a property can be sold thru MLS for say $200k, and the wholesaler is willing to pay $175K, then the borrower nets the same either way. Additional profit may be justified by a quicker close; a sure sale, etc. And this is exactly what the ibuyers offer, except that with them a seller knows they have the money and will to close, and do not have to flip it to an end buyer. That's why I believe ibuyers are a MUCH greater threat to wholesalers than they are to real estate brokers.
Finally, the legal and ethical responsibility of a real estate broker or agent has changed radically in the 40 plus years I’ve been involved in this industry. “Net listings” were the norm in some areas, local real estate associations barred discount brokers, and agents worked both sides of the equation representing both seller and buyer. Bottom line was brokers represented themselves, any benefit to the principals was merely incidental. I can’t imagine any broker operating like that now.
Valid points Don. I agree that many do not get a license for that very reason, they do not have to provide any fiduciary responsibility or provide all the legal disclosures agents must. Some argue it is NAR or the state real estate boards who just worry about their money and while these big operations who govern us do care about money, the intent was certainly to "protect" the public, albeit any government agency tends to bring a bazooka to a knife fight.
As for your comments on the actual licensed wholesalers and net listings, it is true and one of my pet peeves. Here in So Cal, the standard commission is now 5% and many have 4-4.5% now. But at the 5%, and when they rep both sides, making 5% from a $700k average transaction, the payday is handsome. What drives me crazy is that unlicensed wholesalers feel they are somehow entitled to much more than BOTH sides of a standard commission. In our current market environment that heavily favors sellers, getting a fee for more than 5% of the transaction total is not only greedy but gouging and can only be accomplished by taking more equity away form the seller or finding a rookie sucker buyer who overpays. In either case, it is not a win/win/win situation and that is unfortunate.
If Nar had a problem with wholesalers you would see a viscous attack on them its not like they are hard to find :)
And lets face it also every state has a different take on this.. Texas has a clear carve out .. IL its flat illegal they clarified it IE for more than one house a year.. the rest of the states the regs read the exact same .. if you bringing two parties together for expectation of compensation that defines real estate brokerage activity and requires a license.. Its just the lack of enforcement has created the HOW TO GET RICH WITH no money SM and webinars and guru camps etc..
And some states could really give a rip from what I see .. so even though you would have these laws on the books they simply dont enforce them.. Kind of like whats happening in CA now in some cities not enforcing certain crimes.. its become a free for all. the crimes are still on the books but if no one enforces or arrest anyone and you see videos of folks walking into Walgreens and just walking out with stuff or in SF last week into Neiman marcus and raid it for high end leather goods.. you know those bags our women like that are 2 to 5k each I know you all have had to buy a few over the years right. !!!
LOL! I never understood that, spending $5k on a damn purse! Anyways, points well taken. Each state has its own laws for sure and many simply do not have the resources to enforce their laws, but many will, they just rely on the public to call out the perpetrators.
- Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes5y
Originally posted by @Don Konipol:
My Take on Every Thread in the Wholesaling Forum
1. Newbie with no Capital want to “begin real estate investing” by wholesaling
2. Current “wholesalers” offer encouragement, general advice, etc.
3. Real Estate Brokers tell OP that wholesaling is unethical, illegal, etc.
4. Other investors tell OP that chance for success is minimal, and that wholesaling is not investing
5. Inexperienced wanna be investors chime in that naysayers are just trying to kill someone’s dream, don’t listen to naysayers “haters just want to hate” , etc.
6. Thinly disguised point man for wholesaling guru states that he had great success only after paying for mentoring with this particular guru.
7. Jay Hinrichs points out that this particular guru was indicted in Oregon for fraud, and is being sued in Washington
8. Don Konipol votes on Jays post
9. OP asks another blatantly ridiculous question
10. #2 thru #8 above repeat again
- Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes5y
Yep, only got this far in the thread, LOL, you forgot all of my blistering posts if you go back far enough.
Include the issue of stealing equity or not adding value to real property to justify a higher price. The difference between real property and personal property are not understood, there is a lack of understanding of market value, dealing in good faith, guess that continues because, after all, "Hey, I'm lazy and need money today, I just need deals......
BTW, I see it's still the same old dreamer thing with newer faces, want to succeed, cons swoop in, gurus fight over who gets the fresh meat and greed usually wins with desperation.
Hi Don and Will, good to see your pics again.
- Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes5y
You wrote
I take it personally because I feel like a lot of you guys look at
wholesalers as the bottom rung, while reaping all of the benefits that
come from wholesalers' deals.I mean this as sincere advice. Why take it personally? I you believe what you are doing is right, then why would you care what a handful of strangers on an internet forum think?
Relative to the size of the membership here there is not a "LOT" of guys disparaging wholesalers.
since you know better than everyone else, why don’t you help
As someone who has been on this forum for over a decade I can tell you @Don Konipol has offered more sincere positive and sound advice than 99% of all members here.
- Member since 2021 · 3 posts · 0 votes5y
@BJ Marshall im trying to start wholesaling, maybe we can connect and do a deal together.
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