Is It Just Me or Is BP Anti Wholesaling
Homeowner · NJ · Member since 2019 · 2 posts · 1 vote
Is It Just Me or Is BP Anti Wholesaling
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Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
5y@Marlon Lunsford I have never gotten the impression that higher ups have anything against wholesaling, provided it is done legally. The BP podcast has hosted many wholesalers over the years.
One of the reasons wholesalers get a bad wrap in the forums is that many of them are breaking the law. They make false marketing statements, violate telecommunications rules, broker real estate without a license, market real estate they don't own, etc. Unfortunately some of these people confuse "how to not get caught" with following the law.
It is also complicated because every state has different laws governing housing sales.
I honestly don't even like the term wholesaling, because it doesn't even describe what people are doing. A wholesaler is a middle man that buys in bulk and sells in smaller quantity. People using the term in real estate are not even buying the property in some cases. They are just flipping contracts and collecting a commission.
It is important to differentiate, there are wholesalers who do buy (close and take title) on properties, then resell. That is legal in all 50 states.
Bottom line, the devil is in the details. Follow the law, run your business with integrity and who cares what people say. Many people hate attorneys, police or any number of professions. It is usually based on stereotypes or personal experiences. The truth is no profession is all good or all bad.
26 Replies
- Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes5y
@Marlon Lunsford I have never gotten the impression that higher ups have anything against wholesaling, provided it is done legally. The BP podcast has hosted many wholesalers over the years.
One of the reasons wholesalers get a bad wrap in the forums is that many of them are breaking the law. They make false marketing statements, violate telecommunications rules, broker real estate without a license, market real estate they don't own, etc. Unfortunately some of these people confuse "how to not get caught" with following the law.
It is also complicated because every state has different laws governing housing sales.
I honestly don't even like the term wholesaling, because it doesn't even describe what people are doing. A wholesaler is a middle man that buys in bulk and sells in smaller quantity. People using the term in real estate are not even buying the property in some cases. They are just flipping contracts and collecting a commission.
It is important to differentiate, there are wholesalers who do buy (close and take title) on properties, then resell. That is legal in all 50 states.
Bottom line, the devil is in the details. Follow the law, run your business with integrity and who cares what people say. Many people hate attorneys, police or any number of professions. It is usually based on stereotypes or personal experiences. The truth is no profession is all good or all bad.
- Rental Property Investor · Concord, GA · Member since 2015 · 3k+ posts · 3k+ votes5y
What Joe said.
- 5yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Joe Splitrock:
@Marlon Lunsford I have never gotten the impression that higher ups have anything against wholesaling, provided it is done legally. The BP podcast has hosted many wholesalers over the years.
One of the reasons wholesalers get a bad wrap in the forums is that many of them are breaking the law. They make false marketing statements, violate telecommunications rules, broker real estate without a license, market real estate they don't own, etc. Unfortunately some of these people confuse "how to not get caught" with following the law.
It is also complicated because every state has different laws governing housing sales.
I honestly don't even like the term wholesaling, because it doesn't even describe what people are doing. A wholesaler is a middle man that buys in bulk and sells in smaller quantity. People using the term in real estate are not even buying the property in some cases. They are just flipping contracts and collecting a commission.
It is important to differentiate, there are wholesalers who do buy (close and take title) on properties, then resell. That is legal in all 50 states.
Bottom line, the devil is in the details. Follow the law, run your business with integrity and who cares what people say. Many people hate attorneys, police or any number of professions. It is usually based on stereotypes or personal experiences. The truth is no profession is all good or all bad.
Joe Exactly wholesaling means many different things in the real estate context.. And none of it is really the definition of wholesaling as a verb.
But if we define it as buying a property as is for low price and selling it as is for higher price once we own it that is what the big we buy houses franchise folks do..
Then there is buy take title light fix up resell that has been coined wholetailing :) at least on this site.
Then there is buying and doing major reno and reselling this is wholesaling or another term is fix and flip ?? IE like TV shows
all of these involve taking ownership before reselling and is legal in all states.. Although like in Oregon you need a developers license if your going to as much as paint a room if your reselling even one home a year.. I know I got nailed on this personally.
then you have what 95% of those out in BP land characterize as wholesaling.
this is mass market for leads.. Tie up property with low low EM long contracts wiggle out clauses and then attempt to market the property to others to close.. Now they always advertise the house but they will say HEY I AM JUST Selling the contract. So in essence bringing two parties together for compensation.. have no real ability to close other than to say we could close if we wanted to but we all know they have no intention of closing if they cant find a buyer of the property and get their assignment fee.
So the negative feedback on the site ( and not from management ) but from others is the later has some real issues with folks doing or saying anything be it true or not to get a deal.. And others dont care for the way they conduct their business.
Not to mention the damage they do to innocent sellers and buyers and believe me I have seen a lot of damage.
I just had one this week.. Nice older couple going to buy one of my new builds for 550k cash.. WE saw their farm was in escrow for 2.2 mil. Ok sounds good.. the buyer as it turned out was trying to flip it / wholesale it as a Weed deal. Had a whopping 1k EM up LOL has not closed in 9 months keeps coming up with one story after the other.. told the seller they had to remove their tenant before they could close so my buyers lost that little income they had.. And now they said well it will close we are going to Africa to meet a new lender LOL Right .. Told my wife this is just a wholesaler with no ability to close 1k em up is a joke in a half and these poor people are going to lose the 10k deposit to me and lost their renter and back to the farm .. they are devestated.
Now their agent representing them is a bozo as well to let this wholesaler come in there with their pack of lies. so there is that too. If my wife and I were represeting them on the sale of the farm we would have sniffed this out straight away. But there is all sorts of sale fails from wholesaler that just walk from there whopping 50 or 100 dollar EM leaving sellers in a bad way.. I have seen them swear they were going to close right up to the day the property was lost at foreclosure and I was there to buy it at the courthouse steps.. seen at least 10 of those over the years. just sad.
then you have the wholesalers get on here that do this and preach what a service they provide and how they are rescuing folks so maybe in their own mind LOL ..
Now for sure in low value asset land wholesaling or swapping contracts is a huge part of the business very often this is done in areas of low income IE the price points. And much as anything RE agents are not going to work on 30k listings who wants that drama.
- 5yJonathan GreeneBusiness MemberReal Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
Wholesaling as a concept isn't the problem. Wholesalers are the problem because the majority do it without ethics and values, don't have cash to buy, mislead the sellers, overpromise and underdeliver on access to properties, continually go way low on repair costs and way high on ARV. It's also, in many states, practicing real estate without a license.
Plenty of us work with wholesalers all the time, good ones, but when you come into the forums and every 10th post says, "I have no money, bad credit, no experience in real estate, no capital to deploy, but I am going to become a wholesaler to make money to invest", it makes the experienced ones of us barf in our mouths.
- 5yDon KonipolBusiness MemberInvestor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
@Jay Hinrichs
Great example. This all goes back to full disclosure. If I want an option to purchase a property, I can pay however little I negotiate for that option. The problem occurs when I mislead the seller into thinking I am going to purchase the property myself when all I really want is the option part of the purchase contract and an opportunity to try and find a real buyer at a higher price.
The whole reason this exists is the way real property is transacted in the United States. We agree on a purchase price for a property and after we reach agreement the buyer begins his due diligence as to title, value, financing, income, expenses, etc. in most other countries the due diligence is performed BEFORE a price is agreed to, as a result “earnest money” is 25% of price, it goes “hard” immediately, and there are no contingencies. Our way increases the number of transactions, but also increases the “fallout” as well as allows for people to tie up the property who have no intention of closing unless they can find a real buyer at a higher price.
Neither approach is without problems, both have advantages and disadvantages. If a seller is totally unknowledgeable about real estate he really shouldn’t enter into a contract without a professional advisor. But of course people do this all the time.
- 5yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Don Konipol:
@Jay Hinrichs
Great example. This all goes back to full disclosure. If I want an option to purchase a property, I can pay however little I negotiate for that option. The problem occurs when I mislead the seller into thinking I am going to purchase the property myself when all I really want is the option part of the purchase contract and an opportunity to try and find a real buyer at a higher price.
The whole reason this exists is the way real property is transacted in the United States. We agree on a purchase price for a property and after we reach agreement the buyer begins his due diligence as to title, value, financing, income, expenses, etc. in most other countries the due diligence is performed BEFORE a price is agreed to, as a result “earnest money” is 25% of price, it goes “hard” immediately, and there are no contingencies. Our way increases the number of transactions, but also increases the “fallout” as well as allows for people to tie up the property who have no intention of closing unless they can find a real buyer at a higher price.
Neither approach is without problems, both have advantages and disadvantages. If a seller is totally unknowledgeable about real estate he really shouldn’t enter into a contract without a professional advisor. But of course people do this all the time.
its just those sad situations. This couple that was going to buy this home from us worked with my Wife for 4 months as they were doing little custom things to the home to make it theirs were very excited. And when Ms. Lori told me she had them both on the phone and they were crying ( these folks are in their 70s salt of the earth ) And knowing what I know about the industry this buyer could give too hoots about how this transaction has affected these folks. So that's unfortunately the mind set of many wholesalers they say they care but they dont if they cant close they walk tough cookies for the seller we will just robo call the next 1000 people. I have wholesaled some contracts on property although these were housing developments were I put up the non refundable EM and not 100 dollars I spent the dollars getting the entitlements ( usually north of 50k ) and all risk money and then I did double escrow to bigger builders and make the delta and in many cases its substantial spread hundreds of thousands . However I was also in a position to close as I dont want to lose the 100k or more I have into the property to create the value.. And I have paid 6 figure assignment fees for developments I have bought but again the person receiving the money took bare dirt and got the entitlements creating a 2 to 4 fold value increase..
- Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes5y
Originally posted by @Marlon Lunsford:
Is it just me, or does it seem as if the BP "higher ups" have a bitter taste in their mouths when mentioning wholesaling? No question,BP is a great site for learning and networking. Where is the love for wholesaling?
I will reiterate what Don, Joe, and Jay stated above. We “higher ups” as you stated, which more accurately is the long standing members of the community and NOT BP owners, is that we try to educate those who come here preaching or asking about wholesaling and spout illegal or misinformation.
I suggest reading this: https://www.biggerpockets.com/forums/93/topics/58383-the-truth-about-wholesaling-
- Specialist · Member since 2021 · 267 posts · 113 votes5y
Thank you Mr. Barnard. I've been following the wholesaling forum on BP for the past several months. Because I'm a wholesaler looking to connect with other wholesalers for educational purposes, network with others and offer advise where possible. I have noted however, that the forum's beginning comment starts with how corrupt wholesalers are. Under the title of the truth about wholesaling. And then there is always the handful of the "Higher-Ups" mentioned, that are not wholesalers, but also follow the forum for no obvious reason other than to criticize wholesalers. I don't believe BP is anti-wholesalers, not in the least, but there are those who need to get a life and find something better to do like tend to their own shop.
- Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes5y
Originally posted by @Randall E Collins:
Thank you Mr. Barnard. I've been following the wholesaling forum on BP for the past several months. Because I'm a wholesaler looking to connect with other wholesalers for educational purposes, network with others and offer advise where possible. I have noted however, that the forum's beginning comment starts with how corrupt wholesalers are. Under the title of the truth about wholesaling. And then there is always the handful of the "Higher-Ups" mentioned, that are not wholesalers, but also follow the forum for no obvious reason other than to criticize wholesalers. I don't believe BP is anti-wholesalers, not in the least, but there are those who need to get a life and find something better to do like tend to their own shop.
Nowhere in my thread of the truth about wholesaling does it mention anything about wholesalers being corrupt. It was an example of the poor tactics the wholesaler used to teach others. I have wholesaled many times years back so I have personal experience and in all cases, never did I violate laws or misrepresent myself like so many do.
- Homeowner · NJ · Member since 2019 · 2 posts · 1 vote5y
Thank you fellas for your wisdom and insight.
@Joe Splitrockundefined do you care to elaborate on the violating telecommunications or gave an example?
- Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes5y
Originally posted by @Marlon Lunsford:
Thank you fellas for your wisdom and insight.
@Joe Splitrockundefined do you care to elaborate on the violating telecommunications or gave an example?
Calling people on the do not call list or bulk texting people you have no pre-existing relationship with.
- Specialist · Member since 2021 · 267 posts · 113 votes5y
My apologizes Mr. Barnard, I think you misunderstood my point. I never said you had in anyway ever violated any laws or misrepresented your self. But your post does give an example of how corrupt some wholesalers can be and says this is the truth about wholesalers. I totally disagree with you and the "Higher-Ups" who constantly post on this forum. Because not ALL wholesaler are bad actors, nor are we acting as realtors without a license. I for one will not even attempt to perform a estimated cost of repair or a ARV. So as not to misrepresent myself. Nor will I draft a contract without an end buyer that's actually going to close the deal. I expect the end buyer to have enough brains to run the numbers them self which any savvy investor should do regardless of the type of investment. If anyone gets their self into a mess over a investment, they can only blame them self for not being more diligent.
- Freehold, NJ · Member since 2021 · 77 posts · 43 votes5y
Originally posted by @Will Barnard:
With all due respect, this is pretty much the only post I've seen on BP where there has been education from the "higher ups" in regard to wholesaling. Usually, Jay and company come in bashing wholesaling as a whole, and make it seem as though there's something wrong with the concept. Maybe the intention is to educate, but what actually happens is they come in bashing and not educating. I have on occasion myself attempted to mention this in the threads in hopes that more educating will occur, but those responses are usually overlooked and go unheard in the midst of the melee.
There's no doubt that wholesaling is rife with ignorant as well as unscrupulous people because of the low barrier of entry and the gurus who are out to make a quick buck by making it seem like you can make a quick buck. But The real problem with newbie wholesalers comes more from ignorance than it does unscrupulousness. There are too many gurus out there teaching these methods and that is a lot of where the problem lies. (Or is it lay? I always get confused on that one)
I have great respect for all of the experienced members of this forum. I have learned so much by reading what they have to say. And I also agree 1,000% with the indignation against the people who come in and think they're going to make easy money by screwing people over.
I also understand that the repetition of constantly having to educate the newbies on the ethical way of doing business is annoying. But I would still caution that if the intent is to educate, then more care needs to be put into the responses.
- Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes5y
Originally posted by @David Rosenhaus:
Originally posted by @Will Barnard:
With all due respect, this is pretty much the only post I've seen on BP where there has been education from the "higher ups" in regard to wholesaling. Usually, Jay and company come in bashing wholesaling as a whole, and make it seem as though there's something wrong with the concept. Maybe the intention is to educate, but what actually happens is they come in bashing and not educating. I have on occasion myself attempted to mention this in the threads in hopes that more educating will occur, but those responses are usually overlooked and go unheard in the midst of the melee.
There's no doubt that wholesaling is rife with ignorant as well as unscrupulous people because of the low barrier of entry and the gurus who are out to make a quick buck by making it seem like you can make a quick buck. But The real problem with newbie wholesalers comes more from ignorance than it does unscrupulousness. There are too many gurus out there teaching these methods and that is a lot of where the problem lies. (Or is it lay? I always get confused on that one)
I have great respect for all of the experienced members of this forum. I have learned so much by reading what they have to say. And I also agree 1,000% with the indignation against the people who come in and think they're going to make easy money by screwing people over.
I also understand that the repetition of constantly having to educate the newbies on the ethical way of doing business is annoying. But I would still caution that if the intent is to educate, then more care needs to be put into the responses.
I can appreciate your comments. I can’t speak for everybody but I can speak for my intent and as you noted in my thread, it was all about education. There were several who took even that post the wrong way claiming it was bashing and I corrected their impression. I can only guess, but would say that much of the “bashing” from the higher ups is what you said, annoyance with the repetitiveness of stating the same thing over and over to different newbies who post before they research and read. It can get frustrating when 300 people ask the very same question and expect some step by step how to of making easy riches - what the gurus preach to fleece the desperate of their cash.
Additionally, wholesalers often take large portions of seller equity because the seller is naive, lied to, or some other reason. Of course there are the deals where the seller knows their options and still chooses to go with an offer from a wholesaler over listing on the mls, but truth be told, in almost every case, they could have likely got more by listing with an agent.
I was just about to lock a deal with a wholesaler at $1M. Their contract was for $950k and the seller could have easily listed on mls for $1,050,000 and got over asking in 1 week, and I mean easy! The wholesaler ended up getting another offer of $1,050,000 making them $100k profit with no risk. I find that absurd and greedy for nothing more than finding the deal. If the sellers eventually find out that they made $100k when a 5% commission (or 4% if double ended) and sale price of $1,050,000 could have netted seller $50k or more. That’s a lot of cash to leave on the table for a no risk proposition of The wholesaler. This is where I really have a problem with wholesalers as I am use to their rehab and exit value numbers being consistently way off (usually intentionally to make the deal look better).
It is certainly my hope that more continue to educate and even more so that new members looking to wholesale spend some time researching and reading rather than taking the easy road of asking the same question already posted and answered 1000 times on BP.
- Freehold, NJ · Member since 2021 · 77 posts · 43 votes5y
Originally posted by @Will Barnard:
Originally posted by @David Rosenhaus:
Originally posted by @Will Barnard:
With all due respect, this is pretty much the only post I've seen on BP where there has been education from the "higher ups" in regard to wholesaling. Usually, Jay and company come in bashing wholesaling as a whole, and make it seem as though there's something wrong with the concept. Maybe the intention is to educate, but what actually happens is they come in bashing and not educating. I have on occasion myself attempted to mention this in the threads in hopes that more educating will occur, but those responses are usually overlooked and go unheard in the midst of the melee.
There's no doubt that wholesaling is rife with ignorant as well as unscrupulous people because of the low barrier of entry and the gurus who are out to make a quick buck by making it seem like you can make a quick buck. But The real problem with newbie wholesalers comes more from ignorance than it does unscrupulousness. There are too many gurus out there teaching these methods and that is a lot of where the problem lies. (Or is it lay? I always get confused on that one)
I have great respect for all of the experienced members of this forum. I have learned so much by reading what they have to say. And I also agree 1,000% with the indignation against the people who come in and think they're going to make easy money by screwing people over.
I also understand that the repetition of constantly having to educate the newbies on the ethical way of doing business is annoying. But I would still caution that if the intent is to educate, then more care needs to be put into the responses.
I can appreciate your comments. I can’t speak for everybody but I can speak for my intent and as you noted in my thread, it was all about education. There were several who took even that post the wrong way claiming it was bashing and I corrected their impression. I can only guess, but would say that much of the “bashing” from the higher ups is what you said, annoyance with the repetitiveness of stating the same thing over and over to different newbies who post before they research and read. It can get frustrating when 300 people ask the very same question and expect some step by step how to of making easy riches - what the gurus preach to fleece the desperate of their cash.
Additionally, wholesalers often take large portions of seller equity because the seller is naive, lied to, or some other reason. Of course there are the deals where the seller knows their options and still chooses to go with an offer from a wholesaler over listing on the mls, but truth be told, in almost every case, they could have likely got more by listing with an agent.
I was just about to lock a deal with a wholesaler at $1M. Their contract was for $950k and the seller could have easily listed on mls for $1,050,000 and got over asking in 1 week, and I mean easy! The wholesaler ended up getting another offer of $1,050,000 making them $100k profit with no risk. I find that absurd and greedy for nothing more than finding the deal. If the sellers eventually find out that they made $100k when a 5% commission (or 4% if double ended) and sale price of $1,050,000 could have netted seller $50k or more. That’s a lot of cash to leave on the table for a no risk proposition of The wholesaler. This is where I really have a problem with wholesalers as I am use to their rehab and exit value numbers being consistently way off (usually intentionally to make the deal look better).
It is certainly my hope that more continue to educate and even more so that new members looking to wholesale spend some time researching and reading rather than taking the easy road of asking the same question already posted and answered 1000 times on BP.
100%. It's very annoying that so many people won't read before posting and asking questions.
- Real Estate Agent · Dallas, TX · Member since 2020 · 92 posts · 46 votes5y
I would agree they don't have anything against wholesalers but rather common issues wholesalers cause. I actually buy properties from wholesalers and often times they are way off of their numbers. I'll get a 3/2/2 that's a 1930 build and they are using a 3/2/1 2021 build as a comp. Or they will tell us rehab for a property is around 20-30k when it's really about 65k. So again, I wouldn't say they are against them, but see some common issues they bring to the table.
- Rental Property Investor · Charlotte, NC · Member since 2015 · 134 posts · 78 votes5y
I agree with pretty much everything said here. I don't think BP has a negative viewpoint on wholesalers, but rather it warns investors of the potential problems that wholesalers sometimes create. Like @Jacob Maes said - their numbers are wrong quite often (yes, I'm generalizing a little here) and that's because the barrier of entry to wholesale is so small, resulting in lack of knowledge most of the time.
BP preaches transparency when wholesaling and conducting your business as white-hat as possible.
Quick real life example: I wholesaled a deal 3 weeks ago in which the seller just texted me a few days ago saying this deal changed her life and will make her a millionaire because the speed of the transaction enabled her to take her equity/profit and plug it into 2 very good real estate deals.
So...there can be much value that a wholesaler brings to the table, both for buyers and sellers, but there just like anything, there are right and wrong ways to conduct business and BP simply warns of the wrong ways wholesalers can sometimes conduct business. - Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 17k+ votes5y
The problem with wholesalers (cue: How do you solve a problem like Maria? :P ) is that, of virtually all of the possible profit points of real estate, it is the one with virtually no barrier to entry and no reasonable recourse for the parties involved, and the opportunity for significant financial loss. If a realtor acts unethically, S/he can be reported to the state licensing agency. Same thing with a lender, or a contractor. These people could face issues from fines to losing their license to actual jail time. You might not be able to do anything about a crappy inspector or appraiser in your state, but you're talking about losing a few hundred bucks if you don't like their services, and you can go get another one. Wholesalers can, and do, fleece uneducated sellers from reasonable profits they could expect to see from the sale of their property. They also can, and do, cause or increase financial hardship by tying up the property without being able to close or find a buyer. They typically have little or no money involved in the transaction, so if/when things go south it's no issue for them. In many states, any type of real estate brokering with a license is illegal yet people from these states persist on coming on BP looking for advice on how to make it happen outside the boundaries of the law. Finally, as already noted, the entire term is co-opted and corrupted. *True* wholesaling means you buy a product at one price and then resell it at another, usually getting a discount on the buy price because of volume, access to market, or some other competitive advantage. Wholesaling as used here on BP has virtually none of that.
Skyline Properties - 5yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Ryan Whitcher:
I agree with pretty much everything said here. I don't think BP has a negative viewpoint on wholesalers, but rather it warns investors of the potential problems that wholesalers sometimes create. Like @Jacob Maes said - their numbers are wrong quite often (yes, I'm generalizing a little here) and that's because the barrier of entry to wholesale is so small, resulting in lack of knowledge most of the time.
BP preaches transparency when wholesaling and conducting your business as white-hat as possible.
Quick real life example: I wholesaled a deal 3 weeks ago in which the seller just texted me a few days ago saying this deal changed her life and will make her a millionaire because the speed of the transaction enabled her to take her equity/profit and plug it into 2 very good real estate deals.
So...there can be much value that a wholesaler brings to the table, both for buyers and sellers, but there just like anything, there are right and wrong ways to conduct business and BP simply warns of the wrong ways wholesalers can sometimes conduct business.I think one of the HUGE misconceptions is that wholesalers can close deals faster than Brokers.. this simply is not correct.. Decent brokers will out perform most wholesalers is what I see.. they have better title company contacts and we can all only move as fast as the title company moves.. so thats simply not true.. its a huge perception problem that sellers have and wholesalers foster it with their sales pitches. I know i get pitched every single working day of the month by a wholesaler in one of the 10 markets I work in.
- Rental Property Investor · Charlotte, NC · Member since 2015 · 134 posts · 78 votes5y
Originally posted by @Jay Hinrichs:
Originally posted by @Ryan Whitcher:
I agree with pretty much everything said here. I don't think BP has a negative viewpoint on wholesalers, but rather it warns investors of the potential problems that wholesalers sometimes create. Like @Jacob Maes said - their numbers are wrong quite often (yes, I'm generalizing a little here) and that's because the barrier of entry to wholesale is so small, resulting in lack of knowledge most of the time.
BP preaches transparency when wholesaling and conducting your business as white-hat as possible.
Quick real life example: I wholesaled a deal 3 weeks ago in which the seller just texted me a few days ago saying this deal changed her life and will make her a millionaire because the speed of the transaction enabled her to take her equity/profit and plug it into 2 very good real estate deals.
So...there can be much value that a wholesaler brings to the table, both for buyers and sellers, but there just like anything, there are right and wrong ways to conduct business and BP simply warns of the wrong ways wholesalers can sometimes conduct business.I think one of the HUGE misconceptions is that wholesalers can close deals faster than Brokers.. this simply is not correct.. Decent brokers will out perform most wholesalers is what I see.. they have better title company contacts and we can all only move as fast as the title company moves.. so thats simply not true.. its a huge perception problem that sellers have and wholesalers foster it with their sales pitches. I know i get pitched every single working day of the month by a wholesaler in one of the 10 markets I work in.
I won't argue this point. However on this specific transaction, I netted the seller $30k over market value (if she we're to list) for her house because I have a solid relationship with a specific buyer/fund which 99% of agents do not have nor explore. This house would've never sold for as much on the market, in addition to the only thing the seller needed to do was allow us (1) 30-40 min walkthrough - no add'l showings, etc
- 5yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Ryan Whitcher:
Originally posted by @Jay Hinrichs:
Originally posted by @Ryan Whitcher:
I agree with pretty much everything said here. I don't think BP has a negative viewpoint on wholesalers, but rather it warns investors of the potential problems that wholesalers sometimes create. Like @Jacob Maes said - their numbers are wrong quite often (yes, I'm generalizing a little here) and that's because the barrier of entry to wholesale is so small, resulting in lack of knowledge most of the time.
BP preaches transparency when wholesaling and conducting your business as white-hat as possible.
Quick real life example: I wholesaled a deal 3 weeks ago in which the seller just texted me a few days ago saying this deal changed her life and will make her a millionaire because the speed of the transaction enabled her to take her equity/profit and plug it into 2 very good real estate deals.
So...there can be much value that a wholesaler brings to the table, both for buyers and sellers, but there just like anything, there are right and wrong ways to conduct business and BP simply warns of the wrong ways wholesalers can sometimes conduct business.I think one of the HUGE misconceptions is that wholesalers can close deals faster than Brokers.. this simply is not correct.. Decent brokers will out perform most wholesalers is what I see.. they have better title company contacts and we can all only move as fast as the title company moves.. so thats simply not true.. its a huge perception problem that sellers have and wholesalers foster it with their sales pitches. I know i get pitched every single working day of the month by a wholesaler in one of the 10 markets I work in.
I won't argue this point. However on this specific transaction, I netted the seller $30k over market value (if she we're to list) for her house because I have a solid relationship with a specific buyer/fund which 99% of agents do not have nor explore. This house would've never sold for as much on the market, in addition to the only thing the seller needed to do was allow us (1) 30-40 min walkthrough - no add'l showings, etc
gothca.. real buyers using real agents to buy distressed assets also only need one quick walk through its my day job.. I fund this stuff so that simply is not unique to a non licensed wholesaler transaction.. But I get it.. I was just in a big East coast city last week were I would say on price points under about 100k that wholesalers dominate the transactions Now my program allows said wholesaler to close on the house and not flip the contract so they can maximize their return since its so competitive in these markets. But I was with him one day and he bought 2 houses that I will fund as soon as title is ready dont think he spent 20 minutes in either I walked through one.. well I made it to the front door it was full of crap.. and it was by a bus stop and liquor store so was also watching for riff raff.. :)
I wouldn't say BP is necessarily anti wholesaling, I think a lot of investors nowadays get their deals from wholesalers because finding properties by making offers, forming relationships and/or dumping a ton of money into marketing is either expensive or time consuming. You do have the same couple of people that like to troll the forum over and over that they never say anything about, but what are you gonna do
- Specialist · Member since 2021 · 267 posts · 113 votes5y
I'll add some red-neck talk for the white-collar folks who have made a comment on this subject. If one takes a pig, cleans it up, perfume, good smelling soap even. In the end, you still have a pig on your hands that will go right back into the mud. What I'm saying is, it does no good to bash the wholesaler who's doing wrong. All you'll do is tick him off and he will continue doing wrong. There's a right and wrong way to educate people, bashing and criticizing is the wrong way. For those of you who are experienced and educated in real estate, and real estate investing. Why not spend your time, take a un-learned wholesaler under your wing and try to help him or her learn the right way to wholesale. If you are unwilling to do this, maybe you should spend your time on another forum.
- Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes5y
Originally posted by @Randall E Collins:
For those of you who are experienced and educated in real estate, and real estate investing. Why not spend your time, take a un-learned wholesaler under your wing and try to help him or her learn the right way to wholesale. If you are unwilling to do this, maybe you should spend your time on another forum.
This is EXACTLY what I did in my "The Truth About Wholesaling" thread. It was an educational real life piece to show what not to do and then describe what to do. I have spent literally thousands and thousands of hours teaching and helping others on this site for free for over 15 years now. If some can't see that, not my fault. If some want to accuse me or others of "bashing", that is certainly their right to hold that opinion of me or others. That said, I am not saying anyone in this thread is accusing me of this, just saying in general.
- 5yMindy JensenPro MemberBiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes
I am a higher up at BiggerPockets and I have a HUGE problem with wholesaling as it is being taught today by the gurus on YouTube. Here's why:
Scenario 1 - Honest, solving a problem wholesaler
Person inherits a run-down property several states away. They don't want it, it is literally a problem that will cost them money every year in taxes and upkeep. They get contacted by someone who tells them they can help with this problem. They put the property under contract, fully able and expecting to purchase said property if they cannot assign the contract to someone else, or with the intent to close, then sell again. They're upfront with their intentions, and the property owner doesn't really care how it gets done, this was a problem they had and the wholesaler has solved this problem for them.Scenario 2 Dishonest, equity-stealing wholesaler
Elderly person who has owned their home for decades, is deciding to go into assisted living. They only own this one property and really don't have any idea what it is worth. They get contacted by someone who offers to buy their property, in cash, and close quickly.
Elderly person signs, prepares to move, and later discovers that the person who bought their house turned around and sold it for hundreds of thousands of dollars more than they paid for it - with no work done.
This wholesaler just stole the equity of this home, and took advantage of the sellers lack of knowledge. That isn't being smart, that's just being deceitful.Scenario 3 Dishonest, outright lying wholesaler
Couple is looking to sell their home, to move to be closer to their daughter and new grand child. They are contacted by someone who writes a contract on their house, and all they need to do is show it to their "partner" to make sure the partner approves. Couple thinks this is a solid contract, starts to pack and prepares to move. "Buyer" reaches out the day before closing to say he couldn't find anyone to assign the contract to, and does not have money to close, so he is cancelling the contract and the sellers can keep the earnest money of $100.
This wholesaler had no intention of ever buying the house. He was dishonest in his intentions with the sellers, who thought their house was sold, had packed up everything and even put an offer on another house in their new town. They lose the Earnest Money deposit on that house, and their plans are derailed for months trying to get their house sold.I have a huge issue with 2 and 3 because the intent is dishonesty.
I have absolutely no issue with Scenario 1. If you are conducting yourself in the same lines as wholesaler #1, we'll get along just fine.
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