All Forum Posts by: Andy Cross

@Justin Stamper

How do you wholesale properties off the MLS?

The first thread I read in its entirety on BP was the "Truth about Wholesaling" sticky. This is pretty much the same warning.

It's bad that so many people are bad wholesalers, but it gives me more faith in myself. Reason #1 is because I've had my phone ringing with seller leads every week since February. None of them are listed or have even spoken with an agent about selling yet.

I'm still a newbie, but even I can tell that the newbie wholesalers who advertise MLS "deals" (not) are simply in this to get rich quick. And that means they're not going to last long because it's not how good wholesaling works.

I appreciate when investors spread the word about bad wholesalers. I don't see it as bashing at all. If a wholesaler is doing things right, (s)he shouldn't take it as bashing either because the discussion won't apply to him/her.

It's actually an education in what NOT to do. So it's helpful. Thanks for sharing your experience.

 With respect, the fact that you say you want to wholesale because you don't want to do what a realtor does is proof that you don't know all that much about the real estate industry.  Because wholesalers and Realtors do exactly the same thing.  The only difference is the mechanism by which they get paid.  And a license and a code of ethics, of course.  But they perform the same function.

I do want to respond directly to this statement (then I'm done on this subject). And I'm only responding to this because now I feel you are personally attacking my intelligence. There are a select few wholesalers that are doing exactly what realtors are doing, which puts them in violation. Yes, they should be reported, reprimanded, fined, thrown off a bridge, whatever. As for me and my business model, which you know nothing about, is nowhere near what a realtor does; nor is it the same as any other normal wholesaler. So, no, I will not accept that "wholesalers" and "Realtors" do exactly the same thing.

Good day sir! 

@Richard C.@Andy Cross  Awesome post Richard.... and of course we are of like mind on each and every point you raise.

Andy when you say you only want to do this long enough to get cash.. this reeks of someone who is not interested in the industry as a career and just looking for a cheap money grab... its folks like this that we don't need representing or trying to tie up sellers properties... its very much akin to the paving schemes and traveling contractor schemes... just hit quick and leave.

when you do get posts on BP from some of the top wholesalers you will realize they are also licensed RE brokers... 

Andy, if wholesaling the way most wholesalers do it.. IE tie up property stick it on Craig's list with pic's and all or on their websites ... then why even have a licensed RE industry at all we would just all run around doing what we wanted  Like the old days.. and like present day China which requires no licensing. 

But most countries have these laws and every state has the laws.. Its only with the advent of the internet Guru's and what is promulgated even here on BP that it gives folks the false sense of security that wholesaling is some sort of industry or career path. 

And in fact your statements are very common... People are fed this BS  hey if you have limited resources then wholesale until you get enough cash that you can buy and hold or flip.. When in fact if you wanted to flip just find a good money partner and by pass all the wholesaling BS  find the money partner CLOSE on your wholesale deals fix and flip them and make money like the rest of the industry... Wholesaling without a license is raising a lot of Ire with certain states.. we see that now on BP  Ohio , FLA, CA ,,, I had a client in MS that got a cease and desist in 04 for not owning properties he was reselling and I created a transactional model that kept him legal  IE he owned what he sold.. 

think it through past the short term money grab.. if these deals are good enough to flip off to a rehabber even after your wholesale fee whatever it maybe .. close on it rehab and resell..  share the profit with your money partner. you will make as much if not more you will gain experience and a relationship with a money source... and be legal in all states except WI which requires a license

Not so appealing a property from the looks, and the 5+ year tenants keep it messy..built in the 1930's a small investment for rental props...with a ROI of over 30% is up as a possibility. A BP colleague was the avenue for it to come to me...As much as I think it will work, just want to hear any thoughts from the larger bp community of any unforeseeable risks. Seller trying to reduce the number of properties to look investing elsewhere...Comments are sought as I am leaning on putting an offer on it...

Again, cannot reiterate the appreciation I have for BP forums and the people who share their time and advice..

@Philip Seifert Just added it to my pod cast player thank you for the recommendation. 

@Andy Cross I agree with you that wholesalers are indeed getting a bad rap on social media as well as forum posts. I am by no means an expert on the subject, so experienced BP members, please correct me if I am mistaken.

When trying to understand it myself, I found that wholesalers get a bad rep for similar reasons that give many used car salesman a bad rap, the first priority always appears to be money before good service. 

Although wholesaling is a legitimate business, there tends to be a trend of terminating the sales contract before the inspection period is over if the wholesaler does not find a buyer for the house. This of course leaves a bad taste in the mouth of those involved due to the time wasted.

I'm sure there are good wholesalers out there, just as I believe there are good car salesmen, but it's the bad ones that ruin it for all of us.

Here is an example of the typical bad experiences when dealing with wholesalers for those of you that are just catching up to the subject:

http://www.biggerpockets.com/forums/48/topics/2284...

Explain completely and honestly to the seller what you are doing, avoid any actions that constitute unlicensed brokerage, and actually learn something about real estate, and no one will have any problem with you.

Not even me, and I am as "anti-wholesaler" as it gets on this site.

Is it possible to be completely honest with sellers about what you are doing?  It absolutely is.  Will it cost you some deals?  Absolutely.  But if you have to lie to get deals, you really aren't bringing much in the way of knowledge or skill to the transaction anyway.

Is it possible to avoid any actions that constitute unlicensed brokerage?  This one is harder.  Yes, it is, but the vast, overwhelming majority of wholesalers do not or can not.  For example, if what you have to sell is a house, you are brokering without a license.  If what you have to sell is a contract, then what you can show prospective buyers is...wait for it...a contract.  If you are showing buyers through a home, you're brokering.

Is it possible to learn real estate.  Yes, but not by looking for sources that will teach you wholesaling.  Go take a real estate licensing class.

Now as to your statements in your post.  You don't solicit cash buyers?  Huh?  Then how do you make money?  Of course you solicit cash buyers.  And that is actually one of the few things wholesalers do that I have no problem with.  That is just a bizarre statement.

Will some "go to any lengths to destroy what is a legitimate business?"  No.  I have said on other threads, I am going to report any and all wholesalers to my state REC.  But if they are in fact engaged in a legitimate business, that will not destroy them at all.  The REC will look at my report, shrug their shoulders, and say, "That's a legitimate business."  Coming to the attention of the REC should not concern you unless you are in fact NOT running a legitimate business.

As far as the "protecting commissions" nonsense:  I am not an agent.  I have never made a commission on a real estate sale.  Ever.  So get over the idea that the only reason people might find wholesaling as most do it objectionable is that their personal incomes are threatened.  You don't have to be a banker to think that payday lenders are sleazy, or a paving contractor to think that Travelers preying on elderly people with paving scams are sleazy.  And make no mistake, wholesaling as it is taught by the gurus and pursued by all too many on here is bottom feeding, the equivalent of payday loans.

There are good wholesalers.  You can recognize them because they ADD value.  If you are not ADDING value, then any money you receive is value you have unjustly taken from someone else.  So wholesalers sending thousands of pieces of direct mail a month, and running real businesses finding leads of people willing to sell who hadn't actually listed yet?  No problem.  Those people are adding value, ease for the seller and inventory for buyers, and so they are entitled to get some of that value back as compensation.  You just find some old lady who doesn't know any better?  You let her think she cannot sell with a Realtor because her house needs repairs?  You tie her house up, with no ability or intention to buy it yourself if you cannot find a buyer?  Then you are not ADDING value, and whatever money you make was stolen from that old lady.

So there is the bottom line.  Be open and honest about what you do.  Don't broker without a license.  Learn enough (and frankly, spend enough) that you are adding value rather than stealing it.  Do those things, and you're golden.

Now, let me ask a question in return.  Why not just get a license?  Seriously.  No wannabe wholesaler has ever had a credible answer to that question.  So why?