All Forum Posts by: David Hines

@Pratik P.

I would say that if you aren't doing assignments then you aren't really wholesaling and my comments probably don't apply to you. If you're putting the property in your name and then deciding to sell it, rent it or flip it, then more power to you on making the best deal possible.

What I have a problem with is wholesalers (and I am absolutely convinced that a very high percentage of them do this on a regular basis) going to a seller and convincing them that their property is only worth X while knowing the whole time that they will be able to turn around and market it to their buyer list at X + assignment fee. This is dishonest. Wholesaling is not a profession, it is a scam predicated on an ability get some sucker to sell for less than what their property is really worth. 

Maybe one of you can answer this for me, I’ve debated with some people on other threads. What is the value that wholesalers bring to a real estate transaction? It is my position that the only way a wholesaler makes money is by getting a seller to sell a property for less than it is worth or by getting a buyer to buy for more than it is worth. I believe wholesalers remove value from the transaction, they don’t add any.

Sharing utilities with your tenant doesn’t seem like a good idea either. You’re just begging for conflict.

This does not seem like a good deal...

@Joseph ODonovan

Your use of the term "willing seller" sounds suspiciously like "uninformed seller" IMO. If an investor is willing to pay X for a property and the property goes on the market for X, then the investor buys it for X. The only way a wholesaler makes any money is by getting a property under contract for X minus assignment fee (say $10,000) and then marketing the property to their buyer list for X. Does everyone agree that this is the typical wholesale process or am I missing something?

The idea that wholesalers make the process easier or smoother is wrong IMO. I think it is much more common for a wholesaler to find some uninformed property owner and convince them that they are getting a great price for their property, when the wholesaler knows the entire time that they will be able to sell it for more.

The only reason the OP asked his question is because he knew that fully informing the seller BEFORE the property is under contract conflicts with the only way wholesalers can make money. 

@Gabriel Amedee

I agree that in the current market, buying from the MLS isn't profitable. Its been several years since I've purchased a property because the return just isn't there. So I've stockpiled cash to put to use when the market drops and focused on commercial transactions.

Another solution is investing in properties that need repairs, maintenance, etc and doing something to create value. The solution shouldn't be convincing less knowledgeable sellers to sell for less than their property is really worth. In my opinion a large proportion of wholesalers rely on predatory behavior at a minimum if not out right deception.

@Chris Turner I'm not sure what assumptions I'm making that you may disagree with. I've had this discussion with other wholesalers before and they say things like A) "I'm connecting buyers and sellers" or B) "I'm planning to make improvements or repairs that the seller may not be able to afford."

In situation A, I believe that the open market of the MLS is the best way to connect buyers and sellers. Investors don't need to be connected to sellers, they'll find properties a multitude of ways. So, what this situation really boils down to is a wholesaler was able to convince a seller to sell for less than market value and then is planning to reach out to their buyer list in hopes of getting an assignment fee from the buyer. This seems highly unethical to me.

In situation B, I believe that the wholesaler is really a flipper and not using the correct terminology when they talk about what they do.

It’s questions like this that make me doubt the wholesale profession as a whole. The only way wholesalers make money is by convincing a seller to sell for less than their property is worth or convincing a buyer to pay more than a property is worth. If you can’t conduct your business and be completely honest with the people you are dealing with, then you shouldn’t be in this business at all.

I include lease renewal as part of my overall management fee.

You could always hire a realtor just for getting it in the MLS and finding a great tenant.