All Forum Posts by: Rich S.

This thread is very interesting... can we PLEASE stop painting every wholesaler with the FRAUD/SCAM brush?  Also, can we stop anointing everyone with  a license as GENUINE because neither are true. 

John- I'm curious, as a Hard Money Lender are your transparent about what other hard money lenders offer for services, fees, how many points they charge, interest rate? I mean, I'd hate to see a HML victimize an uneducated borrower by not telling them what they could get elsewhere-- which is essentially one of the things you despise about wholesalers.

If unlicensed brokers are violating the laws--that is a scam. - I don't disagree
If they are misleading sellers, that is a scam.- You talk as if all they do is mislead- meaning they intentionally misinform the buyer- 100% of the time and you act as if 100% of realtors operate 100% above board, 100% of the time.
If they borrow $20 from their mom to use for EMD_-their mom loses:) - no realtors have ever borrowed $$ from Mom I suppose?
Assignment fees are BLIND transactions. Sellers have no idea how much they are losing.- If you give a seller confidence they can sell for $100,000 but the property sits and sits and sits... and they sell for $80,000, it is better because seller KNEW how much they lost?
Agents have accountability, can be fined, have their license suspended, have required training, E&O insurance, etc. Unlicensed brokers have NONE. -CAN be fined, not necessarily will?  How often is a license suspended?  Just because people are trained doesn't mean they execute on that training.  E and O insurance is basically WE PAY so our mistakes are covered.  These ALL have good intentions, but it doesn't mean they are all followed.  It also doesn't mean that folks without these things, can't do good things.
When sellers sign a LISTING agreement they know EXACTLY what it costs. LISTING AGREEMENTS. Unlicensed brokers use PURCHASE agreements as defacto listing agreements. They OFTEN lie to sellers stating they are buyers when they are NOT. - Do they really know EXACTLY what it costs?  I'm listed for $250,000- you tell me it will sell for that... after fees I clear $230,000 so its cost me $30,000-- but house sits 3 months... list price drops... buyer wants closing costs... now I'm getting $210,000... but you had me sign a new contract-- just like a wholeseller might if their X days are up...  I just don't buy that the realtor side is always better, is all I am saying.   
Listing agreements are clear and concise and NOT used to deceive sellers into believing their house is sold.- There is nothing concise about a listing agreementd(IMO)... nothing(in MN minimum of 4 solid pages)... and last I checked... everyday many agreements are signed that are never followed up on.  I've TWICE on my on personal residences agreed to terms with a seller(accepted their counter) only to have that basically shredded to start over because someone was unhappy-- so even done the "right way" in your world, doesn't mean it is full proof.  I thought my house was SOLD as well... but it was not.
I know LEGAL LICENSED wholesalers. They CLOSE if they cannot find a buyer.- Which is great.. more evidence to my theory that NOT ALL WHOLESALERS ARE BAD, just like NOT ALL REALTORS ARE GOOD.

I don''t know ANY educated sellers that would accept $20 and 30 days due diligence. I doubt any unlicensed broker with experience deceiving sellers would accept the same BS terms they offer UNSUSPECTING or DESPERATE AND UNSUSPECTING sellers. The State of Florida investigators with DBPR calls people VICTIMS that end up dealing with these types of operators. - In the specific scenario that started this post... house was inherited, has been vacant, hoarder house... it isn't a shiny MLS listing you can show tomorrow.  Most realtors wouldn't even take it as a listing.  I agree with your premise, but million dollar deals have been done with nothing more than handshake, doesn't mean they are bad because they are terms you wouldn't accept.

My entire point of my posts is that many are WAY TOO QUICK to throw all wholesalers under the bus and way to quick to assume a realtor with a license is flawless... that is the basic premise.  I don't wholesale, but don't think the only people that do are scam artists.  I also have seen the way realtors treat many of the folks with listings that make sense for wholesaling... often distressed, bad shape, low value assets.  There are many realtors that either won't take that type of listing or spend zero time on it while the seller just goes along for the ride and realtor is hoping to make a small commission for little to no work.  There are two sides to this... the wholesalers that do it right , are wrongfully grouped in with those that don't, as are the realtors that do it right are wrongfully lumped in with those that don't. I truly believe you think this "wholesaling" thing only exists for crooked people to take advantage of other people, when in reality I think it really exists because there is market demand for listings of that type that the licensed crowd doesn't serve well.

The unfortunate truth that keeps ringing in this post.... some folks believe all wholesalers are scammers and other people believe because you have a real estate license you can do no wrong. The honest truth is, there are wholesalers who scam people and those that don't. There are realtors that break plenty of rules and those that don't. There are good and bad people in both categories. Are there checks and balances that "legally" are there when dealing with licensed folks? Sure.. are there less with wholesalers, probably so. In my experience, realtors have issues with wholesalers because they are a threat. In different parts of the country they are breaking the law-- most could care less, unless it affects their day to day and wholesalers do affect the day to day of realtors. How much is made on an assignment really shouldn't matter. As a realtor... say you have two listings, both for $250,000. One sells in one day, with only MLS listing, after one showing, for full asking price. The other takes 5 months, but you eventually get it sold for list price. 5 months of marketing, 50 plus showings, etc. Is any realtor taking less commission on the one day sale? I highly doubt it... but aren't you scamming folks as they paid the same price for way less work and effort? Or is it OK because you are telling folks exactly how much you are making off the sale of their home? If any wholesaler or realtor is forcing folks into a contract they don't understand or don't agree with, then I agree, they are getting scammed. If folks willingly enter into a contract and aren't defrauded, it isn't a scam. Also, in regard to EMD, when a wholesaler puts $$$ down, it is THEIR OWN MONEY, correct? When a realtor representing a buyer puts EMD, it is the BUYERS money, no? Seems a wholesaler has more skin in the game than a realtor in the EMD category.

In regard to your deal, too many variables.  As was pointed out, I don't think it is fair to do a valuation based on a different bed/bath total than what exists, except to potentially show a buyer there is more meat on the bone.  As far as assignment fee, its negotiable and the one benefit of working with wholesalers, in my opinion, is their fee is much more negotiable than a realtors fee.  If you are open to offers, best to be in the right ballpark to start with a go from there.  A wholesaler might close in one day for half their suggested fee.   

It's the same reason a lot of real estate EXPERTS become GURUS.  There is money to be made in both, but one is easier, can be done in more volume and most of the time with less headaches.  

Everyone here is giving you the systematic approach for what to do, so make sure to apply their advice with the laws of your state.  IF you want them gone so bad, it sure seems like losing one month of rent is worth it... but just my opinion.  There is a cost to doing business and short term losses can often lead to long term gains.  If they are poor tenants, follow the laws, give the correct notice and get them out.  Whatever comes of them paying or not, is just the price of doing business.

Would you mind sharing numbers of a recent deal? I’m just curious... I know in the local market here the only way it might work is multi family, so something that may be possible, but the time and money needed would probably outweigh buying existing.

I would venture to guess for many, there isn't as much value capture out of the gates, but it depends on your market.  In my area, you'd never get the value capture or cash flow with new that you would with existing.  Our construction costs are too high for the rent return we would get.  I'd be curious to what you are building- single family, multifamily, etc and what typical numbers look like.  You'd be hard pressed to build a decent sized single family home in my area for $200,000 and it would rent for $1400 or so max I think.  You'd barely be cash flowing from the get go, if that is what you are after.

There is money to be made in low income rentals, but it's more work and much easier to do if you are close by(in my opinion).  It also comes with more turnover and maintenance costs as statistics would show low income renters are harder on units then others.  The fact that you are low on cash and only able to fix up as you can and can come away with cash to move to the next deal and even do better if you sell, I would sell.  The catch 22 of low income rentals... low cost of entry, but not the best way to start in the business, in my opinion.  Too easy to lose your shorts and end up on the outside looking in.  Risk is higher, so if you can wholesale your way to better opportunities, I think that may be a better plan.

I think the beauty of the question is that it shed's some light to everyone's FREEDOM being different.  Some want to travel the world and do whatever they want.  Others want do stay where they are and keep doing a lot of the same things just have the power of choice with their time.  And lots of people are in the middle.  I see healthcare being the biggest variable in this for any and everyone as who knows that that looks like 10-20-30 years down the line.

I'm not an agent and I don't pretend to know what it is like in their chair, but in my experience I don't buy the full time agent is better than the part time agent as a blanket statement.  Don't get me wrong, it is hard to replicate years of experience, through thousands of transactions, I completely get that.  I have seen the successful, full time agent have flaws in my experience.  An example of the two times I used one of, if not the top agent in the area left me with the same feeling.  The high flying, really successful agent, is almost impossible to consistently get a hold of unless you are in the top tier of listings.  I used a very successful, high volume agent on two separate occasions(two different ones).  My listings were both middle of the road, I'd say middle 50% of market value type stuff.  In both occasions it very much felt like my listings were just a number.  I might have been able to get a hold of a support staff person on a regular basis, but rarely the agent.  I also had mistakes in both transactions that were avoidable had someone on the team or the agent taken the time to double check things.  

In the times I've used part time or just getting started agents, I've felt much more valued and much more of a priority.  It very well could have been the people(individual agents) and something you can say part time or eager new agents are better, but if I'm not selling top of market stuff, I'm not very inclined to race to the top of the charts to find my agent.  In the end, I don't think the top ranking agents got me more money or did a better job and maybe I just didn't like the feel.

In regard to not giving advice without someone paying you? Don't agents do that all the time when they go to listing appointments with CMA's hoping to land the listing?

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