All Forum Posts by: Shane H.

 No, I don't. Somebody has to be out there with fiduciary duty to sellers and buyers. Unlike a wholesaler who markets B2B, finds distressed (uninhabitable/dilapidated) property and sells it AS IS to an investor to profit. 

Note that he advises against putting large EMD down. He says he usually gets away with $100, with $500 to $1000 being a max he would deposit if it was an extra ordinary deal. When asked what he does when seller asks for greater EMD, he responds that he simply walks out and looks for another seller. The last thing you want to do as a wholesaler is to lock up your money.

POF is a different story. One can use it to show seller that I have means to close on deal (even if I ultimately end up reassigning a contract). You can use it to show that the transaction can be closed if seller accepts your offer and everything smoothly falls into the place. You don't part with any money when you produce POF. I think what Chris emphasizes is that he never ends up closing on the wholesale property, because he almost always finds buyers for them (simply because they are true wholesale deals). But in the event if for whatever reason such buyer can not be located, then he will be in a good place taking control over the property that is known to have higher value than what he pays for it. So, it ends up being a win-win situation for him.

I believe, as I stated it before, that if you select the property and negotiate its price as if you were the investor to part with your hard earned money to own it, then your deals should be good enough to sell themselves. Provided you do understand the market, the value of the property and the potential to profit from it. 

I don't like dealing with bad people. But humans are humans, human nature is what it is. There are a lot of stupid people out there. Some of them are nuts and evil. I never knew how bad humans can get over a buck until I ran a wholesale operation of my own. So, we may never be able to weed them all out from any of the industries where humans participate. What we can do is be alert and understand that doing business is like going on hunt in a jungle. You wouldn't sleep in the middle of savannah, exposed to all the animals and harsh conditions with assumptions that lions, wolves and coyotes are your friends. You would probably put your protective gear on, be on high alert and ready to take action and protect yourself as needed. 

Aside from that, the state should step in when something outrageous and obviously criminal takes place. Putting a gun on the head of 86 years old senile man to sign the sales agreement shall never be tolerated in a civilized society. And other things that are done with clear intent to harm shall be prosecuted under existing laws. Not enforcing laws is not an excuse to pass draconian laws. Enforcing criminal laws on the books is what the gov is for. And it should leave the business alone, as long as no criminal law is violated. 

There is a guy who did just that in Mishawaka, IN. He was on Biggerpockets since 2013 or so, but stopped posting about 4 years ago. 

He created a good thread about wholesaling , he was very informative and helpful (without any BS/fluff), gave all the valuable information for free (unlike some gurus charging $30K for a course that doesn't do anything for you). You can read his posts here: https://www.biggerpockets.com/forums/12/topics/862964-wholesaling-101-how-to-wholesale-for-beginners

You will see he was attacked with just about every line of arguments you see today from those who badmouth wholesalers. 

 I am rightfully defensive, because instead of attacking the issue you complain of you want to outlaw or regulate to death the industry. Senile 86 years old man was screwed you say? Well, there is remedy for that: anything senile person lacking basic mental skills signs is null and void on the eyes of law. It's as good as if someone forged a signature on a contract by alleging that the seller has agreed and signed it. This sort of thing happens all the time, FYI, and if common issue in Estates, Will and Trusts. A lot of Wills are executed by people who are medically diagnosed to be mentally disabled, therefore there are a lot of cases where either Sate or disputing heirs take culprits to court. No need to outlaw Wills, Trusts or wholesaling as an industry. N o need to create a new regulation when existing laws make it clear that contract is invalid if signed under duress or by mentally disabled person.

The think about Craiglist doesn't make sense because those "wholesalers" you describe are like the squirrel on the wheel. They can spam all the ad pages and post all day long what they want, but wholesale deal sells itself and has people lined up for it, because there is a profit on it. If there is a struggle to peddle it then it means it's not a wholesale deal. Market is the best judge of whatever those guys do. If they have a property which has zero demand they will simply fail to benefit from it and eventually be forced out of business (unless they have endless time to keep doing what doesn't earn them a penny). And since wholesalers can't market property to public, they can only assign a contract to end buyer they must reach out directly, the laws on the books should simply be enforced. No need to pass hundreds of laws banning the same thing if no one will enforce them. Just enforce the laws that exist and don't allow for public marketing of property that doesn't belong to a wholesaler.

It's not a "good job" that sells the deal, whatever the definition of "good job" is. It's the NUMBERS that sell. Everyone out there knows an investor who wants to buy the property to flip or fix and rent. There are not enough of those properties at wholesale prices, so there is constant demand for the investment opportunities. That's not to say that there are no wholesale deals posted or available somewhere, it's just that the REAL ones don't stay on market for a day. When I was looking for fix and flip properties I recall seeing dozens of ads for properties with inflated ARV's and not desirable from investor's standpoint. On two occasions I found exactly what I wanted. I used to get text messages, alerts and emails all the time, and I reacted on these two almost as soon as they hit me with notification. And these were not ghost ads, you could see the property address, you could go on MD Landrec, search the title, find a deed and etc. But each time when I called and asked to see the property it was sold before I could get my hands on it. The others could stay on for long periods of time (and were available for purchase). Good deals sell quickly, people snatch them right away. The ones that you can't ever find a buyer are not wholesale deals. They are probably dilapidated houses in slow selling area with low ARV and high cost of repair that no investor in his right mind will buy. Of course, once in a while bad deals sell too, but they are not true wholesale deals is what I am trying to say.

 86 years old senile man should hire an attorney to assist him and not sign any papers on his own. There are social service orgs in MD that offer free legal advise to people in such matters if they can't afford to hire an attorney. Also, buying from a senile old man without an attorney can be a costly affair, simply because the contract signed by someone who lacks basic mental abilities is considered null and void in the eyes of law. That property could possibly go back to that man should state become aware and prosecute the case against new owner and everyone involved in the transaction. Heirs or relatives of senile man could bring a legal action of their own, on the grounds that the contract was void and null due to mental disabilities of the seller.

The second example you site also doesn't make much sense to me. First, the wholesaler can't advertise the property on craigslist. You can't sell or market a house as wholesaler, you have to find investors/potential buyers on your own and reach out to them directly, rather than making a public advertisement to get the leads. Latter is illegal. Second, why would wholesaler have to make such enormous efforts and struggle to find a buyer if the deal was a TRUE wholesale deal and not some junk property peddled for retail price? The biggest effort, IMHO, is involved in finding a property at the right price and in the right location. That's what is the most challenging part of the wholesaling, But once you have such property under the contract getting rid of it should not take much effort, unless (as I have repeatedly stated) it's a fake deal. Meaning, it's not a wholesale deal at all but a junk one tries to peddle for the full retail price. 

Quote from @Shane H.:

Quote from @Account Closed:

Quote from @Nate Marshall:

ment like an interstate compact regarding wholesaling. 

 Oh, please, I don't want to hear words "ethical" and "businessman" in one sentence. It is so hypocritical when someone unethical starts preaching ethics to the rest. Given the fact that people say "ethics" and usually mean "saint, loving and caring to all as Jesus of Nazareth was", the very idea of such "ethics" can't exist in the business environment. Businessmen are predators, they are jungle animals, and bigger the size of the business the more they act like predators. Anyone who is against predators should start from the very top, like Boeing Corp. who makes $*tty planes that keep falling off the skies lately, so CEO can earn tens of millions in bonuses for cutting the costs of production and delivering planes to airlines sooner than the engineers can properly test them for safety issues. That, by the way, is not merely "unethical" (no one would expect a business of such scale to be operated by Jesus-minded CEO), but it's criminal.

There is one thing and one line no one should cross in any business, IMHO: don't commit crimes! Don't murder seller to steal his house, don't get him sign a Deed and steal his house without paying him what you agreed to, don't assign non-existent contract to investor , take his money in cash and run away. There are a lot of DON'Ts in business, wholesaling is no different from the rest. But being like Jesus is not what any businessman must be. As a businessman you don't have to be liked, it's ok to be hated (and you will be hated, make no mistake about it. The more you succeed the more there will be people who will hate your guts for it and will wish to harm you to deprive you of the fruits of your work). So, being hated is perfectly fine with me. I will just mind my business and do exactly what I CAN DO in order to be profitable. Send all your AG's and tap my phones, computers, homes etc. if you wish, I couldn't care less about it. I have learned to be shrewd to survive in a pack of wolves.

 I’m so glad that I wasn’t taught to operate my business this way. My competitors are dishonest. I’ve had employees who encouraged me to be dishonest and were dismissed. They now work for my competitors. Those competitors are in fact larger than me. That’s okay. I steadily grow. I own up to my mistakes and cover them. Just had an employee make a $14,000 mistake. I covered it even though there was a clear option to cover it up. Never going to happen. Own up. Fix the mistake. Build long term customer relationships because of it. I get phone calls from customers literally in the lobby of the competitors businesses, because they can’t be trusted and they come to me. But go ahead and convince yourself that dishonesty is the only way to get ahead. That business that I started out with a $500 investment, after 2 companies in a row “downsized.” One wasn’t really downsizing. They got rid of 2 “problem employees,” I was one of them because I refused to bend to they lack of ethics. I became a direct competitor. They have meetings about how to deal with me as a competitor now. Lol simply by being ethical. I truly have no other competitive advantage. As a matter of fact, they have every other advantage, except maybe that my slow growth allows me a maintainable overhead compared to theirs.  

 You should be concrete with your allegations. "They" or "them being dishonest", them "lying, cheating, doing this and that" doesn't tell me anything at all. What exactly happened, who did what, and should I as a wholesaler be responsible for wrongdoings of other wholesalers?

In this business, unlike many other, things are simpler because it's about NUMBERS. NUMBERS matter in this game, not preaching ethics and producing smoke-screens to hide the true agenda.

And NUMBERS don't lie. Pick ANY off market property on the map. Look at comps in MLS, to see how much buyers paid in real world for similarly sized property in the past 6 month. There you will have your ARV. Next, deduct whatever % you think investor will want to make to be interested in acquiring this property. Let's say it's 30%. Then do estimate of the repairs. Hire a contractor if needed, to get exact cost estimates. Finally, deduct whatever you think you can squeeze in as your fee for finding this property. The final number will be your MAO, the maximum amount you can afford to pay seller to profit from the deal which will be attractive enough for an investor to buy. Armed with that information you can now make an offer to seller. Some suggest to start with 85% of MAO and go as high as 100% of MAO before you stop negotiations and tell seller to kick the dust or find a buyer on his own. It's all simple as that. I don't understand what all the "lying", "cheating" and nefarious doings are about. It seems likely that there are some stupid wholesalers who can't do a simple math, wont look up comps in MLS (all it takes a phone call to your RE agent), have no clue about the value of the property and then they try to peddle it to an investor for a retail price. Obviously, those guys will fail, but not because they are liars and cheaters, it's simply because they are inept and don't know what they are doing.

1. The problem is with "wholesalers" trying to find a good deal on MLS from REA. 85K on a listed property might be a good deal for the end buyer, but not something worth investing as a flipper. The "wholesaler" will struggle to get a buyer for that house. A good wholesaler in his right mind will look for deals HE would buy as an investor/flipper. Knocking 15K off retail price may not do it. It all depends on ARV, cost of repair, and profit margins for investors. Such a "wholesaler" should be weeded out of the marketplace by failing miserably in what he is doing.

2. I know a lot of industries where abusive calls are commonplace. In fact, I receive a ton of spam calls almost daily but can't recall one from a wholesaler. As noted earlier, calling someone on the DO NOT CALL list is illegal. Anyone who does that, not just a wholesaler, should be dealt with by gov which is obliged to enforce the laws on the books.

3. They are not wholesalers. They are scammers. 

4. When I talk to the seller all I care about is making an offer that makes sense for me to move the inventory. The seller either accepts it or goes on his merry way. I am not obliged to educate or explain anything. Here is your house, and here I am, I think I can get you paid X dollars for that dilapidated junk you are living in. Either take it or leave it, period. I don't have to beg, lie or make up stories. I am not the one trying to get rid of the property, the seller is!

5. Wholesaler can lie all he wants.  If I am an investor buying from him he won't be able to fool me. No one will. I will have my comps, cost of repairs, and market forecasts ready in my hand before I pull the trigger. If a lying wholesaler can fool me then maybe I shouldn't be investing in RE and find some other endeavor where I have a better clue of what I am doing. 

6. I disagree. I don't think we should ban all wholesalers just because some are scammers, criminals, and idiots. market will weed out idiots, and criminals who break the law should be prosecuted by gov. The rest should continue doing business as usual, realtors, wholesalers, flippers, lenders and etc. 

Quote from @Nate Marshall:

ment like an interstate compact regarding wholesaling. 

 Oh, please, I don't want to hear words "ethical" and "businessman" in one sentence. It is so hypocritical when someone unethical starts preaching ethics to the rest. Given the fact that people say "ethics" and usually mean "saint, loving and caring to all as Jesus of Nazareth was", the very idea of such "ethics" can't exist in the business environment. Businessmen are predators, they are jungle animals, and bigger the size of the business the more they act like predators. Anyone who is against predators should start from the very top, like Boeing Corp. who makes $*tty planes that keep falling off the skies lately, so CEO can earn tens of millions in bonuses for cutting the costs of production and delivering planes to airlines sooner than the engineers can properly test them for safety issues. That, by the way, is not merely "unethical" (no one would expect a business of such scale to be operated by Jesus-minded CEO), but it's criminal.

There is one thing and one line no one should cross in any business, IMHO: don't commit crimes! Don't murder seller to steal his house, don't get him sign a Deed and steal his house without paying him what you agreed to, don't assign non-existent contract to investor , take his money in cash and run away. There are a lot of DON'Ts in business, wholesaling is no different from the rest. But being like Jesus is not what any businessman must be. As a businessman you don't have to be liked, it's ok to be hated (and you will be hated, make no mistake about it. The more you succeed the more there will be people who will hate your guts for it and will wish to harm you to deprive you of the fruits of your work). So, being hated is perfectly fine with me. I will just mind my business and do exactly what I CAN DO in order to be profitable. Send all your AG's and tap my phones, computers, homes etc. if you wish, I couldn't care less about it. I have learned to be shrewd to survive in a pack of wolves.

First of all there is a new law in the books in state of MD, which takes effect on October 1, 2024, and mandates wholesaler to disclose in the contract that they are wholesalers and will benefit from the assignment of the contract. So, this point is effectively moot. As to your other points, why is it any of your concern how much money wholesaler puts in EMD if seller is happy to get what he is offered? Do you work for CFPB? I will offer $20 to seller in EMD, he can either take it or be stuck with his property. He is free to go find his own buyers and get the most money out of the deal. Who is to say what I have to pay in EMD if sellers agrees to take what I offer?

I have read this forum extensively, ever since I have registered 6 years ago. Here is what my understanding is: almost everyone (not all, though) who persistently badmouths wholesalers doesn't give rats behind about sellers per se, but they are all realtors or brokers. These are people who feel pain in you know where when they see wholesaler walking off with $10K is assigning fee. They feel jealous, angry and motivated to destroy wholesaler, so (as they think) all the assigning fee can sink in their pockets. This is so simple. Knowing people and human nature you find out by the time you reach my age that there is no such a thing as predators caring for sellers. Money is the only factor that moves them and they will lobby the state to pass regulations and laws which will forcefully redistribute share of the pie in their favor. So, there is no moral argument, it's all smoke screen there. Therefore the question I asked earlier remained unanswered.





So, what do you suggest to do with those "buyers" (who are in fact middle-men, the actual buyer is the bank), when their financing falls through and they don't get final approval from underwriters to "help sellers" get rid of the property? May be we should fine and put in jail retail "buyers" when they can't get an actual buyer (a mortgage/bank) to pay for their home and secure a deed of trust with the county government? Or may be we should jail and fine mortgage loan officers who issued pre-approvals and then approved the deal/contract with buyer before underwriters went over every dot and T in all the documents submitted buy seller and retail buyer? Answer this, please. I am curious if you are for applying the same standard for all, or if you have a beef with wholesalers only.