All Forum Posts by: Shane H.

Wholesalers who are able to close on their properties before reselling will have the advantage. I am working with a lender who is offering 100% financing to wholesalers who want to close on their deals and then resell. I think that is what the future of wholesaling will be and a lot of the bad apples will be out of the game. Which I dont think anyone will be terribly upset about. 

At the end of the day I see no De Facto difference (set the legalize aside) transaction wise between the guy who "buys" house on retail market and takes a mortgage on it to finance his purchase, and a wholesaler who depends on a third party to pay cash for the purchase. Both lack CASH when they come to table. The retail buyer obviously can own the property in the end if he pays off the balance, wholesaler has nothing to do with it once he assigns the contract, but we are talking about transaction, everything that occurs before CLOSING. NEITHER retail buyer nor the wholesaler have the actual CASH to buy the home, as mentioned before. However, BOTH come to seller and say "I will have you paid in full for this property", both sign their contracts and both seek an actual BUYER: an investor, if you are a wholesaler, or a mortgage/bank if you are a retail buyer. Hundreds of retail contracts fail, especially in current market, where underwriters go beyond Dodd Frank and deny loans at the last moment (those are underwriters who work for the same bank that issued initial pre-approval to sign a contract). So, where is your concern for sellers in those cases? Who will make them whole? Once mortgage is denied seller is left high and dry, 30 days and sometimes 6 months into the contract (sometimes even longer, in cases where seller is a builder who built the whole $700K mansion for you, in firm belief that your bank will come through and finance the entire purchase at the end). 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. 

I believe most of the animosity and hatred towards wholesalers has nothing to do with their bad practices. After all, if criminal behavior is the culprit then why not advocate for prosecution of criminals? There are plenty of criminals out there, in all walks of life, from handymen, plumbers to street thugs, realtors and brokers. Why sole obsession with the wholesalers?

Or why not propose fingerprinting wholesalers and running them through FBI NICS and registering them, like they do with all gun purchases in MD? But no, this would still leave competition in place and some folks just can't stand the competition. Free market is good when some chosen/special folk benefit from it. But if average Joe Six-packs benefits from it then that must be outlawed, all pies must belong to top dogs. Ok, at least we understand the motivation))

Quote from @Jay Hinrichs:

Quote from @Account Closed:

Quote from @Jay Hinrichs:

Quote from @Account Closed:

I believe most of the animosity and hatred towards wholesalers has nothing to do with their bad practices. After all, if criminal behavior is the culprit then why not advocate for prosecution of criminals? There are plenty of criminals out there, in all walks of life, from handymen, plumbers to street thugs, realtors and brokers. Why sole obsession with the wholesalers?

Or why not propose fingerprinting wholesalers and running them through FBI NICS and registering them, like they do with all gun purchases in MD? But no, this would still leave competition in place and some folks just can't stand the competition. Free market is good when some chosen/special folk benefit from it. But if average Joe Six-packs benefits from it then that must be outlawed, all pies must belong to top dogs. Ok, at least we understand the motivation))

when the GFC happened and Dodd Frank came in and all Mortgage Brokers now had to take the Federal test and be registered with NMLS  criminal and finger prints are required along with a personal financial statement.  this led MANY to fall out of the business.. So its not uncommon to have further regulations to ensure that the public is protected from bad actors.. We all know what basically caused the GFC it was rampant abuse of lending ..

Dodd-Frank and Mortgage Brokers are a whole different ballgame. In no way wholesalers contributed to GFC. Are they contributing to GFC now? Btw, we all remember who were the biggest culprits in GFC, they were the ones that Eric Holder said were too big to prosecute. How convenient would it be to go after wholesalers now, with another market correction appearing on the horizon))

https://theintercept.com/2016/07/12/eric-holders-longtime-excuse-for-not-prosecuting-banks-just-crashed-and-burned/

ERic in your continued effort to paint wholesalers in a great light U completely missed my point.. My point is there are certain licenses that do require background  finger print financials etc etc..

 Jay, let's be very clear about it. At no point did I paint wholesalers in great light. Wholesalers are a group, like any other group of people. With no entry barriers, it probably has greater mix of bad apple than some other, tightly regulated professions. I always say if anyone doesn't like wholesalers then they shouldn't deal with them. And if wholesalers commit a crime let AG's prosecute them, as they should. 

As to background and fingerprints, I have no objections at all. As I suggested on several occasions, State could regulate wholesalers the way it regulates gun owners. Get them fingerprinted, run through FBI NICS database and register them after a mandatory 4 hour course that would touch the basics of DO and DO NOT's. That would be fine. But forcing wholesalers to get RE license and then wait 3 years to get Broker's (in MD you must have 3 years of RE experience under your belt before you can apply to be a Broker) to start wholesaling, then force wholesaler to have some sort of fiduciary duty towards a seller of dilapidated , unmarketable property or towards an end buyer/investor who is in business to get a cheap property to rehab and profit, that would just kill the wholesaling as a venue for a business. And the first to quit would be the ones with brains and skills. Why should I jump through millions of hoops, to end up brokering with 3% cap on some trashy house that is priced at 50% or below its After Repair Value? Licensed RE agents don't touch those properties due to little return on the effort they can spend quickly retailing on demand, more expensive properties. Why do you think any individual in his right mind will bother to deal with it, if it becomes heavily regulated industry , like RE agents and brokers are? 

 Doesn't ANYONE out there (speaking of end buyers) sign a contract on property, in hopes that financing will come trough and pay for it? There is a lot said about wholesalers not coming through on closed deals, but how many times buyers go under contract and fail to buy RE simply because the bank underwriters deny the loan the last minute? Every time I go to check on new houses that builds put up I always get offered a "special deal" with large discount. I am told by a realtor that this and that deal fell through, buyer was under contract with builder, builder built the home and at the last moment underwriters at the bank denied the mortgage. Now I can get builder build what I want from the scratch or buy this ready to move home, with a discount on it. 

Do you realize that with the exception of few cash investors with piles of money in bank accounts, almost every other buyer relies on a lender/bank to finance the purchase of real estate? Do you realize that de facto buyers of all financed properties are mortgage companies/banks that finance them and get the Deeds of Trust? What should we do now? Outlaw all home purchases, except for those who have a cash to close? "Buyer, bring a cash to table and close the deal in 30 days or we will put you in jail"? What will that do to real estate industry?

Some people are so unreasonable, it's hard to believe that they believe in what they are advocating for. 

 I totally agree. Free society doesn't mean lawless bandit society. I took wills, trusts and estates class in the college and remember that if you sign something under duress or are mentally incapable of consenting to the terms of the agreement you sign, then that agreement or will is null and void in the eyes of the law. May be we should have non-profits or pro-bono attorneys representing mentally challenged and elderly individuals who were unfairly and unlawfully taken advantage of. And state's AG's should concurrently prosecute those cases in criminal courts. We do need law and order, not just in wholesaling but in ALL things we do as individuals in a society. 

Colorado will be next. 46-19 democrats to republicans. They just passed some extreme anti landlord laws. They are gearing up for some extreme anti wholesaling laws if they still have a 2-1 majority in 2025. 

@Jay Hinrichs You make an excellent point about simply charging a commission that reflects the work required by the deal. It's a good area for former wholesalers or brokers in certain markets to carve a niche in. "We Sell Ugly Houses." The last deal we received from a wholesaler that wholesaler made the equivalent of a 25% commission by contracting the property 60% under market and assigning the deal to us 40% under market. WHolesaler would have done better selling for 25% commission and listing 5-10% below market value. 

The South Carolina law does not seem to put an end to wholesaling. The text says: 4) "Wholesaling" means having a contractual interest in purchasing residential real estate from a property owner, then marketing the property for sale to a different buyer prior to taking legal ownership of the property. Advertising or marketing real estate owned by another individual or entity with the expectation of compensation falls under the definition of "broker" and requires licensure. "Wholesaling" does not refer to the assigning or offering to assign a contractual right to purchase residential real estate.

Confusing. So is the problem the marketing of the property while owned by another? But you could technically market just your contractual interest? The wholesaler can certainly close on the property and list it FSBO the very same day. It will be interesting to see if the Commission imposes these light but annoying administrative penalties fairly.

@Alan Asriants there is a ton of nuance to these situations, but I am personally done with wholesalers who require me to tell an owner that I am their "business partner."

Transparency is best for all those acting in good faith.