Before I get started, let me say I have nothing against wholesalers.
I think many wholesalers do a great job and provide an awesome service to many investors. I also have dealt with wholesalers as a listing agent who drove me crazy and made me understand why many agents don’t want to deal with them.
How to Invest in Real Estate While Working a Full-Time Job
Many investors think that they need to quit their job to get started in real estate. Not true! Many investors successfully build large portfolios over the years while enjoying the stability of their full-time job. If that’s something you are interested in, then this investor’s story of how he built a real estate business while keeping his 9-5 might be helpful.
As A Real Estate Agent I Want To Do Whats Best For My Seller
Most wholesalers are looking to get a great deal so they can pass it on to a buyer and make a buck in the process.
As a real estate agent who lists homes, my job is to get the most money I can for my seller. As you can see, the two sides don’t mesh very well with each other. If I sell a house to a wholesaler, who is then able to sell the house to someone else for more money, I didn’t do my job very well.
Most real estate agents are trying to do what is best for their clients and selling to a wholesaler usually contradicts their mindset that they are getting the most money they can for the seller.
I know wholesalers have their formulas and need to get great deals in order to leave some meat on the bone for themselves. I think wholesalers need to realize it is very hard to wholesale off of the MLS because of the real estate agents mindset. I can guarantee the real estate agent doesn’t give a damn about the 70% rule and why a wholesaler needs to buy the house so cheap.
Real Estate Agents Don’t Like Getting Low Ball Offers Over And Over
I list many REOs and fair market listings as well.
On my REOs I always get an offer from one buyer that is 50% or lower of list price. Even on my HUD homes that I can’t even submit offers on (they go through hudhomestore.com) I get the same low ball offers every time.
I stopped taking this agent and their buyer seriously a long time ago since they can’t even take the time to check the MLS comments to see if the home is a HUD home or not. Here is more great information on HUD.
I can understand wholesalers or investors offering low on aged assets. I can understand offers 20 percent or even 30 percent less than asking price, but 50% two days after a home is listed, on every single listing?
Wholesalers Cancel Contracts A Lot
In my experience and having been on the Bigger Pockets forums a lot.
I know wholesalers will cancel contracts a lot. A wholesaler may underestimate repairs, over estimate value, or not be able to find a buyer. While the wholesaler is running around trying to make a deal work, the owner of the home and the real estate agent are losing valuable marketing time. Ultimately the wholesaler cancels their contract and the seller has to start all over again marketing the home.
I would also add that when I have a home go under contract and then come back on the market, I almost always get less money in the end.I think buyers see a contract fall through, they assume there was a problem with the house and there must be something wrong with it.
When a house first comes on the market is when the most excitement is generated and buyers are waiting for new listings. Many times houses that come back on the market are not greeted with that excitement or are missed completely.
Not only does a wholesaler waste time when they get a house under contract and then decide to cancel, but they cost the seller money as well.
Not All Wholesalers Know What They Are Doing
To be a wholesaler there is no licensing requirement and many wholesalers don’t know the laws.
Some wholesalers try to act as a real estate agent by bringing buyers and sellers together without having any interest in a property. Some wholesalers may pretend to be cash buyers by getting a fake proof of funds letter on the internet.
Some wholesalers may try to do a double closing without disclosing to the seller what they are doing. A double closing may be perfectly legal, but it will still rub the real estate agent the wrong way if he doesn’t know it was happening and the seller isn’t being funded until a third party buys the house from the wholesaler.
How dumb does that agent look to his seller if the seller finds out all this was happening at the last minute and they weren’t informed of it?
Don’t Be Mad At Real Estate Agents Because They Don’t Like Wholesalers
Many agents have probably dealt with wholesalers who had no clue what they were doing or cost that agent a sale in some way.
Don’t be mad at the real estate agent, be mad at the previous wholesaler who ruined it by being shady. If you want o be a wholesaler who uses the MLS, you are going to have a tough time of it, because the agents job is to get the most money for his seller’s, not leave room for two more parties to profit.
In my opinion the wholesalers greatest value is finding off market properties that aren’t in MLS. That is a real skill that should be rewarded handsomely.
Have any of you agents out there dealt with a wholesaler?
What was your experience?
Be sure to leave your comments below!