Guys, I must share this story. I had a very unfortunate encounter with an up-and-coming real estate investor in my area. Every time I tied up a property with this guy, without fail, he would back out of the deal.
Every single time!
Now, I’m not for sure if he’s a wholesaler trying to tie down a deal with his buyers and the buyers are backing out or what, but this has been the third time he has entered into a purchase agreement with me and backed out.
I have a rule — three strikes then you’re out!
It’s nothing against him. I really like him, and I want to move forward with working with him, but when it comes to my business, I just can’t give precedence to someone who constantly backs out of properties over others.
Guys, what’s really frustrating is that I actually turned two other buyers away in order to work with this guy! That ended up putting me in bad light because I had to go back to these buyers and ask if they were still interested since he backed out.
It’s frustrating because not only does it makes me look bad, it also creates a lot of drama and unprofessionalism because now my other buyers are skeptical of the property, and it makes them wonder why the previous buyer backed out.
I’m not going to name drop because I want to be respectful in honoring this company, but I want to use them as an example to bring a point home in today’s post.
Let’s jump into it!
How to Purchase Real Estate With No (or Low) Money!
One of the biggest struggles that many new investors have is in coming up with the money to purchase their first real estate properties. Well, BiggerPockets can help with that too. The Book on Investing in Real Estate with No (and Low) Money Down can give you the tools you need to get started in real estate, even if you don’t have tons of cash lying around.
Why Ethics Matter as a Real Estate Wholesaler
Guys, I don’t want you to experience the encounter I had with this guy. That’s why we must understand the importance of being people of integrity and having ethics in real estate.
Trust me, it matters!
When people hear the word “wholesaler,” the vast majority of people get a bad taste in their mouth because they know wholesalers have a poor reputation of being unreliable.
They know wholesalers are looking for a quick buck, looking to rip people off and tie up a bunch of properties and back out. They know wholesalers are making huge margins, not leaving any meat on the bone for their end buyers.
Does this sound familiar?
It’s those types of wholesalers who ruin the reputation for everyone!
Why Trust Matters
As an investor, it’s super important that you establish trust.
With the rise of the internet these days and the empowerment of the consumer, you need to provide people with a means to something called “permission marketing.”
Technically, everyone is in the marketing business, so I would highly recommend reading a book called Permission Marketing: Turning Strangers into Friends and Friends into Customers by Seth Godin. This book goes in depth on how traditional marketing and advertising has become less effective due to the loads of information shoved into people’s face every day. Permission marketing encourages you to create reasons for people approach you about your business instead. Check it out!
When you’re a business owner, the more people who trust your brand and think of you as legitimate, the better you’ll be.
For example, there are buyers on my buyer’s list who automatically receive special treatment compared to everyone else because we have history and we’ve established trust.
And vice versa.
There are people who I can call right now, who would drop everything they have on a dime and do a favor for me.
Don’t you think it would be the same for you?
I’ve had so many opportunities come my way simply because I have established a relationship and trust with people, and I won’t do anything to violate that trust.
Backing Out Hurts Your Reputation
I really want to speak to this because if you’re a wholesaler and your primary strategy is assigning contracts, that’s great — but if you can do it ethically and morally, that’s even better!
It would have to be a BIG move for me to ever work with the investor I mentioned again, and I’ve said this before in past posts, but I have intentionally lost money on deals simply to maintain my word and good standing.
To me, losing $2,000 is far less important than losing a relationship with another investor who is going to bring me in more money in the long run.
If you create a business model where you assign contracts and back out of deals like it’s nobody’s business, then the big players in your market will not take you seriously.
They don’t mess around, and if you want to work with the big players, you can’t be flaky!
If you get blacklisted and your reputation diminishes, get ready to find a new career because that’s the number one deal breaker in your business.
You don’t want that!
Real Estate Wholesalers Need to Change
Guys, we’re looking to build a legacy in our business.
We’re striving to make a difference in this industry, and we have to rise up and stop being bottom feeders operating with a scarcity mindset.
As a wholesaler, your goal is not to make as much money as possible by exploiting people!
If you operate with that mindset, people are going to realize very quickly that you’re a shady person and won’t do business with you anymore.
There’s this concept where if you have several boats in the ocean and the tide rises, then every boat rises along with the tide.
You have to realize there are plenty of opportunities for everyone to make money as wholesalers.
It starts with treating people right, and if we do that, our business will boom.
So with that, I hope this post has encouraged you guys today!
Whether you’re assigning contracts, flipping houses, or whatever your investment strategy may be, put ethics at the top of your business model and watch your business flourish.
Have you ever worked with wholesalers (or other types of investors) and been sorely disappointed by their lack of morals?
Let me know your experiences with a comment!