Buying from Wholesalers

[Thomas Weidner]

I have potentially found a property that the numbers work well. It is a wholesaled property. If you are buying from a wholesaler what is your due diligence phase before you write a big check to a wholesaler? Would you do a title check on your own?

[John Thedford]

Why would you want to deal with people that skirt laws? Most of them are operating illegally. Here is what I warn people about before they deal with these types:

BEFORE you deal with any unlicensed broker consider these ideas:

1. Always require WRITTEN comps that can be substantiated

2. Always require WRITTEN bids from LICENSED contractors

3, Always require WRITTEN comps to substantiate ARV

4. NEVER pay a non-refundable fee

5. Always correspond via email so there is written record to bring suit in the event of misrepresentation.

Remember, these are middlemen trying to play RE agent without a license. Make sure they provide GOOD comps. Make sure if they are representing an ARV value make them provide ARV comps. If they make claims about rehab costs, make them provide WRITTEN bids from contractors. They are brokering real estate so make them PROVIDE good quality information like you could get from a licensed broker. Many of these unlicensed brokers simply make up figures that sound good but cannot back them up.

Unlicensed brokers generally have no insurance. From personal experience most just pull their ARV out of thin air. Lets see: claim it costs x and it will sell for y. If someone uses an agent, an agent won't provide or should NOT provide the BS an unlicensed broker does. They should not or do not provide rehab figures (to protect themselves). They should tell a prospective buyer to get their own bids. They can provide comps in some situations on an updated unit vs an original unit. Agents have something to lose, can be fined, and have their license suspended or revoked. Unlicensed brokers, acting as fringe operators skirting the laws have nothing to lose. They are acting as an agent without the laws, ethics requirements, education, and insurance that are vital IMO.

Ask yourself this: if a property is REALLY worth 100K WHY would they sell it for 70? Not because they like you....more than likely it isn't worth what they CLAIM it is. I always encourage anyone giving away 30K to call me first. I need the income:)