Should I buy from wholesaler or negotiate an MLS for a BRRRR?

[John G.]

Hello fellow BP'ers,

I'm looking to do my first BRRRR (in Atlanta) and am wondering what the pro's and con's are of picking up a SFR from a wholesaler vs a RE agent? I have gotten in contact with an agent in the city, and hope to negotiate a good retail deal. But am starting to wonder that a similar property could be cheaper through a wholesaler.

1. Help. I just don't know.
2. Generally speaking, how do wholesalers prices compare with "motivated" sellers on the the MLS?
3. When wholesalers pickup properties at a discount, do they mark it up to near retail pricing?
4. Are wholesale prices typically negotiable?
5. Do wholesalers do any due diligence with regard to the properties they offer? (Title issues, liens, inspections, etc).
6. Or do they just get the property under contract with zero contingencies then look for a buyer?

Thanks!

[Wilson Lee]

1. PANIC! (just kidding)

2. Motivated sellers are not on the MLS, the are too busy trying to cope with whatever crises they have in their life.

3. A wholesaler I know buys at foreclosure auctions in cash. Then mark up $15k exactly.  None cash buyers don't have access to foreclosures deals.  For the low cost of 15k, he provides that access.

4. Depends, you can always try.  The wholesaler may just have a contract to purchase.  You would have to ask him to negotiate with the owner.  If the wholesaler has title it is easier. 

5. Who cares if they do.  We have to still do our own. It is better if they don't pay for any due diligence as they will pass that expense to you.  And you may not trust what they paid for.  Make sure there is language in the contract for due diligence.  Make sure the wholesaler is not paid a dime until closing.

6. If the contract has zero contingencies,  Do all the diligence that is free.  Then, if it still looks good, Ask that they amend the contract to include contingencies for the diligence that comes out of your pocket.

Will you get a better deal finding your own? Sure.  Will it cost you to set up a marketing funnel and spend a cash up front? you bet!   When you buy form a wholesaler, you are buying their ability to acquire properties that you could not.

happy deal hunting!