WHY THE HELL WHOLESALE?

Question

Hey BP, the other day I was listening to the bp podcast feat. Michael Quarles and he said something that really struck me. Something along the lines of," after giving my usual offer (low-ball offer that all wholesalers give), 80% of the time I'm told f you, no!".I thought to myself in curiosity, Why? It must be that people want to milk as much money as possible from their property and an offer 30-20% below market value will not make the cut. With that said, why don't wholesalers become brokers and sell 80% of their leads on the MLS and the other 20% of their more motivated leads for cash (the traditional wholesaling way) as a secondary service? This way, absolutely no one they come in contact that is genuinely interested in selling their property will slip through the cracks. Am I missing something?? Or am I enlightening a new dynamic in wholesaling??

LET ME KNOW, BEN

Dedrick Williams · Answer

I believe the key to wholesaling is using it as a tool to do something greater. Just don’t stay being a wholesaler because it’s not sustainable in the long run.

Use it as a way get properties you will keep for cash flow just like agents use there commission as a down payment on a property. Use it to save cash to put into a bigger more lucrative deal. Use it to pay for your RE license and create another source of income. Yes it is a way to get into REI when you have nothing but be smart about it.

Wholesaling is not as easy as people think it is especially when you are doing it alone. It’s a lot harder then been a agent which Is why I don’t understand RE agents giving wholesalers a hard time.
Yes wholesalers make a lot more on commissions then agents but it’s well deserved when you look at everything it takes to get from a motivated seller to a end buyer closing.

And yes there are bad apples in wholesaling that are unethical and take advantage of sellers but there are some of the same type of people that are agents and in any other profession.

Most of the people that fail with wholesaling don’t use it for anything I said above. It’s a high paying 1099 job. It’s quick cash so they spend it as such and never creating a foundation for there future.

Marc Winter · Answer

Some of the best deals I've ever gotten have been because I was a strong listing agent and often first on the scene.  Always disclose that they might get more on the open market, but that is not a sure bet.  Go in with no contingencies, all cash, close at their convenience.  Win-win for a motivated seller who wants to sell NOW.

Joseph Cacciapaglia · Answer

I have had this conversation with a lot of wholesalers. I think that if you have the hustle and marketing budget necessary to succeed at wholesaling, you could probably dominate as an agent. I think a lot of wholesalers don't like the idea of having to service clients. Even if that's the case, they could at least refer out the deals they can't make, and get a portion of the fee. There are only 3 reasons I can think of to not just get a license:

1. You're terrible at learning and/or taking tests. The licensing tests in the 3 states I've been licensed were all very easy, but I know that it can still be a struggle for some people. I think test anxiety is a legitimate reason that some people don't go ahead and get a license.

2. They can't pass the background check necessary for licensing. I think this is a real hurdle for some people, and may explain why wholesaling tends to attract some shady characters (Please don't misread that. I'm not saying all wholesalers are shady. Some are great.).

3. They don't want to disclose the real market price or the fact that they're an agent to prospective sellers. I think if you're willing to be honest and upfront with sellers, this shouldn't be a problem. However, I know this is an issue for some.

I think this time/expense of getting a license is negligible compared to the time it takes to learn your market and the expense of marketing. I know those are the most common reasons I hear, but they're just not believable to me. I'm sure there may be other legitimate reasons to not get a license, and I just haven't heard them yet.

Travis Steinemann · Answer

Just my two cents, since I am just starting a wholesale business.

I am doing it because I have higher ambitions. Wholesaling is a way to get paid to set up systems to generate consistent off market leads. Once you have the machine humming and the leads consistently coming in, you can cherry pick the best opportunities and flip them yourself, or hold on to them as rentals.

After this intermediate stage while you are starting to work on your portfolio and have someone else doing the grunt work using your wholesaling systems, you now have track record. Then, you can get into partnerships and buy the best deals with other people's money, and get 50% of the deal with none of your money invested. You can scale.

But it all starts and comes back to deal flow. Without that, you have nothing.

Jay Hinrichs · Answer

there is absolutly no question in my mind if you take the same amount of money you WILL need to spend on marketing to get wholesale deals and spent it on building your real estate brand that over time the real estate career would do better by far for 95% of the folks out there.

Now to do both successfully you have to have some sales chops or you need strong ties to a community

Jay Hinrichs · Answer

No kidding you simply put on your contract i am buying for PROFIT or LOSS  my attorney taught me that on in 1975 it works like a charm.

if they dont want to take your price you simply list it and make money there.. not just walk away with yet another lead you spent money to get that turned into dust.

Dedrick Williams · Answer

Best put elsewhere like what?

Dedrick Williams · Answer

You make a very good point. That is something to strive for once you do a few wholesale deals and reinvest into yourself if you don't have the resources to go that route from the beginning.

WHY THE HELL WHOLESALE?

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