Wholesalers Getting a Bad Rep

[Andy Cross]

Ok...so...I'm a little beside myself. But I've got to get this off my chest.

I'm seeing more and more posts about bad wholesalers. And all of the posts have various stories about how people are being jilted by bad wholesalers. I get it, there are bad wholesalers out there. But those of us that are good...or are trying to be good (and land that first deal) are now judged because of what sellers have read on social media. That angers me a little bit. 

In my opinion, you cannot and I repeat, you cannot judge a book by its cover. I never solicit cash buyers...for the simple fact that there are some that will go to any length to destroy what is a legit business; because of pre-judgments and "protecting their commissions."

If there are any other wholesalers (or anyone else for that matter) out there that reads this, your thoughts? I need to get a thorough understanding of investors feelings on this topic.

.....aaaaand....GO!

[Richard C.]

Explain completely and honestly to the seller what you are doing, avoid any actions that constitute unlicensed brokerage, and actually learn something about real estate, and no one will have any problem with you.

Not even me, and I am as "anti-wholesaler" as it gets on this site.

Is it possible to be completely honest with sellers about what you are doing?  It absolutely is.  Will it cost you some deals?  Absolutely.  But if you have to lie to get deals, you really aren't bringing much in the way of knowledge or skill to the transaction anyway.

Is it possible to avoid any actions that constitute unlicensed brokerage?  This one is harder.  Yes, it is, but the vast, overwhelming majority of wholesalers do not or can not.  For example, if what you have to sell is a house, you are brokering without a license.  If what you have to sell is a contract, then what you can show prospective buyers is...wait for it...a contract.  If you are showing buyers through a home, you're brokering.

Is it possible to learn real estate.  Yes, but not by looking for sources that will teach you wholesaling.  Go take a real estate licensing class.

Now as to your statements in your post.  You don't solicit cash buyers?  Huh?  Then how do you make money?  Of course you solicit cash buyers.  And that is actually one of the few things wholesalers do that I have no problem with.  That is just a bizarre statement.

Will some "go to any lengths to destroy what is a legitimate business?"  No.  I have said on other threads, I am going to report any and all wholesalers to my state REC.  But if they are in fact engaged in a legitimate business, that will not destroy them at all.  The REC will look at my report, shrug their shoulders, and say, "That's a legitimate business."  Coming to the attention of the REC should not concern you unless you are in fact NOT running a legitimate business.

As far as the "protecting commissions" nonsense:  I am not an agent.  I have never made a commission on a real estate sale.  Ever.  So get over the idea that the only reason people might find wholesaling as most do it objectionable is that their personal incomes are threatened.  You don't have to be a banker to think that payday lenders are sleazy, or a paving contractor to think that Travelers preying on elderly people with paving scams are sleazy.  And make no mistake, wholesaling as it is taught by the gurus and pursued by all too many on here is bottom feeding, the equivalent of payday loans.

There are good wholesalers.  You can recognize them because they ADD value.  If you are not ADDING value, then any money you receive is value you have unjustly taken from someone else.  So wholesalers sending thousands of pieces of direct mail a month, and running real businesses finding leads of people willing to sell who hadn't actually listed yet?  No problem.  Those people are adding value, ease for the seller and inventory for buyers, and so they are entitled to get some of that value back as compensation.  You just find some old lady who doesn't know any better?  You let her think she cannot sell with a Realtor because her house needs repairs?  You tie her house up, with no ability or intention to buy it yourself if you cannot find a buyer?  Then you are not ADDING value, and whatever money you make was stolen from that old lady.

So there is the bottom line.  Be open and honest about what you do.  Don't broker without a license.  Learn enough (and frankly, spend enough) that you are adding value rather than stealing it.  Do those things, and you're golden.

Now, let me ask a question in return.  Why not just get a license?  Seriously.  No wannabe wholesaler has ever had a credible answer to that question.  So why?