Wholesaler's and Due Diligence and Transparency

[Patrick Scifres]

I have a new client who found a property here in Memphis, TN that he was interested in maybe purchasing.  The property was on Zillow and was listed for sale by a wholesaler.  Now before you jump to conclusions and think I'm about to bash wholesaling, I'm not.  I think there is a place for wholesaling in the RE business.  The company I work for has many wholesaling connections and has done a lot of deals with wholesaler's.  Wholesalers and agents need each other, because what you find on "Zillow" may not always be correct.

I have several issues I would like to address.

First,  I reached out to the company yesterday, and heard nothing back.  The company get's in touch with client today.  My client clearly states that he has signed an exclusive buyers agreement with me and gives them my name.  Without hesitation they ask him to sign a contract and send it back to them.  The first thing that should have been done was for the company to call me.  I understand that all agents don't understand wholesaling and some may frown upon it, but give it shot.  Call the agent tell them about the property and be as transparent as possible without giving up all the details of the negotiation.  A great partnership may just happen.

Second, the company states to my client that there are no back taxes on the property, which there clearly are back taxes.  I had already discussed this with the client.  Over $3,200 worth of back taxes.  Memphis and Shelby County tax records are online, easily accessible to everyone on the planet.  Or do it the old fashion way and pick up the telephone.  The company explains that the local title company said there were no back taxes, obviously not a true statement.

My client did not sign the contract and immediately called me.  I advised him not to sign the contract and I would call again.  I called and spoke with a gentleman who told me also, there were no back taxes, and explained the title company said there were no taxes.  I told him he might need to check again.  The company has more properties in Memphis that are being sent to me to view.

If your in the RE business, in any role, as an agent, wholesaler, investor, please do your due diligence on your deals.  When you give false or misleading information it makes people lose trust.

[Michael Mcghee]

Hi Patrick,

I am not here to defend wholesalers as I am one and I have a large portfolio of my own properties. I wholesale, buy, flip, rent, retail sales and many other things involving real estate. I have a couple of questions concerning your post. How did the company get in touch with your client? Did the client reach out to them first? Another thing the company put the property on Craigslist and not the mls, which leads me to believe the company wanted to see if they can sell it without paying a commission maybe. The issue with the back taxes should not be an issue at all. Why was there even a discussion about back taxes when clearly if they went with the transaction taxes would be paid and prorated unless a quit claim was discussed. Like I said earlier I am a wholesaler and I have never posted a house on Craigslist or Zillow, why? Because with my few repeat buyers I deal with, if it don't sell to one of them for an agreed upon price we both can live with then I must not have a deal. I will not beat a deal over and over. That brings me up to another point, I was once a mortgage broker and I cant begin to tell you how many deals I lost or came close to losing when the customers went looking at spec homes in a new construction community. In your defense the wholesaler should have called you back and at least let you know their intentions about the price and if you wanted a commission and work that out however you guys seem fit. Also one problem is that your buyer had already engaged the seller which is an issue because if he seemed eager to them prior to your call, why would they need you. Your buyer should have been more consistent from the beginning and called you before contacting them period.

Please excuse the lengthy reply, I normally just sit on the sidelines.