Wholesale problems today

[Justin Badillo]

What’s the biggest issues with wholesaling in today’s market and how do you suppose it could be fixed?

[Ian Walsh]

There aren't problems.  There are adjusting conditions and markets, but not problems.

[Jonathan Greene]

The problem isn't with wholesaling, it's with wholesalers. The problem is always people. It has a murky reputation because of the people. If all wholesale deals were transparent, it would be a lot easier. There are too many new investors looking to wholesale as a way to build up money, but because they want to make money quick, they put high spreads in when they aren't warranted and go way too high on ARV and way too low on repairs. I also think wholesalers' biggest mistake is sending every deal to everyone. They should be focused on a core group of maybe 5 solid investors and they don't need more than that to close all deals. Maybe they get a little less on each one, but they go smooth and they know it will close (and so does the seller).

[Jay Hinrichs]

Originally posted by @Jonathan Greene:

The problem isn't with wholesaling, it's with wholesalers. The problem is always people. It has a murky reputation because of the people. If all wholesale deals were transparent, it would be a lot easier. There are too many new investors looking to wholesale as a way to build up money, but because they want to make money quick, they put high spreads in when they aren't warranted and go way too high on ARV and way too low on repairs. I also think wholesalers' biggest mistake is sending every deal to everyone. They should be focused on a core group of maybe 5 solid investors and they don't need more than that to close all deals. Maybe they get a little less on each one, but they go smooth and they know it will close (and so does the seller).

YUP.. when a wholesaler sends me a deal and says you have X amount of hours as i have sent it to my list of 200.  Of which probably 190 cant buy or wont buy anything.. I just delete ..  you have many issues with this niche.. the glamorization by guru's  the misguided idea that its the quickest way to build cash.. And the simple fact that in most states its illegal the way folks go about it..  NOT all states but many.

PS getting rich in real estate is not a new concept..  OPM  you need no credit  no cash etc.. those tag words have been around for decades.. think Carlton Sheets  Dave Del Dotto  and many many who came before them..

And before that was the land game  IE  Glenn Gary Glenn Ross of the 50s and 60s..

[Nick C.]

To answer your question directly the biggest issue with wholesaling is wholesalers. 

The quality of wholesalers has been in a steady decline since a few years after the foreclosure crisis. 95% of wholesalers are either working for the large institutional shops who are jacking the price up on 1st timer fix and flip wannabes or they're brand new and have no clue what they're doing and will never do a deal. 

[Justin Badillo]

@Jonathan Greene being a simple and honest wholesaler would make me stand out then?

[Amy Aziz]

Just as these gentlemen stated the wholesalers themselves are the problem, but then I get I think people ruin most things haha. Transparency really makes your job easier and has things move quicker. I buy and sell land and when the person calls me back asking what I will do with the property I tell them. I think most people in any form of sales feel like they need to please everyone to get every sale and the easiest way to please someone is to tell them what they want to hear. 

[Justin Badillo]

@Jay Hinrichs As I am getting into real estate the more I see new comers acting like they know all and inevitably hurts them in the end.

[Justin Badillo]

@Amy Aziz some great advice for me thank you. I am trying to get into real estate through wholesaling and want to avoid being the wholesaler everyone hates!

[Jay Hinrichs]

Originally posted by @Amy Aziz:

Just as these gentlemen stated the wholesalers themselves are the problem, but then I get I think people ruin most things haha. Transparency really makes your job easier and has things move quicker. I buy and sell land and when the person calls me back asking what I will do with the property I tell them. I think most people in any form of sales feel like they need to please everyone to get every sale and the easiest way to please someone is to tell them what they want to hear. 

I grew up on a land family in Northern CA and my first 6 or 7 years in the business was selling nothing but vacant land and small ranch's and a few bigger trophy ranchs .. bought and sold most of my own inventory but did some brokering.. Love the land game always will.

so you should watch Glen Gary Glen Ross its a classic and Very true our office was just like that..  you got 3 leads a week etc etc. 

wholesaling the way most do it these days is basically just a form of real estate brokerage IE they are not buying anything just trying to move contracts.. And areas with abundant low priced homes are prime areas .. those in much higher priced areas will find wholesaling to be somewhat more difficult.. not that some don't make a good run at it.. but you need a lot of money up front for marketing if your going to make any meaningful amount of money.

[Steve Morris]

Originally posted by @Justin Badillo:

@Jonathan Greene being a simple and honest wholesaler would make me stand out then?

If by honest you mean full disclosure, then yes.

[Jeff C.]

The biggest issue with wholesaling is that there are 48956 wannabe wholesalers for every suitable deal in existence. 99.9% of those have never done a deal, have no idea what they're doing and no chance of adding any value to my business. I really have no choice but to just tune them all out.

[Mike Cumbie]

Hi @Justin Badillo

In my opinion the biggest issue is that Wholesaling is explained as a "Beginner skill/entry point". I disagree. Wholesaling (or more appropriately in my eyes "Contract Assigning") is an advanced skill set. It can be done legally/ethically/morally.. and is every day. The problem being someone who does not understand things like "Title", "Lien positions", "Escrow", "Equity", "Due Diligence", "  are encouraged to jump out there and try their hand at it. A RE Agent has to work under a broker for a couple years. A barber has to work under a master barber for a couple years. A paramedic has to be a licensed EMT before starting class for a reason. 

Jumping into wholesaling (Contract assigning) without a clear person overseeing makes those "learning curves" painful.

Just my 2 cents and good luck!

[Justin Badillo]

@Mike Cumbie where would you recommend a start?

[Robert Dobbs]

Like Amy and Jay, ...I'm a "land guy" too! After my first 500 land deals, and a decade later, I figured, "I'm a wholesaler too! LOL!

Sprinkled-in, with a mix of honesty, integrity, ...along with "below market pricing", and don't forget, putting in "long hours" finding those "motivated sellers", then maybe you can begin to call yourself a successful wholesaler!

I get excited every time I read about someone new, "getting the real estate bug"!

Lots of good luck to all! Bob

[Amy Aziz]

 @Justin Badillo I'm here if you need me! 

[Amy Aziz]

@Robert Dobbs Heck yes! There are a few good ones still out there! @Jay Hinrichs Im not gonna lie I've been following you for the past year or so. :)

[Mike Cumbie]

@Justin Badillo

I can only speak for my area so take it with a grain of salt. If I was starting over and my goal was "Contract assigning". I would. Take an online class to get my license ($200 tops including class tests). Then I would sit for the license exam ($50/100) and then find an agent who was busy (but not too busy that they don't answer their phone when I call), that would pick me up as an admin. Have them pay for my fees at their brokerage and I would run their contracts as a "Transaction coordinator" where they pay me a couple hundred bucks a transaction (Because you are licensed they can pay you when something closes). Then learn everything about 30/40/50 transactions. (Part time on your schedule, just get to it a couple times a week).

Once done the path will be much clearer on what you can and cannot do. As well as common sticking points.

Hope it helps! 

[Anthony Sgro]

@Mike Cumbie where would you start to go this route? I’ve always been interested in getting into this area. Thanks!

[Mike Cumbie]

@Anthony Sgro

I would look for an online class in your state. I believe you guys have 60 hours. Sign up and do a few hours a night while having a glass of wine. When you pass all the class tests, sit for the state. I think you have to hang your license at this point with a broker (like my state and most I know of). Then find an agent who will pay your fees and pay you to walk through their transactions (When they teach you they may have a couple more agents who will pay for that service). It won't be big money but a little part time action while learning and not locked at a desk is a good gig. 

Once you have it nailed then contract assigning is doable on a bigger scale.

Hope it helps.

[Steve Vaughan]

Originally posted by @Justin Badillo:

What’s the biggest issues with wholesaling in today’s market and how do you suppose it could be fixed?

The biggest problem is it's just a job that required a high level of experience and education. Gotta hustle to eat.

The way to fix it is to own assets that pay you whether you hustle or not. 

[Anthony Sgro]

@Mike Cumbie it does, thanks!

[Chris B.]

The wholesaler's ethics have been covered in this thread so I'd like to add another issue I'm seeing. I'm looking to buy a wholesale deal locally and I'm restricting my drive to within 30 minutes of where I live in the Phoenix area and I'm not seeing appealing offers. I'm seeing minimal margins for me that are not worth my time. I'm not an established buyer so maybe I'm not getting offered the real deals, but I have cash and I'm genuine. I'm not going to get into a BRRR to only profit $10K to $20K after my investment of work and time with a $195k purchase, $30k remodel and the place having a ARV of $240k.

[Justin Badillo]

@Mike Cumbie helps plenty thank you!!

[Sean Howell]

I second @Chris B. sentiment. A lot of very thin margins being passed off as "deals". 

[Dan Chomycia]

@Mike Cumbie

Thanks Mike I learned from this.