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?

[John K.]

I don't see any more or less problems than exist on a daily basis. As long as there is an interest in real estate investing, there will always be a way for wholesalers to thrive. 

I think the problems that face wholesalers in general, are largely self inflicted. I don't understand the logic of finding a "deal" first and having no where to take it. It's not as if a wholesaler can just put it on Zillow. I think if you focus on finding buyers first, you will discover that you will find deals, quicker. You have to know what someone is willing to buy and at what price, before you can start looking and securing a property. Too much time and energy wasted on rolling the dice. 

The concept of wholesaling is to move at a fast pace. The reality is a wholesaler that has systems in place, can generate leads at a pace that 99% of realtors, would have no shot at. For this reason, you need buyers that can perform and perform quickly. It's always concerning for a wholesaler to take an agreement with financing contingencies in place, because we are aware of the incredible inefficiencies of most lenders and their willingness to back off the deal, for whatever reason. If you focus on finding that small group of individual buyers or better yet, a hedge fund or partnership, you can spend your time feeding them exactly what they want. This of course, will lead you to focus on only quality leads, not flip of the coin leads. 

Because wholesalers are conditioned to move and move fast, there is never a reason to lock up a deal for more than 30-45 days, unlike are professional counterparts that need up to 6 mos. That's always confused me, btw. When you have the buyers, and I am not talking about a bloated email list that everyone and their brother has joined, most of your deals can close within 1-3 weeks. I only add the extra week or two, just in case there is a glitch on the title. This allows wholesalers to put multiple properties in the pipeline and focus on working leads, rather than marketing properties. 

There is a huge difference in negotiating a house with a 100% sell, versus I I wonder how cheap I need to get this so I can sell it. 

Summary...Don't put the cart before the horse. IMHO

[Dan Chomycia]

@Chris B.

I hear you that sucks.

I'm working on a deal in Prescott I might be able to get it for 67.6 percent of arv after rehab.

Is that a good deal?

Also guys let me know if I'm breaking any rules here. Please feel free to tell me delete my post just explain to me why so I understand.

Thanks

[Alyssa Dyer]

@Jonathan Greene PREACH. My whole thing is just being transparent. Bigger isn’t always better and the big spreads just make me weary. To Jay’s point, if you need the buzz words to sell a deals it’s likely not one lol

[Alyssa Dyer]

@Jeff Cagle lol. So true.

[Mike Cumbie]

@John K.

"The concept of wholesaling is to move at a fast pace. The reality is a wholesaler that has systems in place, can generate leads at a pace that 99% of realtors, would have no shot at. For this reason, you need buyers that can perform and perform quickly."

I will respectfully disagree. There is not a property in my Area of Operations that somehow can be sold quicker than I can do it (If the price is right). Cash buyers are cash buyers. Wholesalers do not have a market cornered. I always hear that "REALTORS need to stage and make pretty etc". So far from the case. I have made calls from the porch with the owner standing there, 10 minutes later cash buyer shows up and we ink it. Cash buyers buy houses. If I am representing a buyer, then we buy houses. If that buyer passes, I have more numbers in my phone. If none of them want it, I can get a listing agreement and have it across the planet in 3 hours.  

Now wholesalers with $4mil in liquid capital that can ink on the spot...... Take the risk themselves..... Fair enough.

[John K.]

@Mike Cumbie

I never questioned whether or not realtors had access to cash buyers, of course they do. So their ability to close within a week or so, should not be a problem. 

My reference was the fact that wholesalers are focused on doing large quantities of deals, therefore we don't have time to play with pre-approval letters and lenders that can't analyze a deal within 3 weeks, so it can close in 4 weeks. 

It's a different mindset and a different business model. Realtors are looking to do dozens of deals a year, we are looking to do dozens of deals per month. 

Not really sure where the capital aspect comes into play in all this. Wholesalers don't need to go into massive debt, to be good at this. We figured out how to do it, without risking our capital.

[Mike Cumbie]

@John K.

"My reference was the fact that wholesalers are focused on doing large quantities of deals, therefore we don't have time to play with pre-approval letters and lenders that can't analyze a deal within 3 weeks, so it can close in 4 weeks.

It's a different mindset and a different business model. Realtors are looking to do dozens of deals a year, we are looking to do dozens of deals per month."

I again respectfully disagree. Cash buyers do not need lenders or pre-approval letters. They need Proof Of Funds, I assume everyone requires that for new buyers. The ONLY difference is "Who you represent". Am I representing a buyer or seller and letting them know up front. That's all. I will do a dozen $50,000 deals a month at 3% ($1500 a pop) without even considering being underpaid (Heck I'll hire another assistant). Odds are that some of those a buyer I know will not want, and I'll list and the seller will get $75,000. 

Buying and selling is the same, the ONLY difference is who you represent. Wholesalers have zero advantage over agents. They do not hold a "Special list of exclusive cash buyers". Cash buyers will buy from anyone with a deal.. licensed or not. Difference being, if nobody bites, one group can list it. 

[James Hamling]

@Justin Badillo so your looking to field how you can be a successful wholesaler, how to be different and not just yet another in a great pile of "yet another"'s. 

Ok, here is how you do it: take literally everything promoted on how to be a wholesaler and throw it out of your life and mind, gone, that's step 1. Step 2, go buy Glenn Gary Glenn Ross and watch it over and over until you wake up in the morning screaming "COFFEE IS FOR CLOSERS". Then keep studying sales from the pro's like Rick Grosso and Anthony Robbins. Once you are an Al Pacino and not a Jack Lemmon THAT's when your ready to learn the mechanics of wholesaling and get to work. 

Thing is the vast majority of wholesalers fail because the are totally and utterly clueless on sales and selling, if you can't sell how can you ever be a wholesaler, the job is literally double selling deal after deal day in and day out. 

If you want to be different and to be successful they are the same thing, become a sales ninja.  

[Tony Kim]

Originally posted by @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.

I believe the corporate world is starting to take notice on the potential to make money in wholesaling. Not sure if anyone has heard of the company, Sundae, Homebuyers with a Heart, but they're a start-up VC (well, they used to be... they're generating revenue now). They're a wholesale company that is growing fast and has aspirations to wholesale properties across the entire nation. The co-founder has a good track record of developing start-ups into national companies. 

I believe they do things the right way, and part of their business model is to provide a much better option than some of the predatory buyers out there (no one from here on BP though, of course!). Also, they simply fill a need that the average mom and pop wholesaler just cannot provide.....even the really good ones. They're expanding fast. 

I almost accepted a job with them as an investment accountant...but ultimately decided to stay at my current company. If I were 20 years younger with no family and mortgage, then definitely yes. But right now, I just couldn't give up the very good blanket of security that my current company provides.

[John K.]

@Mike Cumbie

You are focused on something that I never said or implied. I only said that wholesalers generate far more leads, than 99% of realtors could ever do. Of course, wholesalers do not have the corner on cash buyers. A majority of a realtor's buyers, are in fact John & Susie Q homeowner, who need loans. 100% of my buyers, are cash. This allows me to do the volume I do per month, because I am not playing the bank game. 

I will respectfully disagree with you on whether or not a wholesaler has an advantage over realtors. We generate leads by the 100s, per month. We HAVE to have intimate knowledge of a house, we can't get away with call an inspector or bring your contractor. This allows us to properly price a house based on real repair numbers and not require our clients to drop a few hundred on an inspector, just to find out the repairs are too extensive. There is so much that is wrong with that, where would one begin. Wholesalers are not in it for a commission, we have a fee. This allows us to honestly negotiate the best deal for our buyers because our commission is not at risk, thus eliminating the very obvious conflict of interest. We do not share our fees with anyone, other than the IRS. The whole concept of I do 95% of the work for a share of 3%, sounds a bit Amway...ish, right? If it looks like Amway...and smells like Amway...just saying. You have to admit, the alignment of power forms a nice pretty triangle, and that money definitely trickles down.

[Mike Cumbie]

@John K.

"A majority of a realtor's buyers, are in fact John & Susie Q homeowner, who need loans."

Not sure where you gathered that FACT, but roll with it. If you believe in your heart that somehow being licensed or a REALTOR equates to retail home buying then I have no argument. It's like saying "My sister cuts hair in her basement and she is far superior and has more clients than a person on Mainstreet could ever have, because they are retail consumers and all need perms, nails and Dye jobs"!!

I do honestly wish you the best in your business.

[Bob Prisco]

@Justin Badillo to many wanna Bs. Many find deals online, create their own sheet, mark it up send it out and call themselves a wholesaler .  Many times the person does not know a darn thing about the property or market they are trying to sell. You know how many times I am offered MY property , too funny.  Heres an idea, find a a good deal, it will be sold in a day if good. If you cant sell it its not good,,, Money always find the deals 

Good luck 

[Mindy Jensen]

Too many wholesalers don't know anything about real estate. Just because a house cost $35,000 doesn't mean it's a good deal. Cheap doesn't equal good. It could be worth $30,000 and someone is trying to sell it for a little more to someone else with even less experience.

If you want to be a good wholesaler, act with integrity, don't steal equity from "little old lady" sellers who don't know the market like you do, solve problems, don't create them.

[Jim K.]

@Justin Badillo

If I were you, I wouldn't put up bandit signs that say "WE BUY HOUSES 4 CA$H 555-5555" It's a recurring fantasy of mine to print up a big stack of signs that says "AND GIVE THE BEST H***!!!" and throw them in the back of my car to staple underneath these bandit signs where I find them. Some fine weekend, when I get hammered just right on a Friday night, this is gonna happen all over this town. There are lots of twisted types just like me in real estate.

[Pranav G.]

Agreed. Very thin margin and hyped numbers

[Chris B.]

@Dan Chomycia:

That sounds like it is likely a great find.

[Darius Ogloza]

@Jay Hinrichs The coffee is for closers . . .

[Justin Badillo]

@James Hamling so far this is one of my favorite responses. There seems to be a “battle” between wholesalers and realtors which seems to be unnecessary. Thank you!

[Justin Badillo]

@Bob Prisco exactly what I am trying to avoid being. Thank you for the response! Working my hardest to stand out, be honest, and simply get a deal that helps everyone.

[Justin Badillo]

@Mindy Jensen it shocks me how slimy people are. I’m here to get into real estate and personally think wholesaling is my best option. And the more I read/learn/watch, I’m figuring out that anybody good in this business is in the business to help people, be honest, and make connections. I have a long way to go but I feel as if I have a good base as long as I stay focused. Thank you.

[Bob Prisco]

@Justin Badillo just find the deals, everything else will take care of itself 

Good Luck 

[John K.]

Originally posted by @Mike Cumbie:

@John K.

"A majority of a realtor's buyers, are in fact John & Susie Q homeowner, who need loans."

Not sure where you gathered that FACT, but roll with it. If you believe in your heart that somehow being licensed or a REALTOR equates to retail home buying then I have no argument. It's like saying "My sister cuts hair in her basement and she is far superior and has more clients than a person on Mainstreet could ever have, because they are retail consumers and all need perms, nails and Dye jobs"!!

I do honestly wish you the best in your business.

Umm...in July 2019 Forbes wrote a piece stating that only 40% of homes were free and clear, thus leaving 60% with some sort of debt tied to them. This qualifies my statement of a majority of buyers need a loan. I seriously doubt that in a year, that data has changed drastically. 

Furthermore, your own organization the NAR reported that 89% of homeowners, purchase through a realtor.

It's not hard to draw that line, right?

Again, I never stated that realtors only sell retail, in fact I had to state twice that they do have cash buyers. Why do you insist on changing the narrative? The fact that 89% of homeowners do in fact buy from realtors, would prove that. 

[Account Closed]

This conversation can go two ways. Wholesalers have a bad rap nowadays because of how some wholesalers do things. You have wholesalers that are very "janky" and in certain areas do not require a Real Estate License. In other markets wholesalers are required to have a license or firms require them to have a license and in turn that cuts back on some of the unnecessary things we've all dealt with in wholesaling. So in turn SOME wholesalers are trying to rebuild their image or give people a new idea of how wholesalers operate. Now on the flip side of that make sure you know the firm and the person you are working with. I'll never close on a deal without doing my due diligence. Some times we can be so hungry for a deal and want to jump-start our real estate investing that we skim over details and jump right in. 

I say ALL of that to say that there are some terrible wholesalers out there that only want to benefit themselves and to always know what you are getting yourself into.

[James Hamling]

Originally posted by @Justin Badillo:

@James Hamling so far this is one of my favorite responses. There seems to be a “battle” between wholesalers and realtors which seems to be unnecessary. Thank you!

 What you will find in studying and learning to master the science of selling is that being a great salesperson has nothing to do with pushing something, it's about mastering the skill of listening to people and formulating how you can best help them. Novices think is pushing stuff on people, that never works, that's a "Jack Lemmon", an "Al Pacino" listens, cares, reads the person, their situation, absorbs all the details and is formulating what is the best solutions he can bring to bear and then how to best present these for their best understanding, and then he simply offers the help to them. 

When you become a master of selling you will be a master at helping, from their wholesaling is just the mechanism by which you help people. And you will close deals no others will get because they trust you, they like you, they connect because your legit, you give a damn, your trying to help and looking to make a fair return for succeeding at helping if and when you succeed. 

In my business I have a closing ratio double and tripple the average, it's because I am genuine and that's it, I spent years on end of formal sales training and I am just genuine and work to best help people where I can how I can and I let the $ follow, I pay 0 attention the the $, no joke, I focus on the opportunity and the work and simply believe the $ will follow. 

[Justin Badillo]

@James Hamling then this is exactly how I will practice. Thank you