Do wholesalers only work with cash buyers?

[Sam T.]

Hey all. I heard a wholesaler on a podcast recently say that she only works with cash buyers. Is that normal? I'm still in the process of saving up a down payment for my first deal and it seems like if I plan to use conventional financing then I'd lose the advantages and deals that wholesalers could offer. Thoughts?

[Jon Holdman]

The problem is that conventional lenders don't like wholesale dealings. If its an assignment, they often use the original contract price as the "value" for their LTV calculations so you have to come out of pocket for the assignment fee. Or, if its a double close, they will pull title and discover the seller doesn't own the property and nix the loan.

In general, from the wholesalers point of view, there are lots of hassles to dealing with a conventional lender.  Cash buyers, or those using hard money lenders, are much easier to deal with.

I wouldn't be too concerned, though.  Many wholesale deals aren't really deals at all.