Do you trust these companies?

Question

Planning to get started with my first BRRR, so got in touch with two different companies who can bring you off-market deals:

1. New Western2. NetWorth RealtyI feel both of them are little pushy for you to make an offer on a home. I think its coz even if you walk out, they get that $7500 from you which is non-refundable. Any comments? Anyone here used the above companies for a successful BRRR deal?

Thanks

Evan Polaski · Answer

@Akshay Bhaskaran, to summarize what others said: if they are asking you to buy without giving you the option to tour first, it is a HARD NO!

When you tour, you are running your own checklist of fixes and costs.  New kitchen: $20k, new bath without changing plumbing: $10k, New roof $7k, HVAC and Water Heater $10k, etc.

My experience with wholesalers is sometimes, but rarely, do they have good deals.  Even the "good ones" I have worked with, understate the anticipate Reno costs and overstate the ARV.  They price it accordingly from there to leave you $15-20k profit, IF you hit their Reno and ARV numbers.

Should you be on their list?  100% yes. Will you likely buy something from them?  MaybeShould you pay them anything before touring the property? NEVERAre they pushy sales people?  Typically, they are commissioned sale agents.  Pushy often closes deals.

Zack Oberlies · Answer

I work with New Western. Happy to answer any specific questions you, @Akshay Bhaskaran, or anyone following the thread has.

The short answer is that New Western is generally used as an additional resource for investors. For investors who have the time and network to find their own deals and the numbers make sense, then by all means, it makes sense to source your own deals. We run the numbers beforehand, package them up, and make them available to our investors who can choose to take it or leave it based on the data provided. Sometimes you'll be able to make more money on your own deals if you have the network, and sometimes we'll have deals you won't be able to beat. Really just depends on the deal and depends on what your end game is.

Alex Hileman · Answer

Hi everyone! I work for New Western and would like to clear up some rumors here:

We do not require any payments before we show properties. We do require a down payment if you want to buy the house after you see it. That down payment amount varies depending on the price of the property. Our marketplace is free and investors only pay when they want to buy one of the homes we're selling, after they've walked it.

We do require everyone to sign a disclosure before we show a house. This is because we are all licensed real estate agents and are legally required to disclose that. We also want to make sure investors understand what they're getting themselves into before they put any money down. We stress the fact that properties are sold as-is and that investors need to do their own due diligence. We want investors to run their own numbers before they have us show the property to them. Walking the house is mainly to verify rehab estimates. We don't want to waste investors' time because it also wastes our time. We don't get paid for showings. We also have investors sign a sight-unseen addendum if they want to buy a house without looking at it first because we don't want them to blame us if the rehab is not what they expected. Definitely get pre-approved before you walk a property, and bring a contractor with you if you can.

We want investors to make a lot of money from our deals so that they keep buying houses from us, so that we continue to make money. We're motivated to bring investors value because it's a lot easier for us to work with repeat clients than to make cold calls and explain our business model to new investors. If we scammed people, we would not be in business for very long, let alone 15 years. We make money by saving investors time. We also have a lot of bargaining power with sellers because we have a reputation of closing deals quickly and painlessly. We are the largest private buyer of real estate in the nation. We spend millions of dollars on marketing so that people bring their deals directly to us to sell for them. We even negotiate prices down on on-market properties on behalf of our investors.

Don't forget that you have the option to opt out anytime and tell your wholesaler to stop sending you deals. You will be saving them time as well if you're no longer interested in their services. Also let them know if you're still building your team, saving up money, working on another project, etc. and need some time before jumping into another project. The more info they have on your business model, the better they can cater to it.

Also know that seasoned investors move on deals quickly, and your agent is not lying when they say that the deal is going to sell fast. They don't want you to miss out on a deal if it checks all your boxes. If you don't buy it, someone else most likely will. If you miss out on the deal, they miss out on their commission. A good agent will put pressure on you if they know it's a deal that you already told them you wanted. Be specific when you tell your agent what kind of deal or what area you are looking to buy. They will go out and find it so that they can sell it to you.Please do not feel bad when you tell a wholesaler or agent "no" on a deal. No two deals are the same, and no house is everyone's cup of tea. We never expect someone to buy every deal we serve up and actually appreciate it when you give us feedback. When an investor tells us why they didn't buy a deal, it helps us narrow down what deals we should buy and tailor our deals to our investors. We would much rather hear "no" than be ghosted. The investors who take the time to respond to my emails or texts and give me their feedback are my favorite to work with. I send them deals first because I know they'll respond to me. Keep the feedback coming!

Chris Marroquin · Answer

Don't feel too bad, it's their job to sell.  I have plenty of investors who see deals from them every day and only buy a few a year.

Jay Hinrichs · Answer

I dont care for their business model.. people pay the fee then end up worrying about losing it and then close on crappy deals.. I have funded a number of these over the years and my clients wish they never used them . to the point I personally will not fund a deal that comes from either of these companies.

Zack Oberlies · Answer

I agree with @Chris Marroquin, don't feel bad...It's business at the end of the day. Do whatever is best for you financially. And trust me, no hard feelings on this side of the fence. It's part of the job.

I won't jump in anymore, so everyone can opine freely. Just wanted to drop my 2c.

Mark Munson · Answer

I have closed numerous deals with both as the lender, varying franchises across multiple states. Firstly, I know NW used to require an NDA to go see a property, but not sure if they still do or if that was one branch. I would never sign an NDA to see a property, that is ridiculous and not common practice. Like others have said, don't trust their numbers, trust your own. I wouldn't disparage the entire organization, but I would tread cautiously and just ensure you have all your ducks in a row. Much like other wholesalers their ARVs are wildly inaccurate, in my opinion. Lastly, I fund a lot of wholesale deals and most non-refundable EMDs are $5k. I wouldn't put down $7500 unless the purchase price was $500k+. Feel free to reach out if you need further insight and best of luck!

Bob Stevens · Answer

Why would you give anyone money up front? Also, if YOU do not know if its a good deal, then do not do it. YOU need to know all the numbers,

Mark F. · Answer

I'm with Bob on this. Asking for money upfront from a wholesaler is a red flag. Only people I pay money upfront are situations its expected. Contractor, airline tickets, etc. If a realtor, mortgage lender or a barber asked you for money upfront would you do it? No, you wouldnt.

Like he said, you pay $7500 and they bring you crap deals and say no refunds, what now? Personally, I'd tell them to eat a bag of male genitalia.

They need to make money, I get it. But they should be paid when the deal closes like everyone else. If their deals are legit, people will pay them.

Erik Estrada · Answer

Yea with these wholesaler companies make sure you know exactly what you are buying. It will help if you have a contractor come and take a look at the property with you.

Also make sure to let your lender know, everything about the property. And get fully pre approved beforehand.

Last thing you want to do is lose $7500

Do you trust these companies?

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