Wholesellers - Stop. Read this. Wholesaling is ...

[Cody L.]

...Dumb.

[Sorry to be mean.  My comments as an owner -- rant ahead]

Seriously.  How much are you guys paying for your "lists".   How many of you think buying a list of: owners that got a red tag.  owners that got an eviction.  owners with an out of state address, etc  is going to be the key to finding a distressed buyer.

Here is screen shots of texts to my phone.  Keep in mind:

* I normally delete them. So this is just wants left (I get more)
* This only includes texts that have the name "Sebastian" in them (which isn't even my name.  It's the guy I sold it to.  Which means I get texts about just this one property that are not on here as the 1st name isn't referenced thus didn't show in my search)
* I sold this property maybe 15 years ago. It was literally one of my first SFH fix and flips. So daaamn, how out of date can this be?

Do you think when you buy your lists to spam, that its not going to be someone that's got 100000 texts, emails, calls already?   The lists you buy have out of date info.  They're being bought by the same billion other people who saw some post on BP about how to make money with no money.   And even if you get a reply, you still have to somehow get it under contract at a price that'll allow you to assign it to someone else (or double close).

I just can't think there are people making money in this space.  And if there are, it can't be more than 1% of the people.  The rest are taking classes ($), buying books ($), buying lists ($), paying for text blasting ($),  email blasting ($), having virtual assistance to call and spam people ($).   Even if you do get a deal, after you subtract all your costs, what are you making per hour?

Now I'm sure of the 1,000,000 readers of BP, a few might comment "Oh you're so wrong.  Just last year I assigned a house and made $6,000!".   And that's great.  But -- and I don't want to sound like the filthy 1%'er I am -- couldn't you have added way more value to your life by spending that time and energy in a different aspect of RE?   

Enough rant.  Here are some texts.  Again, this is just for ONE house (that I sold a looooong time ago).  And it's just the texts that have the buyers name and the ones I didn't delete.

PS:  I've actually replied to a few of them.  I used to say something like "That's not mine, but if you'd like to offer on something of mine, here is a list of what I have", etc.  Or sometimes I'll ask about what list they bought that had the specific property they're asking about. 

 Know how many people replied back?  Nearly zero.  Which is crazy since if this is a numbers game (blast to 1,000,000 people.  Hope 1% reply.  Of those, hope 1% you can get under contract.  Of that, hope 10% can make $).  You'd think any reply would cause an action.  But nope.    So really -- maybe -- I just don't get it.   Maybe I'm the dumb one.  Maybe these guys are crushing it and I'm just pounding away on my keyboard on BP like a dork.

[Will Barnard]

Let me remind EVERYBODY that personal attacks including name calling is a violation of the forum rules and your terms of service. If anyone continues with any attack, you will be suspended from forum activity and this thread will be shut down. This is the second thread in the last week regarding wholesaling with members making personal attacks.

Let’s be mature here or refrain from posting.

Now, can somebody please call animal control, this poor dead horse has been beaten so long and so many times! 

For the record, wholesaling is a job (marketing business) and is not investing, it is only illegal when the wholesaler performs the task illegally (which is apparent it is often, but not always) and it is a business strategy in the real estate field to make money. While some are scammers, some are immoral, some take advantage, some lie, etc, not All are that way (just as there are bad or poor operators in any business).

So if you don’t like wholesaling or wholesalers, we all get your pain, but to continue these threads over and over is a waste of everybody’s time and brings out those who want to troll (which is also a forum violation). If someone asks a question about how to or should I perform it this way or that, certainly provide your opinions based on your expertise, calling them dumb or any other attack is prohibited.

[Cody L.]

Quote from @Will Barnard:

Let me remind EVERYBODY that personal attacks including name calling is a violation of the forum rules and your terms of service. If anyone continues with any attack, you will be suspended from forum activity and this thread will be shut down. This is the second thread in the last week regarding wholesaling with members making personal attacks.

Let’s be mature here or refrain from posting.

Now, can somebody please call animal control, this poor dead horse has been beaten so long and so many times! 

For the record, wholesaling is a job (marketing business) and is not investing, it is only illegal when the wholesaler performs the task illegally (which is apparent it is often, but not always) and it is a business strategy in the real estate field to make money. While some are scammers, some are immoral, some take advantage, some lie, etc, not All are that way (just as there are bad or poor operators in any business).

So if you don’t like wholesaling or wholesalers, we all get your pain, but to continue these threads over and over is a waste of everybody’s time and brings out those who want to troll (which is also a forum violation). If someone asks a question about how to or should I perform it this way or that, certainly provide your opinions based on your expertise, calling them dumb or any other attack is prohibited.

For the record, I'm (OP) not calling anyone dumb.  I'm saying the process by which many of these wholesalers go about trying to make $ is dumb.  And I think I made a pretty good case as to why.  I also think the people who prey on people looking to make money in RE with little work and $ are immoral as they're making money selling a system that they know won't work (it's like selling shovels to gold prospectors and pointing them to a spot where you know there's no gold)

 Perhaps I could have been more specific but a sprinkle of hyperbole makes life interesting. 

Maybe someone that's thinking of going down this type of wholesaling will read this and go another direction.  Thus be HELPED in their investing path.  Which is the point of the site (IMO at least)

I don't have anything personally to gain (except maybe less spam).  I'm not trying to sell anything and intentionally hide my personal data so people don't think I'm advertising. 

[George Munoz]

As I once heard. 
Bees don't spend their time telling Flies, Honey taste better than S#!T.

Ill leave it like that, it can be taken in both ways for this topic. Though just want  end it with..
Though a personally believe  there is honey in wholesale!! (Real Estate Overall) 

[John K.]

Seriously, can we come up with an original reason why wholesaling is so terrible, as if it is the only segment of an industry, plagued by bad actors. 

Ever hear of Bernie Madoff? How about the countless others who have ran ponzi schemes throughout the years?

Ever hear of Enron? How about the countless other companies that have cooked the books, resulting in massive losses for the investors?

How about those accounting firms that assisted?

How about Doctors who have lost their license for various reasons?

How about lawyers getting disbarred?

Oh wait, we can't forget this one. 

How about property managers who have been indicted for stealing money? How about those that are on the run from law enforcement?

How about those that are doing it this very day, just haven't been caught yet? Please, correct me if I am wrong, are they not realtors/brokers? The professionals of real estate?  Do you suppose there are more brokers/agents or wholesalers?  Isn't the number like 5 agents, per block?/s

Let me give you some free advice about the professionals that are property managers. This is something your realtor will never tell you, because they can't rat on their own.  

This facade that somehow PMs only charge 10%, is just that, a facade. You need not have a Harvard business degree to realize, that there is no business in any industry on this planet, that can survive on 10% margins. The math will never work. The real number is 25-40%, depending on their markups. PMs do not make money on good tenants, their money comes from bad tenants that do not take care of properties and usually result in evictions. Because, evictions lead to repairs which eventually leads to placement fees. The vicious cycle continues.

I take down failed portfolios, on a monthly basis. Therefore I see a lot of P&L statements. Without fail, an overwhelming majority of these portfolios fail, due to poor management. 

So, please let's come up with some original reason, other than there are bad actors. The fact is there are bad actors in every industry, period. 

This is the hard truth about wholesalers, whether you believe it or not. A well established wholesale company, with strong systems in place, will run circles around every single realtor. Bring your best. They only know the MLS, a saturated free market, where 95% of the homes are grossly overpriced for investors. We can generate leads in the 1000s, within hours. These are true pocket listings, btw. We have the actual house education to know how to properly price a home, because we actually know what it's going to cost to fix it. You won't get, well you are going to need to call a contractor or inspector, because my professional license, does not require that I actually know anything about a house. It's only the single most important part of pricing a home, but hey, just pull a number out of a hat.

How would you feel about going to your doctor's with a concern? You are sitting on the exam table explaining all of this to the good doc, while they are looking at your history on the computer. You get done explaining and they turn to you and say, "Well according to Google...." Are you beaming with confidence at this point?

So, it's fine if you don't want to use one, it's not going to phase well structured companies. It's the equivalent of saying you are going to drop your Amazon prime membership, Amazon won't be filing for bankruptcy, anytime soon as a result.

[Slayde Omura]

.

[Will Barnard]

Quote from @Cody L.:

Quote from @Will Barnard:

Let me remind EVERYBODY that personal attacks including name calling is a violation of the forum rules and your terms of service. If anyone continues with any attack, you will be suspended from forum activity and this thread will be shut down. This is the second thread in the last week regarding wholesaling with members making personal attacks.

Let’s be mature here or refrain from posting.

Now, can somebody please call animal control, this poor dead horse has been beaten so long and so many times! 

For the record, wholesaling is a job (marketing business) and is not investing, it is only illegal when the wholesaler performs the task illegally (which is apparent it is often, but not always) and it is a business strategy in the real estate field to make money. While some are scammers, some are immoral, some take advantage, some lie, etc, not All are that way (just as there are bad or poor operators in any business).

So if you don’t like wholesaling or wholesalers, we all get your pain, but to continue these threads over and over is a waste of everybody’s time and brings out those who want to troll (which is also a forum violation). If someone asks a question about how to or should I perform it this way or that, certainly provide your opinions based on your expertise, calling them dumb or any other attack is prohibited.

For the record, I'm (OP) not calling anyone dumb.  I'm saying the process by which many of these wholesalers go about trying to make $ is dumb.  And I think I made a pretty good case as to why.  I also think the people who prey on people looking to make money in RE with little work and $ are immoral as they're making money selling a system that they know won't work (it's like selling shovels to gold prospectors and pointing them to a spot where you know there's no gold)

 Perhaps I could have been more specific but a sprinkle of hyperbole makes life interesting. 

Maybe someone that's thinking of going down this type of wholesaling will read this and go another direction.  Thus be HELPED in their investing path.  Which is the point of the site (IMO at least)

I don't have anything personally to gain (except maybe less spam).  I'm not trying to sell anything and intentionally hide my personal data so people don't think I'm advertising. 

My post was a reminder to ALL and was NOT directed at you. Your post did not contain any violations and I can certainly be empathetic to your feelings as I have experienced much of the same over the years. It was others who were doing the name calling, FYI.

[Sasha Taylor]

Quote from @Tim McGarvey:

Wow - some interesting and polarizing thoughts here. It seems like the majority of the backlash against wholesaling here is because of the common techniques being used (and pushed by "gurus") below:

1. Spammy marketing methods - SMS, cold calls, and RVMs
2. Underqualified people - a VA or someone who just took a course
3. Poor data - a shotgun approach instead of contacting potentially motivated sellers

Spammy texts and wholesaling are not mutually exclusive. My team closed 12 wholesale deals last month. We sent 0 SMS, cold calls, or RVMs to get those deals. My acquisitions team is USA based with minimum of 10 years sales training. There IS a market need for wholesaling, but we certainly have reached a point where these "gurus" are exploiting the system with these short-sighted teaching strategies.

The annoying wholesalers you're describing either 1) bought a course and don’t know what they're doing or 2) have poor ethics. Eventually this saturation in low-quality players will lead to more regulation - which I believe will be a net benefit. The barriers to entry will become higher and the fly-by-the-night guys will be filtered out (will move on to crypo, etc)

Wholesaling is due for a re-set but there will always be a place in the market for companies that can streamline the closing process with cash.

 Hi Tim,

Out of curiosity, how were you able to achieve your success with wholesaling without cold calling and sending RVMs?  I did wholesaling for a little bit but I absolutely hated it and decided to become a real estate agent.  Since then I've learned how to do deals creatively besides the regular buying and selling of properties.  

I agree with you though about the bad wholesalers who have given wholesaling a bad name!

[Andrew Wright]

I typically spend less than $.11 per record. 

[George Munoz]

“Whether you think you can, or you think you can't – you're right,  - Henry Ford.

Taking that into context , if you see that business not affective and hard to believe , then yes. though if you think you can make it better  and maybe become the best one with new ways of doing it for sure the market place will honor it.. 

There is a need of inventory for investors, in which ( I dare to say ) 80% of realtors dont know how to cater  (FYI I am also a RE realtor) I do specialize in Wholesale  I dont use that technique you are referring too, though I can tell you I know A lot of people in the industry and they do use it, and they are making good money. Sometime is not even about the old list, it also might be a delay or error on public record from that particular city or county.. 

I see wholesaling as 101 RE investing , and you really need to get good at marketing and Negotiating on Acquisition .   other than that it sets you up for other ventures on RE, ...

In conclusion , it might be annoying for you , though a lot of people are making money and most are not even directly connected with the actions, meaning is part of an automated process that ultimate turns out to be a numbers game. in which it passes to a funnel until they get a qualify lead, over all it means you are not a qualify deal  and the scheme of things of all is really nothing and it adds up to cost per acquisition. 

[Joseph Hernandez]

@Jerryll Noorden. I'm a new wholesaler. I just got my first contract, a sub to. So, I asked a few questions here and I was shocked at the replies. I was called a fraud, a scammer, said my $14,000 wholesaling fee is way too high. If necessary, I will go down on my wholesale fee. It's smart to start high and go down. One person told me I should charge 3k-4k. lol, that's about how much I spend in advertising, sometimes more. What these clowns didn't know is that i'm a real estate and mortgage broker for the past 23 yrs. We are trained to know what are fraudulent transactions. Based from their comments, most of these investors have no clue as to the intricacies of a sub to transaction. Furthermore, wholesalers match sellers with buyers, similar to what an agent does. As you know, that's called a dual agency. Furthermore, there's another layer of duties and knowledge that wholesalers must know. So, what agent is going to charge 3k-4k when representing both seller and buyer? lol. I've come to the realization that most negative comments are coming from primarily flippers, next agents. Most are both jealous and have not one iota how time consuming and complex a wholesaling deal can be.

[Jerryll Noorden]

Quote from @Joseph Hernandez:

@Jerryll Noorden. I'm a new wholesaler. I just got my first contract, a sub to. So, I asked a few questions here and I was shocked at the replies. I was called a fraud, a scammer, said my $14,000 wholesaling fee is way too high. If necessary, I will go down on my wholesale fee. It's smart to start high and go down. One person told me I should charge 3k-4k. lol, that's about how much I spend in advertising, sometimes more. What these clowns didn't know is that i'm a real estate and mortgage broker for the past 23 yrs. We are trained to know what are fraudulent transactions. Based from their comments, most of these investors have no clue as to the intricacies of a sub to transaction. Furthermore, wholesalers match sellers with buyers, similar to what an agent does. As you know, that's called a dual agency. Furthermore, there's another layer of duties and knowledge that wholesalers must know. So, what agent is going to charge 3k-4k when representing both seller and buyer? lol. I've come to the realization that most negative comments are coming from primarily flippers, next agents. Most are both jealous and have not one iota how time consuming and complex a wholesaling deal can be.

 I deal with flippers and other wholesalers all the time. I am tellingyou.. TELLING YOU, the serious flippers don't give a frog how much you are making. What I mean by thism is, they genuinealy do not CARE, not even enough to wonder how much you are making. They look at the numbers, if the numbers make sense to them, without a hessitation they ask for the contract to sign.

That said, the numbers DO need to make sense. I know it sucks to get all these negative piercing comments, seriously making you question whether or not you are doing this correctly or if you should still continue doing it.

Try to not care what anyone says. Their opinion simply doesn't matter... only numbers do. Stay honest, transparent and open with the seller and know your worth. YOU found the deal, something THEY can't do.

What I do is the second any buyer gives me any kind of lip, I remove them for my list never to be heard from again.

They need you, both the sellers and the buyers. Everyone sees wholesaling and wholesalers as the bottom of the barrel. Let them think that. Everyone needs us.

So don't fret my brother, stay the course. Just make sure the numbers are right and you are good to go!

Yes, the biggest loudmouths when it comes to wholesaling are people who have never wholesaled a deal in their lives.

That said, a lot of the negative comments here, even the OP's, are not wrong. A lot of wholesalers are scum and ruin it for everyone.  Talking bad about them is only putting fuel to the fire, however. That is why if we all instead of criticizing wholesaling and wholesalers, we should help them and teach them do it right. Everyone would come out benefiting from this.

Congrats on your first contract man. Make sure you monetize that contract, improve all the things that didn't go as planned and repeat always improve your methods.

You should be proud. The first deal is often the hardest. You rock.