Is D.R. Horton the biggest real estate wholesaler?

Question

D.R. Horton is one of the biggest home builders in America. Sometimes they’ll buy contracts to buy pieces of land and sometimes they’ll decide through inspection “it’s not good enough for us”. They’ll assign that contract to buy a piece of land to other people and they’ll legitimately make million dollar assignment fees. All legal.

I think the market cap is worth $30 billion dollars and they wholesale houses. That corporation.. And they make a good amount of money doing it too. They’re not wholesalers per se, but they make a ton of money doing it.

If you think a $30 billion dollar corporation is going to be okay with wholesaling being illegal—no they’re not. That’s the reason why they don’t ban wholesaling. It’s because corporations like that would never stand for it.

Don Konipol · Answer

D.R. Horton is dealing in a commercial transaction purchasing from a land investor or land speculator.  Real estate wholesalers are dealing with a residential transaction purchasing from an owner occupant slash consumer.  As with everything else the government is far less concerned with commercial, B2B transactions than with B2C consumer transactions.  That’s why Dodd Frank and the CFPB do not apply to commercial properties.

Ben Zimmerman · Answer

As Jay mentioned, there is a massive difference between intending to buy the property, but eventually changing your mind and wholesaling it, versus never intending to buy the home, and intend for wholesaling it to be your "Plan A", and walking away from the deal is your Plan B.

If DR Horton says they are going to take your property, then they are going to take it.  Maybe they keep it, maybe they wholesale it, maybe they do whatever, but ultimately they are going to take it off of the sellers hands.  If a new wholesaler (95+% of the wholesalers on BP) say they are going to take it, there is an overwhelming chance that they eventually back out of the deal.  Maybe its because they don't have a proper buyers network, maybe it's because they comp'd wrong, or underestimated rehab costs.  The wholesaler simply walks away from the deal unphased as they only lost their $100 'earnest money' so it's no big deal.  But to the seller they were counting on this house being sold, and may already have a new home under contract to purchase and now that purchase will fall through due to the ineptitude of the wholesaler.  Now people are stuck paying a mortgage for an extra few months while they sell the property to a REAL buyer and can put significant financial stress on a family.There is reason why there are consumer laws that prevent people from walking in with no training, education, or experience, and tying up hundreds of thousands of dollars in a contract that they know they are currently unable to perform upon.  You can't sign a legal contract and hope that a solution falls into your lap after the contract is signed.  To the wholesaler this is a side hustle, to the seller this is their livelihood that is being F'd with.  There are legal ways to wholesale, but unless you are already a massive player in the local RE market, then it is highly unlikely that you can actually wholesale a property without breaking 1 or more laws.  How is a new wholesaler supposed to find a buyer when they can't market the property for sale, or show the property to potential buyers?  You can't say that they are simply 'marketing the contract, and not the house', because no investor is going to simply take the word of a new wholesaler when they say that the ARV is XXX and the rehab is XX.  Instead, the investor is going to want to see the property and verify the numbers for himself which is not allowed.QUOTE:  "Examples of such acts include, but are not limited to, advertising listed property for sale, “showing” listed property to prospective buyers, providing information about listed property to prospective buyers (other than basic property facts that might commonly appear in an advertisement in a newspaper, real estate publication or internet website), negotiating a sale or purchase of real estate, and assisting with the completion of contract offers and counteroffers using preprinted forms and communication of offers and acceptances"

Jay Hinrichs · Answer

I want to repeat myself here.. DR horton and other big builders very often will just walk away from their deposits  100k 200k 300k its nothing money to them . I have seen it many many times especially 08 to 2010.. and those sellers who rely on those transactions to close thinking they have this big deposit are many times left in the lerch   and end up in financial trouble as they have short term debt on their land.. others  ( the farmer) he just gets  a wind fall when they don't close and moves on to sell to another developer.  And today as market has changed drastically you are seeing it today..  there are no buyers to assign the contracts to right now .. or very few in todays market being that these companies go into contract at top dollar.  So a lot of retrading going on right now.

Bob Stevens · Answer

I know DR HORTON very well, what you are describing is 100% not correct. not even remotely

Steve Vaughan · Answer

They may be among the largest wholesalers but it isn't their primary business model and they aren't selling courses on how the broke and inexperienced can make money, forsake all others.

I've assigned plenty, usually options, after further review.  It was  not my initial intention, and yes, I could've bought it.

Mistating intent or ability to perform will never be lawful.

Is D.R. Horton the biggest real estate wholesaler?

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