Ethics of Wholesaling

[Reilly Brown]

I recently came across an interesting youtube video laying out an strategy for wholesaling, where the wholesaler basically low-balls as many properties as possible, hoping to find just one or two highly motivated sellers who bite or at least counter close to the low ball offer.  The offer is formed by taking half of the zillow estimate.  If there is a listing agent already involved, you try to get their help by offering for them to double-dip on the commission.

My question for this community is if its frowned upon, or considered very obnoxious to take such a bulk approach to finding deals?  On one hand, I see how this can be an effective way to weed out unmotivated sellers, especially for rookie wholesalers like myself.  On the other hand, I imagine this could be a way to make a not-so-great name for yourself.

Also, is the double-dipping for listing agents considered a dodgy practice?  Given that you hire an agent with the expectation that they will protect your interests, how can we expect them to do so if they are representing both parties in the deal?

[Josh Wagner]

The "bulk" approach works, as does mostly any strategy for getting deals in wholesaling. It really comes down to how you want to operate. 

As for hiring the same agent that's representing the seller you're offering to... well, it probably depends on which state you're operating in. For North Carolina, the agent becomes a dual agent, which is a fancy term for a paper pusher with a sock in their mouth. They can't negotiate for either party or offer real estate advice, among many other things. And that might be even trickier to pull off, being that the Seller is already a client of the listing agent, and would have to agree to taking less representation than they previously had with their agent. 

The better approach might be to partner with a local agent who can represent you solely, and have them submit offers on your behalf and negotiate with the cross agent. That way you have the full representation of your own agent and you're not dipping your toes into any gray areas. 

But to be honest, as a wholesaler myself, I can tell you there are a multitude of much better sources for deals than blasting offers to listed homes. Yes, it does work. But there's better ways.