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Updated 2 months ago, 10/30/2024

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Alan Asriants
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Is this an end to Wholesaling?

Alan Asriants
Agent
  • Real Estate Agent
  • Philadelphia, PA
Posted

Bigger pockets just released an article that goes into Wholesaling and how it can become illegal to Wholesale Real Estate in South Carolina.

Here is the link for reference:

https://www.biggerpockets.com/blog/new-south-carolina-law-wo...

Wholesaling real estate seems like a great strategy but with that strategy, I've seen a lot of fishy characters who promote things that aren't true, lie to sellers directly, lie to Buyers and intentionally misrepresent information. Some of this misrepresented information includes things like after repair values, repair costs, rental comps and more. 

I have even encountered wholesalers who push properties with title issues onto buyers that are not knowledgeable enough to understand that this issue could be a very serious problem. 

A lot of the pitch that wholesalers make to sellers is that they were going to be buying a property with cash, even though they have no cash. So if they don't end up finding a buyer to reassign the contract to, they just lied to the seller and wasted their time. 

Again, this is not to bash on all wholesalers, because I do believe that there are some decent people out there. That being said, the majority of my experience comes from people who are pushy salesman who try to get you to buy something. 

At the end of the day, wholesaling real estate is like getting a net listing for a real estate agent. Except the real estate agent discloses that they will be making the difference upfront and not lying to the seller about buying their property for cash. 

That being said, in many states and jurisdictions net listings are actually illegal. 

My personal opinion was that a lot of this Wholesaling activity couldn't go on much longer. There had to be a breaking point, where unlicensed and unaccredited individuals could be handling real estate transactions. Lots of these individuals didn't have mentors or licensed professionals to help guide them through a transaction process. And on top of that I have seen files were there has been over five wholesalers, making a cut from the sale of a property. 

So before that property went into the buyers hands it went through five other individuals. They were all making money on this transaction, and likely not being transparent with the original owner. 

I remember, speaking directly with wholesalers, who would tell me not to disclose that a profit is being made. 

Look, I respect the hustle. I am all for individuals trying to make their way in the Real Estate sphere. But there has to be a way that is more transparent with individuals. We can't have a large amount of unregulated people, pushing values, and figures onto the end consumer who will be the one that's really suffering at the end of the road. 

To extend an olive branch there are plenty of bad real estate agents that also push things onto their clients, but those individuals work under a broker who carries a fiduciary duty to their client. Here there are no licenses regulations or implemented ethics. 

What are your thoughts? 

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Alan Asriants - New Century Real Estate
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Don Konipol
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Don Konipol
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Replied
Quote from @James Wise:
Quote from @Kyle Spearin:

I'm wondering how people in this space are going to pivot. If you currently do wholesale deals, how will you work with sellers and buyers? Does it mean just getting a license and selling deals "off market" to end buyers rather than getting them under contract? 

Super interested in this.

As for end-buyers like flippers and other value add investors, will you look for other ways to find deals now?


 They're gonna drive Uber prolly.

It will be interesting to see if some of the larger contract assignors become true wholesalers - i.e., closing on the purchase and reselling at (hopefully) a higher price.  One major hurdle is the costs associated with transactions, 2 closing = twice the transaction cost. But if I’m buying 20 -40 lower priced properties annually I may decide to skip title insurance on the buy side and substitute a thorough title search.  
Another solution to comply with new, shall we call them “anti - wholesaling regulations” is the use of straight options. So the seller has no illusion that the optionee is required to purchase his property, he’s merely getting some cash for giving the optionee the RIGHT to purchase within a certain timeframe - IF he chooses.
I think those that are both experienced AND well capitalized have a chance to survive with either of these two scenarios, or perhaps another that complies with the new rules in effect.  What we will see will be the quick elimination of the inexperienced with little or no capital, who has been mislead to believing that they can “start their real estate investment journey by wholesaling to build capital, and then I plan to ………….”
I don’t think this will necessarily be a boon for the brokerage industry for the following reasons
1. Many of the deals that are currently being (attempted) to wholesale are not the size or type that are profitable to represent as a broker
2. Sellers will be able to sell to ibuyers and fix n flippers direct and still avoid a broker
3. New FSBO type companies will pop up offering a broker alternative to sellers
4. Those sellers that have some deep seated psychological hatred of the real estate brokerage industry will go to crazed extremes and cost themselves loads of money to avoid brokers.  I know one guy who hates brokers and will never use one  because his mother had a romantic affair with a broker and it broke up his family when he was a kid.   
  • Don Konipol
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Quote from @Jack Seiden:

 I am fine with being hated. Moreover, I think it's one of the best motivators to action. I would get depressed if I became popular and liked by all, like some high school cheerleader or baseball player. I don't have an innate need to be liked. So, I look forward to doing it, with love of doing what I am doing.

But I have to address couple of things you mentioned. First, a lot of people exploit old people (some registered nurses, members of heavily regulated profession, with multiple degrees and licenses in nursing and medical sciences come to mind. There are instances where care-in nurses stole the funds and property of elderly they were hired to look after). Guess what? You can't get far doing it. Even if an old, senile person screams off the top of his lungs that he wished to sell you his property, State or his relatives can come after you, void the contract he signed and take that property from you. You could be criminally charged for taking advantage of mental disability of the senile old person. So, while there will always be people (nurses, brokers, realtors, wholesalers and etc.) who will take advantage of elderly people, it's not an argument or excuse to outlaw the entire industry. Just enforce the laws on the books and go after people who engage in nefarious practices. 

Next, what is so "bad" in it for society and how is it worse than any other business? Are licensed dealers who pay trade-in values and "take advantage" of car owners any better? May be we should equate them to meth dealers now? And how about current Boeing CEO, a culprit in death of hundreds of Americans? Where is the outrage of our upstanding society when most powerful, on  top of the food chain, engage in crimes that result in death of hundreds of Americans? Aren't we being hypocritical here? 

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Jay Hinrichs
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Jay Hinrichs
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  • Lender
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Replied
Quote from @Don Konipol:
Quote from @James Wise:
Quote from @Kyle Spearin:

I'm wondering how people in this space are going to pivot. If you currently do wholesale deals, how will you work with sellers and buyers? Does it mean just getting a license and selling deals "off market" to end buyers rather than getting them under contract? 

Super interested in this.

As for end-buyers like flippers and other value add investors, will you look for other ways to find deals now?


 They're gonna drive Uber prolly.

It will be interesting to see if some of the larger contract assignors become true wholesalers - i.e., closing on the purchase and reselling at (hopefully) a higher price.  One major hurdle is the costs associated with transactions, 2 closing = twice the transaction cost. But if I’m buying 20 -40 lower priced properties annually I may decide to skip title insurance on the buy side and substitute a thorough title search.  
Another solution to comply with new, shall we call them “anti - wholesaling regulations” is the use of straight options. So the seller has no illusion that the optionee is required to purchase his property, he’s merely getting some cash for giving the optionee the RIGHT to purchase within a certain timeframe - IF he chooses.
I think those that are both experienced AND well capitalized have a chance to survive with either of these two scenarios, or perhaps another that complies with the new rules in effect.  What we will see will be the quick elimination of the inexperienced with little or no capital, who has been mislead to believing that they can “start their real estate investment journey by wholesaling to build capital, and then I plan to ………….”
I don’t think this will necessarily be a boon for the brokerage industry for the following reasons
1. Many of the deals that are currently being (attempted) to wholesale are not the size or type that are profitable to represent as a broker
2. Sellers will be able to sell to ibuyers and fix n flippers direct and still avoid a broker
3. New FSBO type companies will pop up offering a broker alternative to sellers
4. Those sellers that have some deep seated psychological hatred of the real estate brokerage industry will go to crazed extremes and cost themselves loads of money to avoid brokers.  I know one guy who hates brokers and will never use one  because his mother had a romantic affair with a broker and it broke up his family when he was a kid.   

the options certainly tic's all the box's for legality etc.. the issue with wholesalers will be.

1. Full disclosure when you do a option agreement.. vast majority of wholesale deals there is never full disclosure to the seller what is truly transpiring and if full disclosure is made many deals will never happen this is a big worry for wholesalers.

2. Option money itself so many wholesaler either put up no money or ridiculous EM deposits like 25.00 or 50.00 . Folks optioning houses are going to want 2k 5k 10k.. And most wholesalers either wont have the funds to tie up more than a few or they will NOT want to risk losing the money.

3.Uncertainty for the Seller this will be a stumbling block as well. Instead of what happens today where sellers are told they can close on a "DATE OF THEIR CHOOSING" that phrase right out of Wholesale Trainers handbook.
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JLH Capital Partners
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Replied
Quote from @Kyle Spearin:

I'm wondering how people in this space are going to pivot. If you currently do wholesale deals, how will you work with sellers and buyers? Does it mean just getting a license and selling deals "off market" to end buyers rather than getting them under contract? 

Super interested in this.

As for end-buyers like flippers and other value add investors, will you look for other ways to find deals now?


There is no indication at this moment that wholesaling will be outlawed in MD. The 2023 Bill didn't pass last year. They may reintroduce it in 2025, but I wonder why they passed a law in 2024 which mandates disclosures to sellers from wholesalers if they plan to reintroduce and pass 2023 Bill next year? We will see. And, even if they pass it true wholesalers will simply dump MD and go to real Red States (not some purple ones like VA), where I am sure wholesaling will remain legal for years to come.

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Don Konipol
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Don Konipol
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Replied
Quote from @Account Closed:
Quote from @Kyle Spearin:

I'm wondering how people in this space are going to pivot. If you currently do wholesale deals, how will you work with sellers and buyers? Does it mean just getting a license and selling deals "off market" to end buyers rather than getting them under contract? 

Super interested in this.

As for end-buyers like flippers and other value add investors, will you look for other ways to find deals now?


There is no indication at this moment that wholesaling will be outlawed in MD. The 2023 Bill didn't pass last year. They may reintroduce it in 2025, but I wonder why they passed a law in 2024 which mandates disclosures to sellers from wholesalers if they plan to reintroduce and pass 2023 Bill next year? We will see. And, even if they pass it true wholesalers will simply dump MD and go to real Red States (not some purple ones like VA), where I am sure wholesaling will remain legal for years to come.

Even “red” states pass consumer protection laws, usually prodded by some outrageous behavior.  A perfect example is Texas.  20 years ago Texas passed the most stringent contract for deed laws in the nation due to rampart abuse; now I can’t fight an attorney in Texas willing to advise on a contract for deed transaction. And interestingly, the law for CD in Texas has been interpreted by the courts to include commercial as well as residential real estate transactions. 
  • Don Konipol
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Jay Hinrichs
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Jay Hinrichs
Professional Services
Pro Member
#2 All Forums Contributor
  • Lender
  • Lake Oswego OR Summerlin, NV
Replied
Quote from @Don Konipol:
Quote from @Account Closed:
Quote from @Kyle Spearin:

I'm wondering how people in this space are going to pivot. If you currently do wholesale deals, how will you work with sellers and buyers? Does it mean just getting a license and selling deals "off market" to end buyers rather than getting them under contract? 

Super interested in this.

As for end-buyers like flippers and other value add investors, will you look for other ways to find deals now?


There is no indication at this moment that wholesaling will be outlawed in MD. The 2023 Bill didn't pass last year. They may reintroduce it in 2025, but I wonder why they passed a law in 2024 which mandates disclosures to sellers from wholesalers if they plan to reintroduce and pass 2023 Bill next year? We will see. And, even if they pass it true wholesalers will simply dump MD and go to real Red States (not some purple ones like VA), where I am sure wholesaling will remain legal for years to come.

Even “red” states pass consumer protection laws, usually prodded by some outrageous behavior.  A perfect example is Texas.  20 years ago Texas passed the most stringent contract for deed laws in the nation due to rampart abuse; now I can’t fight an attorney in Texas willing to advise on a contract for deed transaction. And interestingly, the law for CD in Texas has been interpreted by the courts to include commercial as well as residential real estate transactions. 

In addition I think there are disclosure laws now in Texas on assignements.. ???
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JLH Capital Partners

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Peter Walther
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Peter Walther
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Replied
Quote from @Don Konipol:
Quote from @James Wise:
Quote from @Kyle Spearin:

I'm wondering how people in this space are going to pivot. If you currently do wholesale deals, how will you work with sellers and buyers? Does it mean just getting a license and selling deals "off market" to end buyers rather than getting them under contract? 

Super interested in this.

As for end-buyers like flippers and other value add investors, will you look for other ways to find deals now?


 They're gonna drive Uber prolly.

It will be interesting to see if some of the larger contract assignors become true wholesalers - i.e., closing on the purchase and reselling at (hopefully) a higher price.  One major hurdle is the costs associated with transactions, 2 closing = twice the transaction cost. But if I’m buying 20 -40 lower priced properties annually I may decide to skip title insurance on the buy side and substitute a thorough title search.  
Another solution to comply with new, shall we call them “anti - wholesaling regulations” is the use of straight options. So the seller has no illusion that the optionee is required to purchase his property, he’s merely getting some cash for giving the optionee the RIGHT to purchase within a certain timeframe - IF he chooses.
I think those that are both experienced AND well capitalized have a chance to survive with either of these two scenarios, or perhaps another that complies with the new rules in effect.  What we will see will be the quick elimination of the inexperienced with little or no capital, who has been mislead to believing that they can “start their real estate investment journey by wholesaling to build capital, and then I plan to ………….”
I don’t think this will necessarily be a boon for the brokerage industry for the following reasons
1. Many of the deals that are currently being (attempted) to wholesale are not the size or type that are profitable to represent as a broker
2. Sellers will be able to sell to ibuyers and fix n flippers direct and still avoid a broker
3. New FSBO type companies will pop up offering a broker alternative to sellers
4. Those sellers that have some deep seated psychological hatred of the real estate brokerage industry will go to crazed extremes and cost themselves loads of money to avoid brokers.  I know one guy who hates brokers and will never use one  because his mother had a romantic affair with a broker and it broke up his family when he was a kid.   

I think to use option agreements the devil will be in the details, amount paid for the option and duration immediately come to mind.  Just recently 30 states have banned the abusive use of exclusive listing agreements and while I believe options are not included in the definition of a service agreement, if options are used to get around wholesaling prohibitions it's possible the definition could be changed.

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Jay Hinrichs
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Jay Hinrichs
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  • Lender
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Replied
Quote from @Peter Walther:
Quote from @Don Konipol:
Quote from @James Wise:
Quote from @Kyle Spearin:

I'm wondering how people in this space are going to pivot. If you currently do wholesale deals, how will you work with sellers and buyers? Does it mean just getting a license and selling deals "off market" to end buyers rather than getting them under contract? 

Super interested in this.

As for end-buyers like flippers and other value add investors, will you look for other ways to find deals now?


 They're gonna drive Uber prolly.

It will be interesting to see if some of the larger contract assignors become true wholesalers - i.e., closing on the purchase and reselling at (hopefully) a higher price.  One major hurdle is the costs associated with transactions, 2 closing = twice the transaction cost. But if I’m buying 20 -40 lower priced properties annually I may decide to skip title insurance on the buy side and substitute a thorough title search.  
Another solution to comply with new, shall we call them “anti - wholesaling regulations” is the use of straight options. So the seller has no illusion that the optionee is required to purchase his property, he’s merely getting some cash for giving the optionee the RIGHT to purchase within a certain timeframe - IF he chooses.
I think those that are both experienced AND well capitalized have a chance to survive with either of these two scenarios, or perhaps another that complies with the new rules in effect.  What we will see will be the quick elimination of the inexperienced with little or no capital, who has been mislead to believing that they can “start their real estate investment journey by wholesaling to build capital, and then I plan to ………….”
I don’t think this will necessarily be a boon for the brokerage industry for the following reasons
1. Many of the deals that are currently being (attempted) to wholesale are not the size or type that are profitable to represent as a broker
2. Sellers will be able to sell to ibuyers and fix n flippers direct and still avoid a broker
3. New FSBO type companies will pop up offering a broker alternative to sellers
4. Those sellers that have some deep seated psychological hatred of the real estate brokerage industry will go to crazed extremes and cost themselves loads of money to avoid brokers.  I know one guy who hates brokers and will never use one  because his mother had a romantic affair with a broker and it broke up his family when he was a kid.   

I think to use option agreements the devil will be in the details, amount paid for the option and duration immediately come to mind.  Just recently 30 states have banned the abusive use of exclusive listing agreements and while I believe options are not included in the definition of a service agreement, if options are used to get around wholesaling prohibitions it's possible the definition could be changed.


I think the market will regulate it most sellers of these types of properties want fairly quick closings so I dont think many will get talked into real long term options.
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Alan Asriants
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Alan Asriants
Agent
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  • Philadelphia, PA
Replied
Quote from @Russell Brazil:

Anyone with this amount of push back against such simple regulation as the requirement to be licensed, and thus the ability of the state to provide easy redress shady operators, makes me think that person is a shady operator.  Anyone who operates ethically has nothing to fear from the requirements to be licensed. Only those with something to hide have something to fear.


 100%!

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Alan Asriants - New Century Real Estate
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Anyone who wants to have a door or privacy curtain in a public bathroom stall is hiding something when they use bathroom. State should install cameras in bathroom stalls and watch what you do while you are inside a public restroom. Anyone who pushes back against such law/regulation is probably hiding something, doing drugs or have sexual intercourse there. Privacy laws and protections should be completely removed. Only criminals will oppose such idea. And etc. etc. etc.

Although this is not a matter of privacy, the argument above is presented to show the typical line of thinking used to sell draconian laws and restrictions on public, using fear to bring fascist/communist/totalitarian control over the lives of the individuals.

Nobody opposes the enforcement of criminal laws already existing in the books. Let MD AG go after shady/criminal characters who steal property from elderly, mentally disabled citizens. Why can't AG of MD do his job? Also, no one would oppose the type of licensing we have for gun owners. Let all wholesalers register, run their backgrounds through FBI NICS database, get some type of MD State registration number in the system that they can show sellers and ensure that no one can commit a crime and disappear in thin air, having stolen funds and properties of the citizens. But to regulate wholesaling and require the same type of licensing that Brokers and REA's have to have to work with retail consumers, with fiduciary duty to sellers, is insane and is designed to use the power and force of state to cut out the smallest guy in the food chain from doing the business in this state. Which is not surprising at all if we consider communist make up of MD legislature. 

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Peter Walther
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Peter Walther
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Replied
Quote from @Account Closed:

Anyone who wants to have a door or privacy curtain in a public bathroom stall is hiding something when they use bathroom. State should install cameras in bathroom stalls and watch what you do while you are inside a public restroom. Anyone who pushes back against such law/regulation is probably hiding something, doing drugs or have sexual intercourse there. Privacy laws and protections should be completely removed. Only criminals will oppose such idea. And etc. etc. etc.

Although this is not a matter of privacy, the argument above is presented to show the typical line of thinking used to sell draconian laws and restrictions on public, using fear to bring fascist/communist/totalitarian control over the lives of the individuals.

Nobody opposes the enforcement of criminal laws already existing in the books. Let MD AG go after shady/criminal characters who steal property from elderly, mentally disabled citizens. Why can't AG of MD do his job? Also, no one would oppose the type of licensing we have for gun owners. Let all wholesalers register, run their backgrounds through FBI NICS database, get some type of MD State registration number in the system that they can show sellers and ensure that no one can commit a crime and disappear in thin air, having stolen funds and properties of the citizens. But to regulate wholesaling and require the same type of licensing that Brokers and REA's have to have to work with retail consumers, with fiduciary duty to sellers, is insane and is designed to use the power and force of state to cut out the smallest guy in the food chain from doing the business in this state. Which is not surprising at all if we consider communist make up of MD legislature. 




"The lady doth protest too much, methinks"
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Account Closed
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Replied
Quote from @Peter Walther:
Quote from @Account Closed:

Anyone who wants to have a door or privacy curtain in a public bathroom stall is hiding something when they use bathroom. State should install cameras in bathroom stalls and watch what you do while you are inside a public restroom. Anyone who pushes back against such law/regulation is probably hiding something, doing drugs or have sexual intercourse there. Privacy laws and protections should be completely removed. Only criminals will oppose such idea. And etc. etc. etc.

Although this is not a matter of privacy, the argument above is presented to show the typical line of thinking used to sell draconian laws and restrictions on public, using fear to bring fascist/communist/totalitarian control over the lives of the individuals.

Nobody opposes the enforcement of criminal laws already existing in the books. Let MD AG go after shady/criminal characters who steal property from elderly, mentally disabled citizens. Why can't AG of MD do his job? Also, no one would oppose the type of licensing we have for gun owners. Let all wholesalers register, run their backgrounds through FBI NICS database, get some type of MD State registration number in the system that they can show sellers and ensure that no one can commit a crime and disappear in thin air, having stolen funds and properties of the citizens. But to regulate wholesaling and require the same type of licensing that Brokers and REA's have to have to work with retail consumers, with fiduciary duty to sellers, is insane and is designed to use the power and force of state to cut out the smallest guy in the food chain from doing the business in this state. Which is not surprising at all if we consider communist make up of MD legislature. 




"The lady doth protest too much, methinks"

 If you have anything of substance to add to this discussion and show the flaws in the logic or arguments I present to support my position, please don't hesitate to tag me. 

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Peter Walther
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Peter Walther
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Replied
Quote from @Jay Hinrichs:
Quote from @Peter Walther:
Quote from @Don Konipol:
Quote from @James Wise:
Quote from @Kyle Spearin:

I'm wondering how people in this space are going to pivot. If you currently do wholesale deals, how will you work with sellers and buyers? Does it mean just getting a license and selling deals "off market" to end buyers rather than getting them under contract? 

Super interested in this.

As for end-buyers like flippers and other value add investors, will you look for other ways to find deals now?


 They're gonna drive Uber prolly.

It will be interesting to see if some of the larger contract assignors become true wholesalers - i.e., closing on the purchase and reselling at (hopefully) a higher price.  One major hurdle is the costs associated with transactions, 2 closing = twice the transaction cost. But if I’m buying 20 -40 lower priced properties annually I may decide to skip title insurance on the buy side and substitute a thorough title search.  
Another solution to comply with new, shall we call them “anti - wholesaling regulations” is the use of straight options. So the seller has no illusion that the optionee is required to purchase his property, he’s merely getting some cash for giving the optionee the RIGHT to purchase within a certain timeframe - IF he chooses.
I think those that are both experienced AND well capitalized have a chance to survive with either of these two scenarios, or perhaps another that complies with the new rules in effect.  What we will see will be the quick elimination of the inexperienced with little or no capital, who has been mislead to believing that they can “start their real estate investment journey by wholesaling to build capital, and then I plan to ………….”
I don’t think this will necessarily be a boon for the brokerage industry for the following reasons
1. Many of the deals that are currently being (attempted) to wholesale are not the size or type that are profitable to represent as a broker
2. Sellers will be able to sell to ibuyers and fix n flippers direct and still avoid a broker
3. New FSBO type companies will pop up offering a broker alternative to sellers
4. Those sellers that have some deep seated psychological hatred of the real estate brokerage industry will go to crazed extremes and cost themselves loads of money to avoid brokers.  I know one guy who hates brokers and will never use one  because his mother had a romantic affair with a broker and it broke up his family when he was a kid.   

I think to use option agreements the devil will be in the details, amount paid for the option and duration immediately come to mind.  Just recently 30 states have banned the abusive use of exclusive listing agreements and while I believe options are not included in the definition of a service agreement, if options are used to get around wholesaling prohibitions it's possible the definition could be changed.


I think the market will regulate it most sellers of these types of properties want fairly quick closings so I dont think many will get talked into real long term options.

You're assuming the optionor reads and understands the agreement.  I think the same thinking applied to people accepting $400 in return for a 40-year listing agreement until it was shown that people only saw the $400 and not the terms and conditions.

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Peter Walther
  • Specialist
  • Winter Springs, FL
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Peter Walther
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Quote from @Account Closed:
Quote from @Peter Walther:
Quote from @Account Closed:

Anyone who wants to have a door or privacy curtain in a public bathroom stall is hiding something when they use bathroom. State should install cameras in bathroom stalls and watch what you do while you are inside a public restroom. Anyone who pushes back against such law/regulation is probably hiding something, doing drugs or have sexual intercourse there. Privacy laws and protections should be completely removed. Only criminals will oppose such idea. And etc. etc. etc.

Although this is not a matter of privacy, the argument above is presented to show the typical line of thinking used to sell draconian laws and restrictions on public, using fear to bring fascist/communist/totalitarian control over the lives of the individuals.

Nobody opposes the enforcement of criminal laws already existing in the books. Let MD AG go after shady/criminal characters who steal property from elderly, mentally disabled citizens. Why can't AG of MD do his job? Also, no one would oppose the type of licensing we have for gun owners. Let all wholesalers register, run their backgrounds through FBI NICS database, get some type of MD State registration number in the system that they can show sellers and ensure that no one can commit a crime and disappear in thin air, having stolen funds and properties of the citizens. But to regulate wholesaling and require the same type of licensing that Brokers and REA's have to have to work with retail consumers, with fiduciary duty to sellers, is insane and is designed to use the power and force of state to cut out the smallest guy in the food chain from doing the business in this state. Which is not surprising at all if we consider communist make up of MD legislature. 




"The lady doth protest too much, methinks"

 If you have anything of substance to add to this discussion and show the flaws in the logic or arguments I present to support my position, please don't hesitate to tag me. 


 No, the topic has been covered ad nauseum.

Account Closed
  • Maryland
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Account Closed
  • Maryland
Replied
Quote from @Peter Walther:
Quote from @Account Closed:
Quote from @Peter Walther:
Quote from @Account Closed:

Anyone who wants to have a door or privacy curtain in a public bathroom stall is hiding something when they use bathroom. State should install cameras in bathroom stalls and watch what you do while you are inside a public restroom. Anyone who pushes back against such law/regulation is probably hiding something, doing drugs or have sexual intercourse there. Privacy laws and protections should be completely removed. Only criminals will oppose such idea. And etc. etc. etc.

Although this is not a matter of privacy, the argument above is presented to show the typical line of thinking used to sell draconian laws and restrictions on public, using fear to bring fascist/communist/totalitarian control over the lives of the individuals.

Nobody opposes the enforcement of criminal laws already existing in the books. Let MD AG go after shady/criminal characters who steal property from elderly, mentally disabled citizens. Why can't AG of MD do his job? Also, no one would oppose the type of licensing we have for gun owners. Let all wholesalers register, run their backgrounds through FBI NICS database, get some type of MD State registration number in the system that they can show sellers and ensure that no one can commit a crime and disappear in thin air, having stolen funds and properties of the citizens. But to regulate wholesaling and require the same type of licensing that Brokers and REA's have to have to work with retail consumers, with fiduciary duty to sellers, is insane and is designed to use the power and force of state to cut out the smallest guy in the food chain from doing the business in this state. Which is not surprising at all if we consider communist make up of MD legislature. 




"The lady doth protest too much, methinks"

 If you have anything of substance to add to this discussion and show the flaws in the logic or arguments I present to support my position, please don't hesitate to tag me. 


 No, the topic has been covered ad nauseum.


 One could as well say that wholesalers were attacked ad nauseum, which necessitated arguing in defense of such a great industry which serves as a stepping stone and entry point for someone who has merits, while lacking millions of dollars in bank account and/or willingness to serve retail buyers/sellers with fiduciary duties and overwhelming state regulations to obey. 

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Shane H.
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Quote from @Account Closed:
Quote from @Jack Seiden:
Quote from @Account Closed:
Quote from @Jay Hinrichs:

finally a decent question from you.  The reason is 95% of sellers that wholesalers work with are approached by wholesalers first .. They have not had time to search our consult with an agent.
Brokers do solicit these types of homes for listings.. I get mailers from James Wises Holton Wise company every week on my inventory in Cleveland and he is a Broker. Part of the reason they go with wholesalers is simply the wholesalers do not tell the truth.. the truth about what the house is really worth and they like to talk about how there is no fee.. Keep in mind many of these sellers simply dont know what they dont know.. they take the wholesalers word for it. And end up leave thousands on the table.. The sellers believe the wholesalers value number and they fall for the no commission line.. not knowing that at the end of the he day that free commish cost them huge dollars if sold through MLS.. its a game and a game that is played well by wholesalers.. At the expense of the property owner. Just ask how many BP investors get solicited from Wholesalers frequently and how they just laugh at them when the number is given.

Perfect example I have a prop in Cleveland that I put up for sale for fun I called a few of the letters we buy houses.. best offer I could finally get out of them was 40k.. I listed it (89K) and in one week had 6 written offers from 45k ( probably a wholesaler ) to 85 to 91k with an escalation clause .. I took what I thought was the best offer at 91k that had NO inspections close in 3 weeks and had a POF which was a copy of a bank statement in the name of the buyer.. Its a nice duplex that makes 1300 a month gross.. But its in East Cleveland So if it was west cleveland it would have been quite a bit higher priced.

 You are always being so condescending, saying I am naive, lacking in rudimentary knowledge or surprising you by asking half decent question. Which is ok by me, I don't get offended by this stuff. But what I understand from what you wrote above is that Broker or Buyers agent's commission (money they earn from transaction) depends on the selling price of the property, so the higher it is the merrier REA or Broker will be. As a wholesaler I have no such concerns. I don't have to overinflate the worth and tell tall tales to seller, so I can grab the most commission out of peddling his property to unsuspecting , foolish buyers. I look at it from investor's point of view and try to get it at the least price possible. Obviously, wholesaler and sellers potential agent/broker have a conflict of interest there, which leads to seller's REA or Broker to super inflate the worth of seller's junk and fool the potential buyers, by lying to all about high value of uninhabitable garbage)))

As to 95% of REA and brokers not reaching the sellers before wholesalers, whose fault is that? lol

And, as wholesaler not having a fiduciary duty to seller, not running a charitable organization or Church, how is it my job to educate the seller about the worth of their property? Unless that seller is in pre-foreclosure and 60 days past on payments, why is it any of my business to teach and educate a seller? Note: I personally don't want to pursue pre-foreclosures, it's tricky and too easy to run afoul of Loss Mitigation laws in MD. 

Come to think of it, about education. I had to make choices and forego things I could do: like going out to party with girls, drink 7 days a week, smoke weed, drop school and never open a single page of any meaningful book, leave alone educating myself on wholesaling RE, while I was going to school, constantly reading books and learning new things. A clueless ADULT seller with all his cognitive abilities INTACT also made certain choices that were most pleasant to him at the moment and now pays the due price by being stupid. Why is he now entitled to fruits of my labor, my knowledge and education? I see so many strange assumptions about non-existent fiduciary duties of wholesalers, I really wonder where do you get these ideas from? lol


 I think you should at least consider going out and partying with girls and drinking 7 days a week, would at least be a better use of your time, than arguing with random people on a message board for over a week.

@Jack Seiden - You conveniently ignore the fact that I am not the one arguing, rather defending a position based on my views as a wholesaler, while wholesalers as a group are relentlessly being attacked on this forum.

@Jay Hinrichs - which I don't mind, btw. The only way to learn and understand the process is to consider all angles and views on it. It would be a terrible forum if it sounded like an echo chamber. 

I love how you even argued about arguing. Lol

no one’s attacking you. You’re not a wholesaler. You’re an aspiring wholesaler. People who have dealt with them are trying to tell you a tale of caution. Rather than taking that and turning it useful by finding ways to avoid being that snake oil salesman who preys on the weak and elderly, you’ve decided that all of the people who have seen the misdeeds are just jealous. I suppose in a way you’re right. Sometimes I wish I had no morals so I could screw people over without empathy or regret. Unfortunately I was dealt a conscience. I was  in your shoes. I took the cautionary advice, researched it from an unaided perspective rather than the one you’re approaching it from. A deal fell in my lap. I brought an experienced and successful wholesaler in. I was appalled by his tactics. No you didn’t “earn” that money if you convince an unsuspecting widow that her home is worth 25% of what it’s worth by inflating repair prices, deflating comps, and pretending to be a cash buyer that you’re not. That makes you a con man. If your hvac contractor tries to sell you a new furnace by telling you it’s more efficient and over one you may save money via energy savings, less repairs, etc that’s fair. If he tells you your furnace is going to explode when it’s not, just to make a sale he’s a thief. Why should that homeowner benefit from the years of experience this contractor has? He has every right to use his superior knowledge to rip them off by scaring them into taking a heloc to pay for a new furnace because it needs a filter replaced.

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Shane H.
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Quote from @Account Closed:
Quote from @Jack Seiden:

 I am fine with being hated. Moreover, I think it's one of the best motivators to action. I would get depressed if I became popular and liked by all, like some high school cheerleader or baseball player. I don't have an innate need to be liked. So, I look forward to doing it, with love of doing what I am doing.

But I have to address couple of things you mentioned. First, a lot of people exploit old people (some registered nurses, members of heavily regulated profession, with multiple degrees and licenses in nursing and medical sciences come to mind. There are instances where care-in nurses stole the funds and property of elderly they were hired to look after). Guess what? You can't get far doing it. Even if an old, senile person screams off the top of his lungs that he wished to sell you his property, State or his relatives can come after you, void the contract he signed and take that property from you. You could be criminally charged for taking advantage of mental disability of the senile old person. So, while there will always be people (nurses, brokers, realtors, wholesalers and etc.) who will take advantage of elderly people, it's not an argument or excuse to outlaw the entire industry. Just enforce the laws on the books and go after people who engage in nefarious practices. 

Next, what is so "bad" in it for society and how is it worse than any other business? Are licensed dealers who pay trade-in values and "take advantage" of car owners any better? May be we should equate them to meth dealers now? And how about current Boeing CEO, a culprit in death of hundreds of Americans? Where is the outrage of our upstanding society when most powerful, on  top of the food chain, engage in crimes that result in death of hundreds of Americans? Aren't we being hypocritical here? 

It’s almost like you don’t know that there are congressional hearings to investigate Boeing. Or that they grounded an entire class of their planes. 

people are not hating you. You’re not the star of this show no matter how much you’d like to be. People dislike what they’ve seen run rampant in an industry. 

what are these insane regulations and licensing requirements you’re referring to to become an agent. In most states with no criminal background you can do it in an afternoon. Lol
Account Closed
  • Maryland
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Account Closed
  • Maryland
Replied
Quote from @Shane H.:
Quote from @Account Closed:
Quote from @Jack Seiden:
Quote from @Account Closed:
Quote from @Jay Hinrichs:

finally a decent question from you.  The reason is 95% of sellers that wholesalers work with are approached by wholesalers first .. They have not had time to search our consult with an agent.
Brokers do solicit these types of homes for listings.. I get mailers from James Wises Holton Wise company every week on my inventory in Cleveland and he is a Broker. Part of the reason they go with wholesalers is simply the wholesalers do not tell the truth.. the truth about what the house is really worth and they like to talk about how there is no fee.. Keep in mind many of these sellers simply dont know what they dont know.. they take the wholesalers word for it. And end up leave thousands on the table.. The sellers believe the wholesalers value number and they fall for the no commission line.. not knowing that at the end of the he day that free commish cost them huge dollars if sold through MLS.. its a game and a game that is played well by wholesalers.. At the expense of the property owner. Just ask how many BP investors get solicited from Wholesalers frequently and how they just laugh at them when the number is given.

Perfect example I have a prop in Cleveland that I put up for sale for fun I called a few of the letters we buy houses.. best offer I could finally get out of them was 40k.. I listed it (89K) and in one week had 6 written offers from 45k ( probably a wholesaler ) to 85 to 91k with an escalation clause .. I took what I thought was the best offer at 91k that had NO inspections close in 3 weeks and had a POF which was a copy of a bank statement in the name of the buyer.. Its a nice duplex that makes 1300 a month gross.. But its in East Cleveland So if it was west cleveland it would have been quite a bit higher priced.

 You are always being so condescending, saying I am naive, lacking in rudimentary knowledge or surprising you by asking half decent question. Which is ok by me, I don't get offended by this stuff. But what I understand from what you wrote above is that Broker or Buyers agent's commission (money they earn from transaction) depends on the selling price of the property, so the higher it is the merrier REA or Broker will be. As a wholesaler I have no such concerns. I don't have to overinflate the worth and tell tall tales to seller, so I can grab the most commission out of peddling his property to unsuspecting , foolish buyers. I look at it from investor's point of view and try to get it at the least price possible. Obviously, wholesaler and sellers potential agent/broker have a conflict of interest there, which leads to seller's REA or Broker to super inflate the worth of seller's junk and fool the potential buyers, by lying to all about high value of uninhabitable garbage)))

As to 95% of REA and brokers not reaching the sellers before wholesalers, whose fault is that? lol

And, as wholesaler not having a fiduciary duty to seller, not running a charitable organization or Church, how is it my job to educate the seller about the worth of their property? Unless that seller is in pre-foreclosure and 60 days past on payments, why is it any of my business to teach and educate a seller? Note: I personally don't want to pursue pre-foreclosures, it's tricky and too easy to run afoul of Loss Mitigation laws in MD. 

Come to think of it, about education. I had to make choices and forego things I could do: like going out to party with girls, drink 7 days a week, smoke weed, drop school and never open a single page of any meaningful book, leave alone educating myself on wholesaling RE, while I was going to school, constantly reading books and learning new things. A clueless ADULT seller with all his cognitive abilities INTACT also made certain choices that were most pleasant to him at the moment and now pays the due price by being stupid. Why is he now entitled to fruits of my labor, my knowledge and education? I see so many strange assumptions about non-existent fiduciary duties of wholesalers, I really wonder where do you get these ideas from? lol


 I think you should at least consider going out and partying with girls and drinking 7 days a week, would at least be a better use of your time, than arguing with random people on a message board for over a week.

@Jack Seiden - You conveniently ignore the fact that I am not the one arguing, rather defending a position based on my views as a wholesaler, while wholesalers as a group are relentlessly being attacked on this forum.

@Jay Hinrichs - which I don't mind, btw. The only way to learn and understand the process is to consider all angles and views on it. It would be a terrible forum if it sounded like an echo chamber. 

I love how you even argued about arguing. Lol

no one’s attacking you. You’re not a wholesaler. You’re an aspiring wholesaler. People who have dealt with them are trying to tell you a tale of caution. Rather than taking that and turning it useful by finding ways to avoid being that snake oil salesman who preys on the weak and elderly, you’ve decided that all of the people who have seen the misdeeds are just jealous. I suppose in a way you’re right. Sometimes I wish I had no morals so I could screw people over without empathy or regret. Unfortunately I was dealt a conscience. I was  in your shoes. I took the cautionary advice, researched it from an unaided perspective rather than the one you’re approaching it from. A deal fell in my lap. I brought an experienced and successful wholesaler in. I was appalled by his tactics. No you didn’t “earn” that money if you convince an unsuspecting widow that her home is worth 25% of what it’s worth by inflating repair prices, deflating comps, and pretending to be a cash buyer that you’re not. That makes you a con man. If your hvac contractor tries to sell you a new furnace by telling you it’s more efficient and over one you may save money via energy savings, less repairs, etc that’s fair. If he tells you your furnace is going to explode when it’s not, just to make a sale he’s a thief. Why should that homeowner benefit from the years of experience this contractor has? He has every right to use his superior knowledge to rip them off by scaring them into taking a heloc to pay for a new furnace because it needs a filter replaced.

Let's make sure we don't argue with a straw man. I don't take any of the thoughts shared here as personal attacks. Jay, for one, is sharing a lot of valuable information and so do others. I enjoy reading their posts. Russel was one of the first members here I contacted 6 years ago when I was looking for fix and flip properties. I understand they are hostile to wholesalers as a group, they don't know me and don't necessarily attack me as an individual. In the same vein, when I argue back to defend my position I don't attack them. I defend a position from a different point of view which is not in agreement with what they say. And I welcome anyone to dismantle my arguments on the merits.

At what point did I advocate for abuse of elderly and objected to protections already afforded under the law for those with mental disabilities? Anyone who knows anything about contract law also knows that a contract signed by individual not capable of making conscious decision is null and void in the eyes of the law, just as if their signature was forged. I stated this million times. Did I ever argue against it?

Snake oil salesman, like father of the founder of Rockefeller dynasty who literally sold snake oil and ran from town to town, would be someone like Kiyosaki who charges $30K for courses to teach things about RE that one could learn on this forum for free. Classic "snake oil salesman" strategy in wholesaling would be to open seminars for sellers and charge each seller thousands of dollars to tell teach them how to sell their property for most money on the market, without providing anything of tangible value to them. But I have no such intentions, so why should I caution myself against something that I don't intend to do?

Yes, I still believe a lot of brokers and REAs who are hostile to wholesaling industry are motivated by jealousy and resentment born out of the fact that they had to invest so much time and efforts to get licensed in RE, while wholesaler can get into assigning contracts and earning his average $10K per deal without any entry barriers, overwhelming regulations, caps on commissions and jumping through hoops that they had to in order to serve end buyers and sellers with fiduciary duty to parties they serve in retail market and public. They believe eliminating wholesalers from them picture will help them capture the sales that pass through their fingers and earn them commissions they crave. 

As to "morals", please don't feed me that)))) There is nothing moral or ethical about doing business, it's just a fact. Do you remember Pretty Woman, where protagonist tells a hooker that they both do the exact same thing, screw people for money? And that's what EVERY businessman out there does. Anyone who denies it is a hypocrite. You can't keep doing in, in whatever capacity and industry you are, yet preach "morals" from the soap box. ANYTIME you pay someone anything less than the market value of the goods you acquire you could say you are acting immorally. Anytime you profit from a transaction as a middle man, it could be argued that you engaged in moral vice by profiting from labor and value that you stole from other people by inserting yourself in the middle , and we both know that in practical terms this argument is a BS. Our entire economy depends on business transactions, on middlemen, we are not cave men or primitive tribe men who barter goods for their true value, without someone in the middle facilitating the exchanges and money serving as a medium or tool to make it happen. ANY transaction out there has a loser and winner, every single one including your purchase of an ice cream or bottle of soda. So, don't even think anyone can intimidate me with this childish talk about "morals" in business. 

What matters to me is criminal law and I know I will not violate it. Anything outside of criminal code  between ADULTS with their mental capacity INTACT is just that: a private transaction where two parties agree to exchange the goods at whatever price they agree to. 

I ran wholesale operation in the past and consistently negotiated and got liquidation products at extremely low prices, which I could speedily monetize by reselling with 25% profit margin. I used the same negotiating tactics when I bought cars from car dealers, by getting the lowest price possible (after extensive research of the market) , to the extent that I have paid wholesale prices (after hefty discounts and application of all the existing rebates from manufacturer and favorable terms from financing company) on purchases of new cars. At no point I had to LIE to any of the sellers. What I did instead (because I assume that people very often by default think they are super smart and you are liar, no matter what your true intentions and actions are) was very simple: in each transaction, before closing a deal, I did my thorough research of the market and figured for myself how much the product I wanted to acquire is worth to ME. I was HATED by sellers for being a hard negotiator on the price, but I couldn't care less if they loved me or hated me. They wanted money, I wanted their product. I was willing to part with max. X dollars to get the goods they had and if they were unwilling to do exchange I immediately walked out. Never had to beg, pressure, lie or invent the reasons WHY they should sell it to me for X dollars. Always said I respect whatever they think and feel, the product is theirs and they had so much time to decide, to sell it to me or not. I was called shrewd and unconscionable by car dealers working for major auto franchises ,but I couldn't care less about it. Hate me all you want, but it's my business and my money, so sell me for what I want to pay or have a nice life! Only on rare occasions, when I had exceptionally clear thinking and well educated person (which, I will emphasize, was rare in wholesale or car buying business), I would go into details, break down the numbers, show my spreadsheets, sources of information, calculation and justification for the price I offered. For the most part, dealing with people driven by emotions and incapable of rational thinking, I didn't bother with ANY of it. It was as simple as "Here is $5, take it or leave it!". I don't care if the market value of it is $25. You want to sell it for $25, $50, $100? Beautiful, go do it yourself, I will wish you good luck. There is no need to engage in criminal acts and to defraud sellers by artificially inflating numbers, that's probably what brokers or REA would be more likely to do, since their commission would be larger the greater the amount of transaction was. And while I use comps, look up MLS and estimate repairs before making an offer to buy a property, at no point I assume that my contract assignee will care a bit about what I show him on the paper. I am sure any investor with half wits in his head will go ahead and do his own math before deciding on a purchase. So, where all the lies, deceit and snake oil salesmanship is in all of this? )))

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Sherry McQuage
Agent
  • Real Estate Broker
  • Moore County, NC
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Sherry McQuage
Agent
  • Real Estate Broker
  • Moore County, NC
Replied

I have done/attempted to do 2 transactions with wholesalers that contacted me...I don't intend to work with them again.

The wholesalers that contacted me generally bring properties that are "not desirable" for some reason...in bad locations, the owner of record has not paid taxes on them for years and is overseas, has some sort of title issue, or is "elderly" and has no idea what the property is worth.

Also, the wholesalers that have contacted me were very protective of what they were under contract to "buy" the property for, and tried to pressure me to sell it within 30 days or my commission would go down.  Not an incentive, because I know how much time, effort, and marketing I put out.

I also appreciate the hustle...however, it felt like "someone was trying to make money off someone who may not know as much" and I don't like that. My local MLS is also writing rules that require a seller to own/close on a property before listing it with an agent. I applaud this; with so much information available online already, owners of record generally find out what the wholesaler is trying to sell it for, and they seem to feel "taken advantage of"...I pride myself on ethics, and doing the right thing...another reason I won't list a wholesaler's property anymore.

Things are changing...there's no "easy button" to make money fast anymore.  I think that's good, as it will protect owners of record better.  Hustle is good...wholesaling is no longer in my "good" category.  Buy/close on the property first, then sell it.

  • Sherry McQuage
Account Closed
  • Maryland
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Account Closed
  • Maryland
Replied

REA and Brokers will always dislike wholesalers, that's just the nature of business where EVERYONE is driven and motivated by selfish interests and greed and nothing but selfish interests (all "moral" talk is a smokescreen, for naive to fall). Anyone who aspires to be a wholesaler and reads this forum, grow a thick skin. Business is like a high school and most people in real world are emotionally driven and irrational. Don't expect to be liked and don't try to be liked. No one will roll red carpet for you except the ones who can benefit from your business and services. Just do your thing, know what you are doing, don't lie, don't misrepresent, don't break the law

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Peter Walther
  • Specialist
  • Winter Springs, FL
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Peter Walther
  • Specialist
  • Winter Springs, FL
Replied
Quote from @Account Closed:
Quote from @Shane H.:
Quote from @Account Closed:
Quote from @Jack Seiden:
Quote from @Account Closed:
Quote from @Jay Hinrichs:

finally a decent question from you.  The reason is 95% of sellers that wholesalers work with are approached by wholesalers first .. They have not had time to search our consult with an agent.
Brokers do solicit these types of homes for listings.. I get mailers from James Wises Holton Wise company every week on my inventory in Cleveland and he is a Broker. Part of the reason they go with wholesalers is simply the wholesalers do not tell the truth.. the truth about what the house is really worth and they like to talk about how there is no fee.. Keep in mind many of these sellers simply dont know what they dont know.. they take the wholesalers word for it. And end up leave thousands on the table.. The sellers believe the wholesalers value number and they fall for the no commission line.. not knowing that at the end of the he day that free commish cost them huge dollars if sold through MLS.. its a game and a game that is played well by wholesalers.. At the expense of the property owner. Just ask how many BP investors get solicited from Wholesalers frequently and how they just laugh at them when the number is given.

Perfect example I have a prop in Cleveland that I put up for sale for fun I called a few of the letters we buy houses.. best offer I could finally get out of them was 40k.. I listed it (89K) and in one week had 6 written offers from 45k ( probably a wholesaler ) to 85 to 91k with an escalation clause .. I took what I thought was the best offer at 91k that had NO inspections close in 3 weeks and had a POF which was a copy of a bank statement in the name of the buyer.. Its a nice duplex that makes 1300 a month gross.. But its in East Cleveland So if it was west cleveland it would have been quite a bit higher priced.

 You are always being so condescending, saying I am naive, lacking in rudimentary knowledge or surprising you by asking half decent question. Which is ok by me, I don't get offended by this stuff. But what I understand from what you wrote above is that Broker or Buyers agent's commission (money they earn from transaction) depends on the selling price of the property, so the higher it is the merrier REA or Broker will be. As a wholesaler I have no such concerns. I don't have to overinflate the worth and tell tall tales to seller, so I can grab the most commission out of peddling his property to unsuspecting , foolish buyers. I look at it from investor's point of view and try to get it at the least price possible. Obviously, wholesaler and sellers potential agent/broker have a conflict of interest there, which leads to seller's REA or Broker to super inflate the worth of seller's junk and fool the potential buyers, by lying to all about high value of uninhabitable garbage)))

As to 95% of REA and brokers not reaching the sellers before wholesalers, whose fault is that? lol

And, as wholesaler not having a fiduciary duty to seller, not running a charitable organization or Church, how is it my job to educate the seller about the worth of their property? Unless that seller is in pre-foreclosure and 60 days past on payments, why is it any of my business to teach and educate a seller? Note: I personally don't want to pursue pre-foreclosures, it's tricky and too easy to run afoul of Loss Mitigation laws in MD. 

Come to think of it, about education. I had to make choices and forego things I could do: like going out to party with girls, drink 7 days a week, smoke weed, drop school and never open a single page of any meaningful book, leave alone educating myself on wholesaling RE, while I was going to school, constantly reading books and learning new things. A clueless ADULT seller with all his cognitive abilities INTACT also made certain choices that were most pleasant to him at the moment and now pays the due price by being stupid. Why is he now entitled to fruits of my labor, my knowledge and education? I see so many strange assumptions about non-existent fiduciary duties of wholesalers, I really wonder where do you get these ideas from? lol


 I think you should at least consider going out and partying with girls and drinking 7 days a week, would at least be a better use of your time, than arguing with random people on a message board for over a week.

@Jack Seiden - You conveniently ignore the fact that I am not the one arguing, rather defending a position based on my views as a wholesaler, while wholesalers as a group are relentlessly being attacked on this forum.

@Jay Hinrichs - which I don't mind, btw. The only way to learn and understand the process is to consider all angles and views on it. It would be a terrible forum if it sounded like an echo chamber. 

I love how you even argued about arguing. Lol

no one’s attacking you. You’re not a wholesaler. You’re an aspiring wholesaler. People who have dealt with them are trying to tell you a tale of caution. Rather than taking that and turning it useful by finding ways to avoid being that snake oil salesman who preys on the weak and elderly, you’ve decided that all of the people who have seen the misdeeds are just jealous. I suppose in a way you’re right. Sometimes I wish I had no morals so I could screw people over without empathy or regret. Unfortunately I was dealt a conscience. I was  in your shoes. I took the cautionary advice, researched it from an unaided perspective rather than the one you’re approaching it from. A deal fell in my lap. I brought an experienced and successful wholesaler in. I was appalled by his tactics. No you didn’t “earn” that money if you convince an unsuspecting widow that her home is worth 25% of what it’s worth by inflating repair prices, deflating comps, and pretending to be a cash buyer that you’re not. That makes you a con man. If your hvac contractor tries to sell you a new furnace by telling you it’s more efficient and over one you may save money via energy savings, less repairs, etc that’s fair. If he tells you your furnace is going to explode when it’s not, just to make a sale he’s a thief. Why should that homeowner benefit from the years of experience this contractor has? He has every right to use his superior knowledge to rip them off by scaring them into taking a heloc to pay for a new furnace because it needs a filter replaced.

Let's make sure we don't argue with a straw man. I don't take any of the thoughts shared here as personal attacks. Jay, for one, is sharing a lot of valuable information and so do others. I enjoy reading their posts. Russel was one of the first members here I contacted 6 years ago when I was looking for fix and flip properties. I understand they are hostile to wholesalers as a group, they don't know me and don't necessarily attack me as an individual. In the same vein, when I argue back to defend my position I don't attack them. I defend a position from a different point of view which is not in agreement with what they say. And I welcome anyone to dismantle my arguments on the merits.

At what point did I advocate for abuse of elderly and objected to protections already afforded under the law for those with mental disabilities? Anyone who knows anything about contract law also knows that a contract signed by individual not capable of making conscious decision is null and void in the eyes of the law, just as if their signature was forged. I stated this million times. Did I ever argue against it?

Snake oil salesman, like father of the founder of Rockefeller dynasty who literally sold snake oil and ran from town to town, would be someone like Kiyosaki who charges $30K for courses to teach things about RE that one could learn on this forum for free. Classic "snake oil salesman" strategy in wholesaling would be to open seminars for sellers and charge each seller thousands of dollars to tell teach them how to sell their property for most money on the market, without providing anything of tangible value to them. But I have no such intentions, so why should I caution myself against something that I don't intend to do?

Yes, I still believe a lot of brokers and REAs who are hostile to wholesaling industry are motivated by jealousy and resentment born out of the fact that they had to invest so much time and efforts to get licensed in RE, while wholesaler can get into assigning contracts and earning his average $10K per deal without any entry barriers, overwhelming regulations, caps on commissions and jumping through hoops that they had to in order to serve end buyers and sellers with fiduciary duty to parties they serve in retail market and public. They believe eliminating wholesalers from them picture will help them capture the sales that pass through their fingers and earn them commissions they crave. 

As to "morals", please don't feed me that)))) There is nothing moral or ethical about doing business, it's just a fact. Do you remember Pretty Woman, where protagonist tells a hooker that they both do the exact same thing, screw people for money? And that's what EVERY businessman out there does. Anyone who denies it is a hypocrite. You can't keep doing in, in whatever capacity and industry you are, yet preach "morals" from the soap box. ANYTIME you pay someone anything less than the market value of the goods you acquire you could say you are acting immorally. Anytime you profit from a transaction as a middle man, it could be argued that you engaged in moral vice by profiting from labor and value that you stole from other people by inserting yourself in the middle , and we both know that in practical terms this argument is a BS. Our entire economy depends on business transactions, on middlemen, we are not cave men or primitive tribe men who barter goods for their true value, without someone in the middle facilitating the exchanges and money serving as a medium or tool to make it happen. ANY transaction out there has a loser and winner, every single one including your purchase of an ice cream or bottle of soda. So, don't even think anyone can intimidate me with this childish talk about "morals" in business. 

What matters to me is criminal law and I know I will not violate it. Anything outside of criminal code  between ADULTS with their mental capacity INTACT is just that: a private transaction where two parties agree to exchange the goods at whatever price they agree to. 

I ran wholesale operation in the past and consistently negotiated and got liquidation products at extremely low prices, which I could speedily monetize by reselling with 25% profit margin. I used the same negotiating tactics when I bought cars from car dealers, by getting the lowest price possible (after extensive research of the market) , to the extent that I have paid wholesale prices (after hefty discounts and application of all the existing rebates from manufacturer and favorable terms from financing company) on purchases of new cars. At no point I had to LIE to any of the sellers. What I did instead (because I assume that people very often by default think they are super smart and you are liar, no matter what your true intentions and actions are) was very simple: in each transaction, before closing a deal, I did my thorough research of the market and figured for myself how much the product I wanted to acquire is worth to ME. I was HATED by sellers for being a hard negotiator on the price, but I couldn't care less if they loved me or hated me. They wanted money, I wanted their product. I was willing to part with max. X dollars to get the goods they had and if they were unwilling to do exchange I immediately walked out. Never had to beg, pressure, lie or invent the reasons WHY they should sell it to me for X dollars. Always said I respect whatever they think and feel, the product is theirs and they had so much time to decide, to sell it to me or not. I was called shrewd and unconscionable by car dealers working for major auto franchises ,but I couldn't care less about it. Hate me all you want, but it's my business and my money, so sell me for what I want to pay or have a nice life! Only on rare occasions, when I had exceptionally clear thinking and well educated person (which, I will emphasize, was rare in wholesale or car buying business), I would go into details, break down the numbers, show my spreadsheets, sources of information, calculation and justification for the price I offered. For the most part, dealing with people driven by emotions and incapable of rational thinking, I didn't bother with ANY of it. It was as simple as "Here is $5, take it or leave it!". I don't care if the market value of it is $25. You want to sell it for $25, $50, $100? Beautiful, go do it yourself, I will wish you good luck. There is no need to engage in criminal acts and to defraud sellers by artificially inflating numbers, that's probably what brokers or REA would be more likely to do, since their commission would be larger the greater the amount of transaction was. And while I use comps, look up MLS and estimate repairs before making an offer to buy a property, at no point I assume that my contract assignee will care a bit about what I show him on the paper. I am sure any investor with half wits in his head will go ahead and do his own math before deciding on a purchase. So, where all the lies, deceit and snake oil salesmanship is in all of this? )))




Woman almost sold nearly priceless Jackie Robinson bat for $1 (msn.com)

Lucky you weren't at the garage sale.

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Shane H.
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Quote from @Account Closed:

REA and Brokers will always dislike wholesalers, that's just the nature of business where EVERYONE is driven and motivated by selfish interests and greed and nothing but selfish interests (all "moral" talk is a smokescreen, for naive to fall). Anyone who aspires to be a wholesaler and reads this forum, grow a thick skin. Business is like a high school and most people in real world are emotionally driven and irrational. Don't expect to be liked and don't try to be liked. No one will roll red carpet for you except the ones who can benefit from your business and services. Just do your thing, know what you are doing, don't lie, don't misrepresent, don't break the law

I completely understand why you would convince yourself that all business is immoral in order to justify doing immoral things yourself. It is 100% possible to operate business in a moral manner. Of course different folks have different views of what is moral, but literally everyone here who has dealt with wholesalers has noticed their propensity to seek out elderly sellers. The legal bar for a criminal transaction or claiming the person was unable to enter into a contract are not necessarily equivalent to the bar for those who need guidance I.e. the elderly. Your obsessive focus on the buyer and their business acumen is strange… unless… it’s a distraction from the individuals who actually need the protection. The often less capable sellers.

Early on in this discussion I thought you were just a wide eyed fellow taken in by the ability to enter into a market with little investment. At this point I suspect a more nefarious reason for your defensiveness of this group of people. While some have different morals than others most reasonable people agree that certain groups need protection. That’s why we write criminal laws, and why many of us are advocating to expand slightly in this area, what is to be considered criminal.

By requiring licensing that you think is so onerous, which is usually quite easy to complete and reasonably priced  maybe $1,000 and somewhere between a day and 2 weeks of online classes, we can protect a segment of people that need protection. Repeatedly you’ve gone back to say brokers would likely inflate the price because if commission. That would literally be beneficial to the segment that needs to be protected so that’s a horrible argument  investors hardly need protection at the same level that little old widows need. Now somehow youve equated auto dealers and professional car salesman with those elderly individuals the rest of us would like to protect. Everyone reading can see how absurd that is. I suspect you can as well. 

You’ve actually inspired me to write to my legislator to encourage a stronger protection of those individuals from wholesalers, even if that means banning the practice entirely. 
 

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Account Closed
  • Maryland
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Account Closed
  • Maryland
Replied
Quote from @Shane H.:
Quote from @Account Closed:

REA and Brokers will always dislike wholesalers, that's just the nature of business where EVERYONE is driven and motivated by selfish interests and greed and nothing but selfish interests (all "moral" talk is a smokescreen, for naive to fall). Anyone who aspires to be a wholesaler and reads this forum, grow a thick skin. Business is like a high school and most people in real world are emotionally driven and irrational. Don't expect to be liked and don't try to be liked. No one will roll red carpet for you except the ones who can benefit from your business and services. Just do your thing, know what you are doing, don't lie, don't misrepresent, don't break the law

I completely understand why you would convince yourself that all business is immoral in order to justify doing immoral things yourself. It is 100% possible to operate business in a moral manner. Of course different folks have different views of what is moral, but literally everyone here who has dealt with wholesalers has noticed their propensity to seek out elderly sellers. The legal bar for a criminal transaction or claiming the person was unable to enter into a contract are not necessarily equivalent to the bar for those who need guidance I.e. the elderly. Your obsessive focus on the buyer and their business acumen is strange… unless… it’s a distraction from the individuals who actually need the protection. The often less capable sellers.

Early on in this discussion I thought you were just a wide eyed fellow taken in by the ability to enter into a market with little investment. At this point I suspect a more nefarious reason for your defensiveness of this group of people. While some have different morals than others most reasonable people agree that certain groups need protection. That’s why we write criminal laws, and why many of us are advocating to expand slightly in this area, what is to be considered criminal.

By requiring licensing that you think is so onerous, which is usually quite easy to complete and reasonably priced  maybe $1,000 and somewhere between a day and 2 weeks of online classes, we can protect a segment of people that need protection. Repeatedly you’ve gone back to say brokers would likely inflate the price because if commission. That would literally be beneficial to the segment that needs to be protected so that’s a horrible argument  investors hardly need protection at the same level that little old widows need. Now somehow youve equated auto dealers and professional car salesman with those elderly individuals the rest of us would like to protect. Everyone reading can see how absurd that is. I suspect you can as well. 

You’ve actually inspired me to write to my legislator to encourage a stronger protection of those individuals from wholesalers, even if that means banning the practice entirely. 
 

 You can suspect and think all you want. First question is: what is your definition of "moral" versus "immoral" wholesale transaction? Please be concrete and elaborate. I understand you mean "moral" is something beyond "legal", but what exactly you mean when you say that?

Second, there are numbers involved here. Let's say there is a property on 123 Main Street, Anytown, Maryland. It has 3 br and 2 ba. I call my REA, we run comps and find that similar homes that were sold in that area in the past 6 months fetched $100,000.00 each. I call my HML guy and he says the area is good, property looks good and that they would lend hard money to an investor willing to buy , repair and flip it.

If I am an investor who wants to buy the investment property, I will want to buy this property for (let's say) 70% of ARV minus my repair costs, provided it's in an area where there is steady demand for homes. Let's suppose all those homes we found in MLS to run comps that were sold for $100K were in good enough shape to meet the definition of ARV. Suppose I brought in a contractor and I know that it will cost investor $30K to repair this particular home to make it retail ready. Now I know that I could offer this home AS IS to an investor for $40K. That's just how much investor/rehabber will pay to acquire it, or else they won't get a return on investment to justify their risks and costs. So, $40K is how much it's worth in a wholesale market. Suppose I have spent 2 months to find a seller of this property, I have spent hundreds of dollars on Facebook ads, spent $1300 to a company that placed 2000 cold calls in the US, spent another couple of thousands on direct mailing campaign. I am not counting MY time and effort, driving for dollars and paying for my gas and wear and tear on my car. As you can see, I have already spent at least $4K to find that seller (he didn't just come and nock on my door out of the blue). So, it's only natural that I add my finders fee to it, to make it worthwhile to do this (I am not an idiot nor a charitable , non profit organization that receives government grants and tax deductions, after all. I run a for profit business and I either have to profit or quit). So, I add my fee to a assignment contract, let's say $8,000. And I deduct those $8K from $40K. So, realistically $32K is my MAO, that's all I can offer the seller to make this work worthwhile of doing. I offer $30K to seller, we haggle and he agrees to give it up for $31K. I am not adding closing costs there, to make math simple, but you get the drill. So now tell me, is it "immoral" to offer $31K to a seller? Is it immoral to have a contract with that figure with a seller and to collect assignment fee in the amount of $8K? Let's talk real numbers here, not pontificate like if we were priests in a Sunday school. So, what wholesaler is supposed to do to be "moral" in your books? May be pay $60K out of his pocket, to get seller $100K, to make seller happy? Is that what you propose here? I am just curious what your rationale is on this. I am not interested in your "moral" lessons, but I want to understand how you think wholesaler should operate in this particular case as described? Please be specific.

P.S. Please feel free to write to anyone you wish. I can do the same! LOL

Account Closed
  • Maryland
53
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195
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Account Closed
  • Maryland
Replied
Quote from @Shane H.:

You either didn't read and comprehend what I wrote, or you deliberately put in my mouth things I didn't say. I equated a car owner to what you insist is invariably an "elderly individual" or a "widow" (as far as I know car owners come in different ages, genders, marital statuses, mental capacities and etc.). Car dealer, in that equation, is a prototype for a wholesaler in a RE transaction, not a seller of home. We are comparing RE wholesale transaction to trading-in a vehicle to a dealer for a wholesale value. 

User Stats

433
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Shane H.
208
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433
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Replied
Quote from @Account Closed:
Quote from @Shane H.:
Quote from @Account Closed:

REA and Brokers will always dislike wholesalers, that's just the nature of business where EVERYONE is driven and motivated by selfish interests and greed and nothing but selfish interests (all "moral" talk is a smokescreen, for naive to fall). Anyone who aspires to be a wholesaler and reads this forum, grow a thick skin. Business is like a high school and most people in real world are emotionally driven and irrational. Don't expect to be liked and don't try to be liked. No one will roll red carpet for you except the ones who can benefit from your business and services. Just do your thing, know what you are doing, don't lie, don't misrepresent, don't break the law

I completely understand why you would convince yourself that all business is immoral in order to justify doing immoral things yourself. It is 100% possible to operate business in a moral manner. Of course different folks have different views of what is moral, but literally everyone here who has dealt with wholesalers has noticed their propensity to seek out elderly sellers. The legal bar for a criminal transaction or claiming the person was unable to enter into a contract are not necessarily equivalent to the bar for those who need guidance I.e. the elderly. Your obsessive focus on the buyer and their business acumen is strange… unless… it’s a distraction from the individuals who actually need the protection. The often less capable sellers.

Early on in this discussion I thought you were just a wide eyed fellow taken in by the ability to enter into a market with little investment. At this point I suspect a more nefarious reason for your defensiveness of this group of people. While some have different morals than others most reasonable people agree that certain groups need protection. That’s why we write criminal laws, and why many of us are advocating to expand slightly in this area, what is to be considered criminal.

By requiring licensing that you think is so onerous, which is usually quite easy to complete and reasonably priced  maybe $1,000 and somewhere between a day and 2 weeks of online classes, we can protect a segment of people that need protection. Repeatedly you’ve gone back to say brokers would likely inflate the price because if commission. That would literally be beneficial to the segment that needs to be protected so that’s a horrible argument  investors hardly need protection at the same level that little old widows need. Now somehow youve equated auto dealers and professional car salesman with those elderly individuals the rest of us would like to protect. Everyone reading can see how absurd that is. I suspect you can as well. 

You’ve actually inspired me to write to my legislator to encourage a stronger protection of those individuals from wholesalers, even if that means banning the practice entirely. 
 

 You can suspect and think all you want. First question is: what is your definition of "moral" versus "immoral" wholesale transaction? Please be concrete and elaborate. I understand you mean "moral" is something beyond "legal", but what exactly you mean when you say that?

Second, there are numbers involved here. Let's say there is a property on 123 Main Street, Anytown, Maryland. It has 3 br and 2 ba. I call my REA, we run comps and find that similar homes that were sold in that area in the past 6 months fetched $100,000.00 each. I call my HML guy and he says the area is good, property looks good and that they would lend hard money to an investor willing to buy , repair and flip it.

If I am an investor who wants to buy the investment property, I will want to buy this property for (let's say) 70% of ARV minus my repair costs, provided it's in an area where there is steady demand for homes. Let's suppose all those homes we found in MLS to run comps that were sold for $100K were in good enough shape to meet the definition of ARV. Suppose I brought in a contractor and I know that it will cost investor $30K to repair this particular home to make it retail ready. Now I know that I could offer this home AS IS to an investor for $40K. That's just how much investor/rehabber will pay to acquire it, or else they won't get a return on investment to justify their risks and costs. So, $40K is how much it's worth in a wholesale market. Suppose I have spent 2 months to find a seller of this property, I have spent hundreds of dollars on Facebook ads, spent $1300 to a company that placed 2000 cold calls in the US, spent another couple of thousands on direct mailing campaign. I am not counting MY time and effort, driving for dollars and paying for my gas and wear and tear on my car. As you can see, I have already spent at least $4K to find that seller (he didn't just come and nock on my door out of the blue). So, it's only natural that I add my finders fee to it, to make it worthwhile to do this (I am not an idiot nor a charitable , non profit organization that receives government grants and tax deductions, after all. I run a for profit business and I either have to profit or quit). So, I add my fee to a assignment contract, let's say $8,000. And I deduct those $8K from $40K. So, realistically $32K is my MAO, that's all I can offer the seller to make this work worthwhile of doing. I offer $30K to seller, we haggle and he agrees to give it up for $31K. I am not adding closing costs there, to make math simple, but you get the drill. So now tell me, is it "immoral" to offer $31K to a seller? Is it immoral to have a contract with that figure with a seller and to collect assignment fee in the amount of $8K? Let's talk real numbers here, not pontificate like if we were priests in a Sunday school. So, what wholesaler is supposed to do to be "moral" in your books? May be pay $60K out of his pocket, to get seller $100K, to make seller happy? Is that what you propose here? I am just curious what your rationale is on this. I am not interested in your "moral" lessons, but I want to understand how you think wholesaler should operate in this particular case as described? Please be specific.

P.S. Please feel free to write to anyone you wish. I can do the same! LOL

This has gone on far longer than I anticipated, but my last word. 

I’ve given examples repeatedly of what would be immoral. So have others. One last time. 

lying about what you’re doing. 

manipulating numbers. I literally gave numbers in another comment of what I actually saw happen. But to use your example. If you had to narrow or expand criteria to come up with the 100k comps. In the case I sat in on, the individual uses straight up 3/2 comps even though this property had another 2,5000 square feet of home to include a bar, dance floor, and 3 “bonus rooms, as a bi-level they didn’t have egress to be considered bedrooms. He includes the price of adding a bath to the half to make it 3 bath. Yet comped to 2 bath. He then narrowed it to the tiniest neighborhood ever requiring to go back 18 months in a quickly rising market. My agent didnt do any of that and comped 150k higher on arv.

This was not simply a slight difference. These were manipulated comps. To the tune of 40%. So if your comps as honestly run were 140 and you manipulated them to get to 100… as for your criminal standard this would be very difficult to prove as a criminal act. Nonetheless, it’s clearly manipulative. Clearly not an honest practice.

Telling them it’s worth 140k and you want to make 30k and the buyer of which you are not, wants to make 30k and it needs 30k so you can give them 50 is an honest practice. Telling them it’s worth 100 when you know it’s worth 140 is not. It’s quite simple really. 

I gave an analogy of an act in another business, the hvac contractor. Do you disagree that telling them it’s going to explode to sell a unit when it shut off because of a simple issue is okay?