Do you tell your end buyer that you are wholesaling?

[Ryan Dossey]

I am curious to those of you guys that actively wholesale properties. Do you tell your end buyer that you are wholesaling or use a double close? Do you tell the seller that you are wholesaling their property or simply use a contract that has clauses that allow you to do so? Is there a right or wrong way? I would think the seller wouldn't care if they get paid. I know from talking to some guys they just use the "subject to partner approval" line and say sorry if they can't sell it. How do YOU do it? 

[Bill Gulley]

Being totally truthful isn't any harder than trying to finagle stories to tell or give false implications.

Introduce yourself as an investor, everyone knows what people do investing or dealing in real estate.

Actually, being a "wholesaler" is only a figment of your imagination as a title for a real estate operator, the title is recognized on this site, at your local REI meetings, to some others who deal in real estate, but don't be carrying on as if it's some professional designation recognized by your dentist or the general public.

Wholesaling has been done for over 100 years, the guru who started this designation was trying to put a bit of a marketing spin on a technique or an option of disposing of a property, the method can be accomplished with little or no money, an ideal method for gurus to sell a how to program, geee, what can we call it, we need a term.....hey, it's much like uncle Steve who is a wholesaler of home décor items who sells to retailers, let's call it wholesaling! And, we can give those who get in this program a title... wholesalers!   That's great! It gives the operator a title that is respected in the business world, it implies they do business by selling at below retail prices too, just like the Wholesale Grocery Warehouse!

Wow, we can have an entire wholesaling business strategy in a market, give newbies a title, a perceived market niche, lower than retail prices, and we don't have to really teach much of anything, we can simplify this as if a monkey could do it....that's the gurus taking! 

So, those doing this are the ones who have adopted the spin, the hype, the category as well as the limitations that go along with the strategy trying to stay away from the general public while you try to sell to other investors.

Where most have swallowed a bag of horsefeathers is that now, we have a system of doing something with little money, no credit, no borrowing required, and very little knowledge of real estate. Well, that's perfect for me to get into real estate and make a million, where do I sign up?  Was that guru yanking your chain or what...., at least about the part of this is how to start out as a newbie as it's a simplified strategy. You were lied to before you ever took this stuff hook, line and sinker! Touch on that again, later.

Now, you find that the general public has issues with taking their home off the market while you beat the bushes for a buyer. The lack of RE knowledge and usually the lack of business experience besides your kool aid stand as a kid, means you lack some basic skills. Well, hell, the easiest way around that is just to lie, mislead, con or deceive the public. Why take the easy way? Because there are so many that are just lazy, in a hurry to make a buck.

So, not that you lack skills you're looking for an easy way to explain what you want to do, get the owner to agree and hopefully you want to stay out of trouble ding it. This is where you devise your little white lies, try to interject all kinds of con artistry contingencies so you can run for cover when you fail and you try to figure out your stories to tell through out the sale transaction process.

It's also an area that is questionable as to acting to facilitate RE transactions without a license, last week we had a wholesaler in Florida facing the RE commission and possibly more federal issues all because he screwed up adverting a property he didn't own. He was turned in by a Realtor according to him.  

And you wonder why those in the business, Realtors, attorneys, title folks and other seasoned investors view most in "wholesaling" as the bottom of the barrel in RE operators?

Now, let me say this too, there are reputable operators in real estate that have a good bit of knowledge and skills that have a market that is good for facilitating sales as is done in wholesaling a property. IMO, they are rather delusional calling themselves a wholesaler as if it's a badge of honor instead of saying they are a real estate investor, but what ever, call yourself anything you like, especially in forums.  

  There are good ones out there who have a good business, but from what is evident on this site, they are few and far in between.

How then, after all that, how can the truth set you free?

Mr Smith, I'm Bill Gulley, I'm a real estate investor and I have been in the industry long enough to get things done. I'm interested in your property, do you care who buys your property?

(Never had anyone say yes, I won't sell to a woman or a catholic or a car salesman.....all being illegal except the car salesman, but the common response is ) No, I don't care who buys it!

Well, I'm interested in buying or at least getting it off your hands, I know other investors that I work with and while I am interested in buying it, if I don't find that it really fits my needs, I'll try to have another investor buy it and ensure that you get the price we may agree to, is that all right with you?

(Never had anyone say, no, I want you to buy it, nor has anyone said they didn't want someone else to buy it!) What the say is something like "fine with me, all I want is my price and I don't care who buys it!

How freaking hard is that people? Just tell the truth, you are interested in buying it, you could close and resale with transactional funds, if you find that it's not a property for you to hold in a real partnership you'll get someone you know to buy it......and the seller doesn't care! The owner now knows what's up.

Now, continue and don't blow smoke at the owner and stop plying games!

Use a standard state approved contract, not some mickey mouse whizz bang contract made up by who knows who with enough bullfeathers to scare the owner's socks off. You use an inspection period, that is all you need.

You should already have a list of buyers, as mentioned, the pros have a good idea who will buy that property before they ever contract. You don't contract and then beat the bushes in desperation to find a buyer!

If you don't want it, and you don't have a buyer, and if you can't buy it, then tell the seller;

After our inspection and due diligence, I have found that I'll have to pass on this one the way it is contracted right now.   There are marketing deficiencies that require more time to make the type of repairs and improvements for me as well as some other investors to get this to close as agreed, it's not the price, it's other factors. Then, the owner may ask what factors and you can go into legitimate concerns, you can move to go beyond the initial inspection period addressing specific contingences, like advertising the property, fixing the awning, you painting a room....whatever.

Your owner will have more confidence in you, they become a partner in completing a mission rather than sitting back thinking you are buying it and just waiting on you, being deceived by some guy that doesn't have the ability to buy a used car, much less a house.

You save face, you were up front, the seller can't stick you for taking his property off the market during some prime marketing period and go after you for financial losses incurred in you acting in bad faith telling little stories.

As to your buyers, if they are investors, they understand what you're doing, if you find a retail deal (which you should always try to do if the property is marketable) then you simply explain that you're an investor and you can arrange a closing at that price for them, you may need a financing contingency at such a point for that retail buyer, so being in good stead with your seller is important. It's done more often than you think.

I never limit my properties to just investors, that's nuts, market to a sliver of the population, but as you gain skills and a good basic knowledge of RE you'll learn that.

Okay, now get off my lawn, even if it is just dirt! LOL :)