Weak, Lazy Wholesalers in San Antonio TX

[Christopher Mongeon]

For the past 6 weeks, my wife and I have been actively searching for a buy-and-hold deal. We found an up-and-coming neighborhood that my wife absolutely fell in love with and we decided to focus on it. We've driven the entire neighborhood several times, got to meet some of the locals, and found 2 properties for sale that fit our requirements. 1 (let's call it Yellow) had not been posted to the MLS, and the other (Blue) had been posted to the MLS that very day.

We walked through the properties, worked up our rehab estimates, ARV, and made our offers. Our offer on Yellow ended up being below what the guy told us he had in it, but it was the most we were comfortable with offering. He told us he was going to list it on the MLS the next day for $90k.

Blue was listed for $145k, an outrageously high price for the amount of work needed. We put in an offer which we were told was "way below" 2 cash offers they received. Alright - can't fault the sellers for taking a higher cash offer, right?

Wrong. Literally that same night, we see Blue on craigslist. A wholeseller is pimping it for $130k, saying how the ARV is $260k (complete speculation, unsupported by comps). And a couple days later, our friend in the neighborhood tells us one of their wholesaler contacts got under contract for Yellow, and was selling it for $96k!

Is this the state of wholesaling in a hot market? Sourcing your "deals" off the MLS, making up crazy ARVs and trying to make a $5k-$10k margin on literally zero value ad?! It's super frustrating. I can only hope that other San Antonio real estate investors are doing their homework on these properties.

tl;dr A wholesaler who can't / won't source his own deals isn't really a wholesaler. Their "deals" aren't really deals, and they aren't worth doing business with at all.

/rant

[Seth Teel]

Sounds like you need to expand your network. There are plenty of good wholesalers in San Antonio that source off-market deals with good ARVs and rehab numbers.  I am not referring to the two big companies. Getting out to some of the meet-ups may help you find one.  The best guys/gals aren't the ones plastering Craigslist with bogus numbers and promise of returns.  

Relative to laziness, I have noticed several wholesalers are gathering deals from multiple different people, adding their fee on top of the current wholesale price and adjusting the ARV and/or repairs to make the numbers "work," then sending out to their buyers list. Undoubtedly these folks will hang up their wholesaling boots in less than six months. There is a new crop every so often; weeding through them is a good way to figure out what you do and don't want in a wholesaler.