Bad Wholesalers

[Hattie Dizmond]

I'm not a negative person. But, my latest encounter with a specific wholesaling operation in DFW has once again left me with a nasty taste in my mouth. It's bad enough I have wholesalers marketing "deals" to me that are 90% of ARV and are being pitched as "great", "hot", "unbelievable" deals. Really? I know deals are hard to come by, but a lousy deal is NOT a deal. Anyway...back to the point...

The rep that I just encountered from this group had advertised a property in a very desirable portion of North Dallas...an area of particular interest to me. Once I got their "package", I quickly recognized the property. It was listed on the MLS. I had already run the numbers on it and passed. Now these clowns were offering it at $8k over the MLS list price. Not only that, they were up to their old tricks of vastly overstating the ARV. In this case by close to $100k.

I'm posting this as a warning to all the deal starved investors in the DFW Metroplex.  BUYER BEWARE!  Do your own due diligence.  Don't think, just because a package looks polished and well put together, and there is a actual business behind the reps marketing it that it makes it a legitimate deal.  The new tactic with these guys is..."This property is likely to sell within the hour."  Great!  Let it sell to someone else who will be stuck with a bad deal.  You should know your business well enough to run the numbers in less than 5-min anyway.  

Seriously folks...there are investors...mostly new ones...dropping the prices on flips all over Richardson, because they over reached on the purchase with an overly optimistic ARV. They are holding the properties longer than they thought, because properties (in general) are no longer selling above market, even though inventories continue to fall. Then, after they have incurred unplanned holding costs, they are having to reduce the price and further slashing their margins.

Be smart.  There is money to be made in this market, particularly with inventories as low as they are, but your profit is made on the purchase, not the sale.  If you buy to high, you're going to regret it later.  Don't get sucked in by the folks taking advantage of the bare market.

Good luck!

Hattie