Wholesaling business is for dishonest, crooks?

Investor · Wood Dale, IL · Member since 2014 · 65 posts · 3 votes

My subject is not direct, but a legitimate question.

I recently got a prime follow up call for a prospect that could absolutely be wholesaled. Upon making an offer and coming to negotiating terms with the seller, I needed to find an attorney who is familiar with how wholesaling works. After reading a response to a forum posted by @Tyler O'Malley, apparently all RE attorneys are familiar with wholesaling or are able/willing to work with you. This is not the case at all. After several phone calls with attorneys, I have not gotten one single attorney who wants to deal with wholesaling because it is a "dishonest" thing to have the seller under the impression that YOU are going to close on the property and/or it is a waste of their time because "most of the time these assignments of contracts never work out". After giving it some serious thought, it does seem pretty dishonest to mislead the seller into believing YOU are going to close on the property and then worst case scenario ending up voiding it all together through a "weasel clause" and wasting everyones time. My question is can anyone convince me this is not a dishonest business and also is it possible to find an attorney willing to work with you without actually being dishonest with him too.

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Ryan Dossey

Real Estate Broker · Indianapolis, IN · Member since 2014 · 3k+ posts · 2k+ votes

11y

These bash the wholesaler threads get pretty old. May not be your intention but I guarantee 9/10 people reading your title will come here to do that. There is a difference between tying up a property for months hoping you find a buyer and being a wholesaler.

As a wholesaler (a term I don't mind calling myself) I provide a service. The property closes one way or another. I have private investors, a portfolio lender, HML, and cash. I make offers that are a great deal for me to PERSONALLY close on. If however I can make cash and not have to do anything.... Why wouldn't I?

Seller receives FULL upfront disclosure. I am buying your house for X because it needs Y. I work with other investors as well. I'm sure you don't care who's name is on the check as long as it clears right?

I have NEVER used a "weasel" clause to "get out" of a contract. I have several buyers that come back to me for repeat deals, sellers send me referrals, and my clients love me.

I have moved trap houses, homes with flooded basements, foundations that look like tectonic plates shifting, even one with mold/bug issues. Could the seller have sold the property without me???

Maybe. A solid majority of the sellers I talk to tried with no success.

I may transition into "wholetaling" actually closing on everything and listing on MLS. I typically double close. I don't like assignments.

Most people have issues with people "marketing the property" using "equitable interest". If your contract gives you permission to market the property as an "owner by contract" I have no morale issues with it.

Promising to close yourself and doing an assignment. I see the morale qualm. Being upfront and honest... I sleep great at night.

My mentor told me the grocery store model is best:

"You don't want to sell a seller in the grocery store and have to duck around a corner. You want to walk right up to them and ask how the kids are." -Jerry Puckett

Final part of my rant.... A seller who knows I wholesaled her property (saw it marketed online for CONSIDERABLY more) has came to me and asked me to help them potentially invest the profits they got from selling to me. That says something.

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Cathy Wells
Investor · Decatur, TX · Member since 2015 · 52 posts · 20 votes
11y
@Paul Ewing Ah-ha. Well, that explains a lot. More to learn. And hello! We should find a time to meet up....
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Will BarnardPro Member
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Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
11y
Originally posted by @Ben Leybovich:

Number 2 is likely the safest way to practice, since a contract is a security, and if you don't get busted for practicing sales without a license, you might get busted for securities fraud. The realtors are trying hard to see to it that you do :).
There are several things wrong with several posts in this thread, let me address as many as possible so everybody is clear. First, there are more than 2 ways to wholesale a property.
Second, there is a distinct difference between "simultaneous closings" and "double closings". A simultaneous closing is where the funds from the end buyer (party C) are used to fulfill the contract between the original seller (party A) and the wholesale buyer (party B) and those same funds are then used almost simultaneously to complete the B to C transaction. A double closing is where there A to B transaction is funded by the wholesaler's funds (cash or borrowed funds) and then the B-C transaction takes place using the funds from party C. Simultaneous closings are not possible in many areas for a number of different reasons. FL was one of the most popular areas for this type of transaction, but in Los Angeles County and most counties in CA, it is not allowed or even possible.
Number 2, as Ben labeled above, is NOT the safest way to perform a wholesale deal and a purchase contract is not a security. A security has 3 elements: 1. Expectation of profits 2. a common enterprise 3. depends "solely" for its success on the efforts of others.
Most states have laws on the books that stipulate that all contracts are assignable unless otherwise prohibited by that specific contract. RE purchase contracts are no different though, many include the disclosure that the assignment is or is not assignable for clarity. Assigning a purchase contract (when possible) is the easiest and most cost effective means to wholesale RE hands down. Simultaneous closings are not an option everywhere, but a double closing is and although it costs more since you have two sets of closing costs and possibly costs of short term borrowed funds (typically called transactional funding), it is certainly a viable option and a moral and legal one at that. Another way is to use a trust to wholesale and it too is perfectly legal, moral, and ethical so long as the wholesaler does not act or do anything to the contrary.
Now, with that all cleared up, I do agree 100% with Ben when he speaks about closing the transaction as a wholesaler no matter what, in other words, have other options to close if you DON'T find that buyer. Not using weasel clauses or "inspection contingencies" to find buyers and back out if you can't is also more than accurate. I also agree there is a "stigma" with the title wholesaler simply because there are so many rookies and crooks who either knowingly or unknowingly operate in manners not legal, ethical, or moral. Of course that could be said about any industry, however, there is a much more perceived notion that this is true with wholesalers.
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Ben Leybovich
Rental Property Investor · Phoenix/Lima, Arizona/OH · Member since 2012 · 4k+ posts · 4k+ votes
11y
Originally posted by @Will Barnard:
Originally posted by @Ben Leybovich:

Number 2 is likely the safest way to practice, since a contract is a security, and if you don't get busted for practicing sales without a license, you might get busted for securities fraud. The realtors are trying hard to see to it that you do :).
There are several things wrong with several posts in this thread, let me address as many as possible so everybody is clear. First, there are more than 2 ways to wholesale a property.
Second, there is a distinct difference between "simultaneous closings" and "double closings". A simultaneous closing is where the funds from the end buyer (party C) are used to fulfill the contract between the original seller (party A) and the wholesale buyer (party B) and those same funds are then used almost simultaneously to complete the B to C transaction. A double closing is where there A to B transaction is funded by the wholesaler's funds (cash or borrowed funds) and then the B-C transaction takes place using the funds from party C. Simultaneous closings are not possible in many areas for a number of different reasons. FL was one of the most popular areas for this type of transaction, but in Los Angeles County and most counties in CA, it is not allowed or even possible.
Number 2, as Ben labeled above, is NOT the safest way to perform a wholesale deal and a purchase contract is not a security. A security has 3 elements: 1. Expectation of profits 2. a common enterprise 3. depends "solely" for its success on the efforts of others.
Most states have laws on the books that stipulate that all contracts are assignable unless otherwise prohibited by that specific contract. RE purchase contracts are no different though, many include the disclosure that the assignment is or is not assignable for clarity. Assigning a purchase contract (when possible) is the easiest and most cost effective means to wholesale RE hands down. Simultaneous closings are not an option everywhere, but a double closing is and although it costs more since you have two sets of closing costs and possibly costs of short term borrowed funds (typically called transactional funding), it is certainly a viable option and a moral and legal one at that. Another way is to use a trust to wholesale and it too is perfectly legal, moral, and ethical so long as the wholesaler does not act or do anything to the contrary.
Now, with that all cleared up, I do agree 100% with Ben when he speaks about closing the transaction as a wholesaler no matter what, in other words, have other options to close if you DON'T find that buyer. Not using weasel clauses or "inspection contingencies" to find buyers and back out if you can't is also more than accurate. I also agree there is a "stigma" with the title wholesaler simply because there are so many rookies and crooks who either knowingly or unknowingly operate in manners not legal, ethical, or moral. Of course that could be said about any industry, however, there is a much more perceived notion that this is true with wholesalers.
Thanks for your input Will. Contracts are indeed assignable unless specifically stated to the contrary. However, it is indeed becoming more and more scrutinizing to assign as a business model, at least in Ohio. This was covered in many threads. Yes - it should be legal, but proving that it is not practicing without a license is not a battle I want on my hands :)
Thank you also for clarifying the difference between simultaneous and double closing.
The important thing that we agree on is that when one signs a P&S contract, it is important to have every intention to perform; one way or the other. Unfortunately, and I think you'll agree with this, in a marketplace that doesn't honor this mentality, we are putting ourselves in quite a bit of disadvantage - at first, anyhow. But, once it becomes clear who performs and who ties up, when someone really needs to sell, you and I get the call...and that's how the good deals are done.
Thanks for your input, @will
@Will Barnardundefined
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Justin Stamper
Investor · Orlando, FL · Member since 2012 · 822 posts · 303 votes
11y
The entire world's economy is wholesale at some level, and the world is also full of awful people. Coincidence? I think not.
......just kidding.
@Tim G. I think said everything I wanted to say while reading this thread.
At the end of the day, there are guys like us fighting the good fight, and providing services that other people just can't do...and then there are your ":came from timeshare now I'm gonna try this hustle:" people who ruin it for the rest of us. BUT that is a character problem, wholesaling is just the vessel.
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Joseph Chillemi
Real Estate Investor · Watertown, MA · Member since 2015 · 9 posts · 3 votes
11y
I have the same resistance finding an investor friendly real estate attorney in eastern MA. I have been looking and spoke with 3 attorneys, last week. I spent too much time explaining the value I bring as well as the time and money I invest to find, research, marketing campaigns, qualifying the buyers situation and evaluating the deal before I make and offer...I believe my time investment is worth a reasonable assignment fee since, Ive helped the seller get out of a property that is a burden and I've helped a rehabber to find properties they will profit from and employ people with families. Still looking for re investor friendly attorney and actuary near Watertown, MA if, anyone knows of someone they could recommend...
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Richard C.
Bedford, NH · Member since 2012 · 2k+ posts · 1k+ votes
11y
Originally posted by @Joseph Chillemi:

I have the same resistance finding an investor friendly real estate attorney in eastern MA. I have been looking and spoke with 3 attorneys, last week. I spent too much time explaining the value I bring as well as the time and money I invest to find, research, marketing campaigns, qualifying the buyers situation and evaluating the deal before I make and offer...I believe my time investment is worth a reasonable assignment fee since, Ive helped the seller get out of a property that is a burden and I've helped a rehabber to find properties they will profit from and employ people with families. Still looking for re investor friendly attorney and actuary near Watertown, MA if, anyone knows of someone they could recommend...
You need an ACTUARY? What the hell are you up to?
Anyway, why not just get a license?
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Rob Gillespie
Specialist · Cleveland, OH · Member since 2011 · 1k+ posts · 852 votes
11y
@Ben Leybovich
At the end of the day, the laws are written with so much ambiguous language, they can shut you down as a wholesaler at any given time. I got called by the state and I did not fight, I did not run, I simply told them I wold get a license and do net listings.
We shall see how this works. I finished classes and now I need to take the test in a couple weeks.
This is kinda funny after nearly 20 years and over 1,000 deals I need to get a license. LOL
I will keep anyone posted that cares to follow my adventures in real estate wholesaling in Ohio :-)
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Steve Babiak
Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
11y
Originally posted by @Rob Gillespie:
@Ben Leybovich
At the end of the day, the laws are written with so much ambiguous language, they can shut you down as a wholesaler at any given time. I got called by the state and I did not fight, I did not run, I simply told them I wold get a license and do net listings.
We shall see how this works. I finished classes and now I need to take the test in a couple weeks.
...
Ask
@Bill Gulley whether net listings are going to cause a licensed agent trouble ...
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Ben Leybovich
Rental Property Investor · Phoenix/Lima, Arizona/OH · Member since 2012 · 4k+ posts · 4k+ votes
11y
Originally posted by @Steve Babiak:

Originally posted by @Rob Gillespie:

@Ben Leybovich
At the end of the day, the laws are written with so much ambiguous language, they can shut you down as a wholesaler at any given time. I got called by the state and I did not fight, I did not run, I simply told them I wold get a license and do net listings.
We shall see how this works. I finished classes and now I need to take the test in a couple weeks.
...
Ask
@Bill Gulley whether net listings are going to cause a licensed agent trouble ...
Exactly, Steve. OK - so, Ohio is at the forefront of the attack on wholesaling, for sure. The realtors are very strong in the State. Having said this, I know for a fact that while net listings are in the books as a possible mode of doing business, to say the last they are looked down upon and perceived as a disservice to the client. If that's all you do, Rob, I think it's just a matter of time before they come asking questions...
Bottom line:
One - realtors don't like wholesalers, for obvious reasons. And considering what I call rampant amateurism in the wholesaling industry today, I can't say that I disagree;
Two - realtors are an extremely strong lobby in this State and nationally. They have a proven track record of getting what they want...
With that being said, I can't see how positioning your business as a wholesale business in 2015 is wise...that's just me.
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Bill Gulley
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
11y
LOL, told them you'd do net listings! Well, good luck with that!
I suspect, after the schooling for a license, the student will then understand a bit more about real estate and the business of it, they won't need to try and do "net listings" and yes, they can get hammered on a license, especially if some owner said "I thought he was representing me".
Cali is the only state, I believe, where a net listing may be done and that is under certain circumstances.
I almost posted after the first page, don't think I posted my long reply, the young'ns were defending their turf talking about what a great service they provided.
I've done wholesale deals, nothing against passing a deal on, the issue is gouging either a buyer or seller taking more than the "service" is really worth. Wholesalers seem to think whatever they can get......no, every service in every type of business has an acceptable value base line in that industry, wholesaling is not an industry. It's not your talent to sell stuff or your good looks or your ability to talk some talk someone out of their equity or money, get a Phd. in Real estate and a license to consult and you can charge 20K on a 2M dollar deal, not a 45K house.
Anyway, some don't get it, they learned guru stuff and think they know RE and business. I don't think most try to mess over anyone, they just don't know, weren't taught the business. Some found something that works, they really don't know RE, can't figure rehab costs and BS their way through as they think they are successful in RE......nope!
Some people are just wheeler-dealers, it's as if it's in their DNA, they can't justify putting more effort in to doing something a bit more ethical, in their minds they are ethical and just won't change, even if it is illegal. There is always going to be greed, ignorance, laziness and egos. Every industry has its bad apples, in RE, we have wholesalers who do something that could be just fine, but they mess it up.
What will happen is that assigning a contract will get to be very tough to get through a closing or being financed because of the abuse by some. Doing one deal is probably fine, trying to make it your only business, you're just circumventing licensing laws. :)
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Account Closed
Oklahoma City, OK · Member since 2013 · 43 posts · 2 votes
11y
As long as you let the seller know your intentions and your honest upfront, your not a crook. A good tip is in the wording you use with your sellers. I like to explain to them that I have partners, who invest in real estate, who actually pay me a fee for by buying my interest in the property. Also explain to them that clause in the contract that talks about assigning so that they know how you and your "partners" do business. Last but not least, give the seller a good earnest money deposit so that they feel more secure as about the deal. Many wholesalers talk about ten dollars earnest money............not a good idea. With a 500 dollar or more earnest money deposit they will know that if you default on the deal then they at least get 500 or more for wasting their time.
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Bill Gulley
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
11y
Originally posted by @Account Closed:

As long as you let the seller know your intentions and your honest upfront, your not a crook. A good tip is in the wording you use with your sellers. I like to explain to them that I have partners, who invest in real estate, who actually pay me a fee for by buying my interest in the property. Also explain to them that clause in the contract that talks about assigning so that they know how you and your "partners" do business. Last but not least, give the seller a good earnest money deposit so that they feel more secure as about the deal. Many wholesalers talk about ten dollars earnest money............not a good idea. With a 500 dollar or more earnest money deposit they will know that if you default on the deal then they at least get 500 or more for wasting their time.
Partners? Really, you have "Partners" as in partnership? Or, is that part of the guru teaching to weasel out if you fail to get a "partner" to buy or sign off on the deal. How do you explain that clause in your contract?
Pretty simple to get the deal across:
Mr. Seller, I acquire real estate for myself......I also work with other investors. If we reach an agreement for you to sell, and later I find that this property doesn't fit my investing needs, do you care who buys it at our agreed price???
No, they will not care!
If they say something like..."Oh, you just want to flip my contract?" You can repeat what you said, no, if it doesn't meet my needs do you care if I let another investor buy the property at our agreed price? Actually, Mr. Seller, agreeing means you increase the odds of selling at your agreed price regardless of what we may find later on, per the agreement.
Again, they don't care!
Get rid of all the partnership BS and weasel clauses and stick to the standard contract, if title is bad, you're off the hook, if you can't get financing, you're off the hook, if the payoff comes in too high, you're off the hook, if the seller can't give good title, you're off the hook, if you make it contingent on passing a home inspection and there are significant issues you can't work out....again, you're off the hook!
Not picking on you Tyler, it's just par for guruized wholesalers, who don't really know real estate or contracting and legitimate ways to terminate a contract. Learn the basics! :)
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Account Closed
Oklahoma City, OK · Member since 2013 · 43 posts · 2 votes
11y
Originally posted by @Bill Gulley:

Originally posted by @Account Closed:
As long as you let the seller know your intentions and your honest upfront, your not a crook. A good tip is in the wording you use with your sellers. I like to explain to them that I have partners, who invest in real estate, who actually pay me a fee for by buying my interest in the property. Also explain to them that clause in the contract that talks about assigning so that they know how you and your "partners" do business. Last but not least, give the seller a good earnest money deposit so that they feel more secure as about the deal. Many wholesalers talk about ten dollars earnest money............not a good idea. With a 500 dollar or more earnest money deposit they will know that if you default on the deal then they at least get 500 or more for wasting their time.
Partners? Really, you have "Partners" as in partnership? Or, is that part of the guru teaching to weasel out if you fail to get a "partner" to buy or sign off on the deal. How do you explain that clause in your contract?
Pretty simple to get the deal across:
Mr. Seller, I acquire real estate for myself......I also work with other investors. If we reach an agreement for you to sell, and later I find that this property doesn't fit my investing needs, do you care who buys it at our agreed price???
No, they will not care!
If they say something like..."Oh, you just want to flip my contract?" You can repeat what you said, no, if it doesn't meet my needs do you care if I let another investor buy the property at our agreed price? Actually, Mr. Seller, agreeing means you increase the odds of selling at your agreed price regardless of what we may find later on, per the agreement.
Again, they don't care!
Get rid of all the partnership BS and weasel clauses and stick to the standard contract, if title is bad, you're off the hook, if you can't get financing, you're off the hook, if the payoff comes in too high, you're off the hook, if the seller can't give good title, you're off the hook, if you make it contingent on passing a home inspection and there are significant issues you can't work out....again, you're off the hook!
Not picking on you Tyler, it's just par for guruized wholesalers, who don't really know real estate or contracting and legitimate ways to terminate a contract. Learn the basics! :)
Whoa whoa slow down guy..lol everything will be ok.
The thing is why would you even sign a contract with the seller if it doesn't fit your needs? Isn't that what due diligence is for?
And actually I have yet to see a wholesaling guru talk about honesty upfront through out the whole deal. Your method seems a little bit more guruish to me.
I have a feeling your an investor with sufficient amount of capital. For those of us that don't actually have the capital in our back pocket to acquire the property, I think it is extremely unethical to make a seller believe your buying their property and then at the end say "um yeah this property didn't fit my needs even though I signed a contract with you so I got some other guy that's going to buy if now". Sure it's a good exit strategy, but if you do it all the time it just better to be honest. And are the investors that wholesalers provide service for not in a partner type relationship?
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Donald Taite
Williamsburg, VA · Member since 2015 · 30 posts · 4 votes
11y
Originally posted by @Troy Whitney:

My question is, why not just become an agent? Why is wholesaling better than being an agent? I understand that the upside with wholesaling is theoretically higher but in reality, you'll find more prospective sellers, not just people in dire straights. Also you'll have more time and resources available to you to make things happen and you won't feel like you're trying to take advantage of people by trying to take their property off of their hands for a 30-40% discount. Just my two cents...
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Donald Taite
Williamsburg, VA · Member since 2015 · 30 posts · 4 votes
11y
I tell ya what Troy..I would love to become an agent instead of a wholesaler because you can have more access like you said..but it cost money to become an agent. That's the main reason why I would like to start out with wholesaling..Because it will give me a chance to make some money so I can take this thing to the next level. I'm glad I heard about whole sing because I had no idea you can started in this business that way.i always thought you had to have your own money and everything. I didn't know anything about hard money lenders or anything like that...so with that being said..I'm all for it.
0 Reply
Donald Taite
Williamsburg, VA · Member since 2015 · 30 posts · 4 votes
11y
Originally posted by @Account Closed:

My subject is not direct, but a legitimate question.
I recently got a prime follow up call for a prospect that could absolutely be wholesaled. Upon making an offer and coming to negotiating terms with the seller, I needed to find an attorney who is familiar with how wholesaling works. After reading a response to a forum posted by @Tyler O'Malley, apparently all RE attorneys are familiar with wholesaling or are able/willing to work with you. This is not the case at all. After several phone calls with attorneys, I have not gotten one single attorney who wants to deal with wholesaling because it is a "dishonest" thing to have the seller under the impression that YOU are going to close on the property and/or it is a waste of their time because "most of the time these assignments of contracts never work out". After giving it some serious thought, it does seem pretty dishonest to mislead the seller into believing YOU are going to close on the property and then worst case scenario ending up voiding it all together through a "weasel clause" and wasting everyones time. My question is can anyone convince me this is not a dishonest business and also is it possible to find an attorney willing to work with you without actually being dishonest with him too.
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Donald Taite
Williamsburg, VA · Member since 2015 · 30 posts · 4 votes
11y
I don't think wholesaling homes are no different than wholesaling cars..more paperwork involved yes..but the concept is the same. If a person comes to the dealership and trade their car in for a new.the manage is gonna decide if he will keep that car and spend the money to get it ready for resell or if he is going to sell it to a wholesaler..make a little money off it instead of taking the chance of the car sitting on the lot for weeks at a time.i used to sell cars so I know all about that. I think as long as everybody is happy..its a good thing. And you know what's crazy about that is..the happiest customers were the ones you made the most money off of..the ones you made the least off of were the unhappy..but they still agreed to the deal..strange huh..I never understood that.
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Troy Whitney
Contractor · Seattle, WA · Member since 2014 · 137 posts · 44 votes
11y
Originally posted by @Donald Taite:

I tell ya what Troy..I would love to become an agent instead of a wholesaler because you can have more access like you said..but it cost money to become an agent. That's the main reason why I would like to start out with wholesaling..Because it will give me a chance to make some money so I can take this thing to the next level. I'm glad I heard about whole sing because I had no idea you can started in this business that way.i always thought you had to have your own money and everything. I didn't know anything about hard money lenders or anything like that...so with that being said..I'm all for it.
I hear what you're saying Donald. It does require a minor investment to do the coursework and take the exam. In reality you're setting up a small business which pretty much always requires some sort of start up capital. That said, you should be able to do so for less than $1,000. If you do decide to become an agent, be sure you shop around and avoid the high desk-fees. I wouldn't pay more than $200/month unless they're giving you some really good leads. Just my two cents.
0 Reply
Donald Taite
Williamsburg, VA · Member since 2015 · 30 posts · 4 votes
11y
Originally posted by @Ryan Dossey:

@Troy Whitney Why I don't have my license. Freedom. I don't want to create objections for myself when I market. (having to disclose I am a Realtor vs an individual.)
There is nothing "under handed" about my process. I show them comps. I show them what there house is worth. I then give them a down to earth estimate of what it costs to get the home to that condition. I also explain I don't work for free and the fact that I close fast commands a premium.
While there are deals that come up to Realtors there are also deals that completely bypass you guys. I get house deals brought to me from Realtors before they are listed here and there. Investors typically run in tight groups. If you preform like you say you will people come back to you. Also for example.... I moved two drug houses. Gang signs plastered all over the walls. The guy who bought them from me double closed that day and made more on one of them. He is rehabbing the other. As a realtor my commission on that deal would have been a measly $3k. By wholesaling I made 20K. Could I have fixed them and made more... Yes. But my time is valuable.
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Donald Taite
Williamsburg, VA · Member since 2015 · 30 posts · 4 votes
11y
Dude..reading your reply made me think of a scene in the movie Back to School..lol. When Rodney Dangerfield was in a class with the professor..who was played by Sam Kinison and they were talking about the war in Vietnam..Rodney started going off when asked a question and at the end of the conversation..Sam Kinison said..and I'm saying to you.." I like the way you think..im gonna be watching you"... Lol!!
1 Reply
Chris Gonzales
Homeowner · Woodway, TX · Member since 2015 · 30 posts · 5 votes
11y
Originally posted by @Account Closed:

Originally posted by @Bill Gulley:
Originally posted by @Account Closed:

As long as you let the seller know your intentions and your honest upfront, your not a crook. A good tip is in the wording you use with your sellers. I like to explain to them that I have partners, who invest in real estate, who actually pay me a fee for by buying my interest in the property. Also explain to them that clause in the contract that talks about assigning so that they know how you and your "partners" do business. Last but not least, give the seller a good earnest money deposit so that they feel more secure as about the deal. Many wholesalers talk about ten dollars earnest money............not a good idea. With a 500 dollar or more earnest money deposit they will know that if you default on the deal then they at least get 500 or more for wasting their time.
Partners? Really, you have "Partners" as in partnership? Or, is that part of the guru teaching to weasel out if you fail to get a "partner" to buy or sign off on the deal. How do you explain that clause in your contract?
Pretty simple to get the deal across:
,Mr. Seller, I acquire real estate for myself......I also work with other investors. If we reach an agreement for you to sell, and later I find that this property doesn't fit my investing needs do you care who buys it at our agreed price???
No, they will not care!
If they say something like..."Oh, you just want to flip my contract?" You can repeat what you said, no, if it doesn't meet my needs do you care if I let another investor buy the property at our agreed price? Actually, Mr. Seller, agreeing means you increase the odds of selling at your agreed price regardless of what we may find later on, per the agreement.
Again, they don't care!
Get rid of all the partnership BS and weasel clauses and stick to the standard contract, if title is bad, you're off the hook, if you can't get financing, you're off the hook, if the payoff comes in too high, you're off the hook, if the seller can't give good title, you're off the hook, if you make it contingent on passing a home inspection and there are significant issues you can't work out....again, you're off the hook!
Not picking on you Tyler, it's just par for guruized wholesalers, who don't really know real estate or contracting and legitimate ways to terminate a contract. Learn the basics! :)
Whoa whoa slow down guy..lol everything will be ok.
The thing is why would you even sign a contract with the seller if it doesn't fit your needs? Isn't that what due diligence is for?
And actually I have yet to see a wholesaling guru talk about honesty upfront through out the whole deal. Your method seems a little bit more guruish to me.
I have a feeling your an investor with sufficient amount of capital. For those of us that don't actually have the capital in our back pocket to acquire the property, I think it is extremely unethical to make a seller believe your buying their property and then at the end say "um yeah this property didn't fit my needs even though I signed a contract with you so I got some other guy that's going to buy if now". Sure it's a good exit strategy, but if you do it all the time it just better to be honest. And are the investors that wholesalers provide service for not in a partner type relationship?
I think what Bill was trying to say was that using the word "partner" was a bit misleading, as calling them partners could be confused with having a partnership with them, in which you would run a business together. From what I can tell you two are technically saying the same thing, one person calls them "partners", the other says "other investors". Also I think that Bill does deals outside of wholesaling so when he says
"Mr. Seller, I acquire real estate for myself......I also work with other investors. If we reach an agreement for you to sell, and later I find that this property doesn't fit my investing needs do you care who buys it at our agreed price?"
He initially intends on acquiring the property for himself, to flip, hold, or whatever, but if at some point he finds that the property doesn't fit the criteria he has for his flips or rentals, THEN he will wholesale to the other investor. I guess you could look at a wholesale deal as his plan B or plan C rather than his whole business. Of course this is all complete speculation, as I do not know Bill or his business, that's just how I read the post.
1 Reply
Bill Gulley
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
11y
Chris, you're right. Even so, I would never use the word "partner" because that is a legal term describing a formal business relationship, it is not established by casual dealings. My uncle is not a "partner" we might be associates but we have no formal business ties. Your spouse is a partner, you're hitched through a legally recognized bonding entity.
Another point, you contract at a price BEFORE doing all of your due diligence, not after. If you are paying for a home inspection before you agree on a price under contract, you're operating azz backwards. If I find in further due diligence that the property won't meet my goals, it might meet another investor's goals, I won't know that until everything is accomplished. That too can be explained to a seller, I'm not deceiving them with partnership BS.
A really big problem in the RE industry is that you can have operators dealing that don't have a clue about real estate. The gurus don't teach real estate, they teach some method or ploy to move real estate around as if a house was a car. Real estate is not just a widget to market, some object of opportunity.
Real estate is a different class of asset, because of its very nature it is unique, serves a public good and purpose. It is a necessity for civilization and a community, anchored in rights of ownership and rights of the public. You'll learn this in the first two chapters of most real estate text books, something wholesalers starting out probably never read or understand. You're under the impression that you're just selling or dealing with some marketable widget that you can tack on some arbitrary value to. That's guru crap, that is the wrong thinking, not only as a professional in real estate but also as a responsible citizen of your community dealing with the public.
And that is why we have more rules, regulations and laws in real estate than we have for car dealers selling new or used cars. Acceptable ethical and legal conduct is completely different in selling real estate than a vehicle or a pair of shoes. We humans are predatory by nature, laws and social demands curb that side of us for our own good as well as others. Predatory dealing includes simply getting another to act in a manner that is unfair. Simply because you can talk someone into doing something that benefits you greatly doesn't mean it's fair dealing. That's not to say you should not profit from your work, but your work has a value that can be ascertained legally and ethically in any business transaction.
Never met a successful person that didn't have a good reputation. :)
1 Reply
Account Closed
Oklahoma City, OK · Member since 2013 · 43 posts · 2 votes
11y
Originally posted by @Bill Gulley:

Chris, you're right. Even so, I would never use the word "partner" because that is a legal term describing a formal business relationship, it is not established by casual dealings. My uncle is not a "partner" we might be associates but we have no formal business ties. Your spouse is a partner, you're hitched through a legally recognized bonding entity.
Another point, you contract at a price BEFORE doing all of your due diligence, not after. If you are paying for a home inspection before you agree on a price under contract, you're operating azz backwards. If I find in further due diligence that the property won't meet my goals, it might meet another investor's goals, I won't know that until everything is accomplished. That too can be explained to a seller, I'm not deceiving them with partnership BS.
A really big problem in the RE industry is that you can have operators dealing that don't have a clue about real estate. The gurus don't teach real estate, they teach some method or ploy to move real estate around as if a house was a car. Real estate is not just a widget to market, some object of opportunity.
Real estate is a different class of asset, because of its very nature it is unique, serves a public good and purpose. It is a necessity for civilization and a community, anchored in rights of ownership and rights of the public. You'll learn this in the first two chapters of most real estate text books, something wholesalers starting out probably never read or understand. You're under the impression that you're just selling or dealing with some marketable widget that you can tack on some arbitrary value to. That's guru crap, that is the wrong thinking, not only as a professional in real estate but also as a responsible citizen of your community dealing with the public.
And that is why we have more rules, regulations and laws in real estate than we have for car dealers selling new or used cars. Acceptable ethical and legal conduct is completely different in selling real estate than a vehicle or a pair of shoes. We humans are predatory by nature, laws and social demands curb that side of us for our own good as well as others. Predatory dealing includes simply getting another to act in a manner that is unfair. Simply because you can talk someone into doing something that benefits you greatly doesn't mean it's fair dealing. That's not to say you should not profit from your work, but your work has a value that can be ascertained legally and ethically in any business transaction.
Never met a successful person that didn't have a good reputation. :)
Never thought about it like that
0 Reply
Bill Gulley
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
11y
@Account Closed
Sure isn't my intention to chase anyone off, looks like you bailed out on us, with "Account Closed".
Part of what BP is about is learning, those getting into RE really need to master the principles of business and real estate before going into the business of real estate. While there are some good "gurus" most will just get you into trouble.
Wasn't picking on you personally Tyler, you're following what most others follow starting out, my comments address those practices. Come on back. :)
0 Reply
Karl Smith
Wholesaler · Chicago, IL · Member since 2013 · 44 posts · 3 votes
11y
Tim and Ryan I agree with you 100%. Iv'e seen too many in this forum bashing wholesalers. .. If you can provide a service to the property owner by helping get their property sold than so be it. When people including 1st time buyers (using an agent), rehabbers or buy & holders look for properties they want a good deal or a great deal. Some investors and wholesalers are good at negotiating and some are even better at creating a win win for all parties.
About 10 years ago I had a 3 unit I needed to get rid of ASAP. After getting a retail buyer who was getting a mortgage loan to buy we signed a contract. After all most 3 or 4 months of following up with the buyers agent. I finally called the buyers mortgage broker only to find out then that the buyer had been turned down for the loan a month or two before I made the call. ....did I not mention that this guy (buyer) was using an agent.
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