Industry wide standard for wholesaling? or being unrealistic?

Question

So, I am guessing a class on real estate wholesaling class must have recently let out or something because I have just been inundated with wholesalers bringing me deals this week. But here is what has been driving me crazy about the deals that they have been bringing to me.

1. All of them are daisy chaining an existing property being wholesaled and marking it up like crazy. For example, there was one property being sold by New Western and all these wholesalers are marking up the property 30-50k and trying to sell it to me, and they give me the same over estimated ARV on the property that came in the original flyer and claiming that is is under contract, just not disclosing that it is New Western that has it under contract and not them.

2. They just grab a property off the MLS and market it to me and want a markup on it without being 100% clear as to whether they have it under contract or not or what kind of deal it is, i.e. short sale, probate etc

All this lack of transparency tends to make me very very wary of wholesalers. Now so I've always thought wholesaling meant the property was under contract by the wholesaler, but I guess this is not how the industry really works? personally, I do wholesale once in awhile but only properties that I have under contract and only properties that I have carefully calculated the ARV and rehab costs and would be willing to rehab myself if I can't find a buyer.

So given the observations, what should my expectations be of a wholesaler? am I expecting too much that they have the property under contract under their own names or companies instead of daisy chaining some other wholesaler's property?

Is there even an industry standard? if there isn't, would it make sense perhaps for us to come together as a group and set certain standards so we know what the expectations are?

Just wanted to rant a little and see if there was a solution to this, or maybe I am the one that has the problem since this is how the industry works?

Jay Hinrichs · Answer

unlicensed unregulated free for all. = wholesaling

CJ Ramos · Answer

CK,

I don't think you're being unrealistic. Personally I think anyone trying to wholesale a property or co-wholesaling should absolutely be on the contract.

It's dishonest, and it puts real buyers like you on the defense.  If you haven't done the work to analyze a deal, build rapport with the seller and get a contract, you shouldn't be marketing it. Do the work - no shortcuts. It's better for everyone this way..

-CJ Ramos

Account Closed · Answer

Says it all................................................................!!!!!!!!

Account Closed · Answer

Some Wholesalers are good and some are just flat out horrible, same with Real estate agents/ Brokers, Contractors, etc. I think people dislike the fact that Wholesalers don't usually have "skin in the game"...some people get into it due to lack of funds and for some odd reason people with money despise that (go figure), stay poor I guess, right?

Personally I don't think Wholesalers are bad, if they bring good deals, LIKE THEY'RE SUPPOSED TO. Can't write an entire people off because of a few bad apples that would be like....never mind, you guys get where I'm going:-)

CK Hwang · Answer

Thanks everyone for reading my rant. Lakeem Allen, don't get me wrong, I am not negative towards wholesalers and am happy to buy from them. It's just that it doesn't seem to be a standard in which the way deals are handled that I think makes that part of the industry a mess and making it hard to do business in this sector.

Perhaps a lot of this nonsense is coming from "gurus" who are teaching underhanded ways to make money from real estate?

For example, I had a recent deal brought to me by a wholesaler. While the deal in of itself is ok, he was so "bendy" with the details of the deal, that i was hesitant to even act on it because who knows what else he is bendy on. i.e., first deal he brings is a daisy chained deal i had received a few days ago, but he had marked it up anther 40K. Second deal, wholesaler claims to be an off market, and it is clearly listed on zillow and truly with a MLS number attached to the property.

Sometimes, I think it might be a good idea to come together as a community and award gold stars to trusted wholesalers to clean up int he industry a little. And to be a goldstar wholesaler, they need to

1. not daisy chain deals

2. only sell deals they have under contract in their own name and have an actual deposit on

3. clearly represent the extent of damage to the house

and whatever other criteria necessary to certify a truly legit wholesaler.

Just some thoughts on what perhaps could be done to make the industry more legit.

Adrien C. · Answer

I've co-wholesaled but it's w/ an agreement with the person on contract. I don't mark it up but instead get a bit from the profits. It looks horrible for one's credibility to daisy chain a property. I have 2 other wholesalers I work with and allow them to send out my properties to their buyers but marking up the price is a huge NO. I'll pay them after closing. I saw one of my properties daisy chained by another wholesaler who marked it up 100%. I had property under contract at $12k (needed a boat load of work) and an assignment fee of $3K. This dude sent it to his buyers at $30K. I wish he had found a buyer because I would have changed my fee to him and made more.

Industry wide standard for wholesaling? or being unrealistic?

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