Wholesalers, do sellers believe that you are the end buyer?

Question

When negotiating a wholesale deal, do the sellers know that you do not have the intent of personally purchasing his or her home? I have my own methods and opinions but would love to discuss all sides of this controversial topic.

Michael Quarles · Answer

Good to meet you Abrams

If you are wholesaling then you are the end buyer. You buy low sell low, however you will create constructive notice. If assigning then you are not recording ownership.

Here are a few paragraphs from my agreement. Most are afraid to use them in theirs because they fear if they tell the truth they'll lose the opportunity. Which to me is highly unethical. Honesty matters.

ASSIGNABILITY: Buyer may assign this Agreement.

RESELL: Seller is aware that Buyer intends on reselling the property for a HUGE PROFIT. All profits made by Buyer during this transaction relating to the reselling of the property are the sole interest of and solely owned by the Buyer.

MARKETING: Seller authorizes Buyer to market property during escrow for Buyers benefit. Marketing is defined as, but not limited to, placing the property for sale in the Real Estate Multiple Listing Service (MLS), advertising in the Newspaper or other periodical, and placing a for sale sign on the property.

APPRAISAL CONTINGENCY: This Agreement is contingent upon a written appraisal of the Property by a licensed or certified appraiser.The Buyer will order and pay for an appraisal on the property. If the appraised value is less than $__________ which is the amount quoted by The Seller as to what the house is Worth in its As Is Condition in Today’s Market, the Buyer may, within three (3) calendar days of Buyer's receipt of the appraisal, at Buyer's sole option, declare this agreement null and void. Buyer is entitled to a return of all deposits, if any, less the appraisal fee and any other escrow expenses or fees chargeable to the Buyer. Thereafter,neither the Buyer, the Seller nor any brokers shall have any further rights, obligations, or liabilities under this contract.

Pratik P. · Answer

Wholesaling....or to be more specific, assigning contracts is just an exit strategy. When I'm making an offer on a property, I might assign it, buy it and immediately list it, or do a full rehab on it. So no, they don't know what my intent is because frankly, I don't even know. Either way, I always let them know in general conversation that I find deals for myself and other investors and they go "oh..ok" because it's really not a big deal. Sellers don't care what you do with the property or who is on the closing docs. They just want you to execute one the agreement you've made. I'm much more concerned with the transaction closing on time.

Abram Santos-Gibson · Answer

@Caleb Heimsoth agreed. Your comments have prompted some introspection. I appreciate the insight.

Abram Santos-Gibson · Answer

@Caleb Heimsoth . I agree. I am a wholesaler and the other wholesalers that I deal with give off "used car salesman" vibes. I took the education to become a licensed realtor but never took the exam for litigation purposes. I believe that there is a place for wholesaling in the real estate industry, but it has to be held to the same ethical standards. This business is hard and I only see it as a means to gain knowledge in real estate investing, networking, and make a little money.

Jay Hinrichs · Answer

I think you know the answer.. I suspect maybe a small % are 100% truthful with the seller the vast majority I suspect

keep the seller thinking they are the buyer.. or maybe its 50/50 .. but for sure.

I know i get lots of direct mail and I have yet to have anyone i talked to tell me they are simply looking to tie it up and sell it to another and make a fee.

Abram Santos-Gibson · Answer

@Michael Quarles I'll try my best to hold back my inner "fangirl". Huge fan of your BP Podcast episodes. I intend to change my agreement and borrow some of your word choices if that is okay with you. I thought that mine was transparent, but I now see that I could be even more transparent. I believe you said that you specialize in wholetale deals on the podcast. In your experience, are wholetalers, in a general sense, more or less transparent. It's obvious that wholesalers are notorious for deceit. God bless!

Abram Santos-Gibson · Answer

@Pratik P. In the scenario that you described, I agree. I may also purchase a property and let the seller know that the end buyer may or may not be myself. The preface of the discussion was to discuss the scenario when a wholesaler has no intention to purchase a property yet misleads the seller into believing that he or she is the end buyer. Thanks for your insight!

@Breshawn Hawthorne Despite the lack of harm to the seller, do you find no ethical dilemma in misleading a seller? Thanks for the insight and I would love to discuss this more!

Breshawn Hawthorne · Answer

Long as you are executing and attending to the sellers needs and come to a win, win situation with a seller i don't think the seller cares how the property gets sold long as they get what you agree and discuss with them. In your contract with the seller you should state that you will either purchase the house or assign the contract to another investor, in which the seller will read and agree with because either way there getting the property off there hands and money in there pocket / problems solved.

Matthew Perry · Answer

Michael Quarles I think those are great- credit to you for those being in your contract.

Wholesalers, do sellers believe that you are the end buyer?

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