All Forum Posts by: Account Closed

QUESTION to all who have dealt with wholesaling in the past. 

We heard a lot about unethical and dishonest wholesalers. I have done wholesaling in the past (not in RE, but in reverse supply chain liquidation), and had to deal with a lot of unethical and dishonest sellers. My experience has taught me that it is just a human nature to seek the most benefit for them at any cost, even if it means harming someone who facilitates profitable transaction serving their interests. Only very few sellers were ethical and honest in dealings involving exchange of goods for money. I found the ways to secure my interest and prevent underhanded moves by sellers in liquidation business, but RE is a whole different animal that I don't have as much experience in.

Now, here is the dilemma: in order to be most efficient and get a good rep as a wholesaler in the eyes of the sellers, you should be able to CLOSE every purchase contract you sign. That doesn't only mean that you have to be able to close on your own (if you can't find a cash buyer within, let's say, 30 days), but to avoid consistently being forced to close on your own and then marketing a property to potential sellers you should be able to locate a buyer BEFORE you sign the contract with seller. That means , in an ideal world, you should be able to inform investors about property you don't have under contract yet and ask if they would be willing to buy it if you had it under contract. That gives a window of time (between the moment you make potential buyer aware, get his commitment/interest to buy and sign a contract with seller), for investor and seller to get together, exchange RE for cash and close the deal by cutting you out of it. Unless you want to run your wholesale operation like someone associated with Sopranos, in real world you will have little to no remedy to secure your interest if the seller and buyer decide to cut you off. Without a contract and right to assign you have zero claims to assignment fee, no matter how much time, effort and money you spent into finding the coveted deal. So, how would you secure your interest as a wholesaler in a situation like this? I understand that it's best to have a buyer ready to pay cash for the property before you sign a contract with seller, but is it a viable option in the real world we live in? Any thoughts on that would be appreciated. 

Great advise, thank you @Tom Gimer 

I spoke with some wholesalers who were able to get good properties under contract, but couldn't find serious cash buyer. It certainly makes sense to CLOSE on those and keep (to resell, rehab and etc.). 

Do you know what worked best for them when they just started? There are so many different options and big guys will advise to spend $5000-$25000 per month on marketing to get a steady stream of leads that can close deals. But what you do when you just start out, with lots of options out there (that come with risks to burn a lot of cash really fast, when you shouldn't do it)? Being too cheap also may back fire if you end up making 10,000 calls by pulling a list from Propstreams and never closing a single deal in the end.

 Any advise on best marketing strategies for starters, on "starting lean and mean" under current market conditions in Maryland, would be greatly appreciated!

Quote from @Andrey Padalka:

Hi Eric,

thank you. I saw your post and links and I also found articles about other states but not for MA. Not sure why, maybe the community is not active here. I was an RE investor before moving to US and now I thought it would be a good idea to find a mentor here and start with this kind of strategy. 

 Hi Andrey,

I pulled these three links through the realestateskills.com posted on my thread. I hope these will be helpful and useful as starting steps in learning about wholesaling in MA. 

https://www.realestateskills.com/blog/wholesaling-real-estate-legal-massachusetts

https://www.realestateskills.com/blog/how-to-wholesale-massachusetts

https://www.realtytrac.com/market-trends/ma/

Good question. I would also want to hear from successful wholesalers where they get the leads from. I guess, it's not just where they could possibly be found. We know there are multiple venues to get the leads, some very costly others not, some demanding tremendous effort (like going door by door, driving for dollars , or making thousands of cold calls etc.) , others not so much (mass mailings, for instance). The question is: what is the most efficient, mean and lean way to start and get the first few deals. 

There is very little traffic and activity on wholesale forum lately. I am not sure if it's just a general trend of people going offline en masse, or a sign of waning interest in wholesale discussion since a lot of bad rep is associated with it. I just started a thread where I invited people to share tips and advise how to do wholesaling the right way. There are some links that you may find useful. They may not be specific to Boston, but may lead you to find what you are looking for if you search further.  Good luck. 

There are a lot of complaints about bad wholesalers who do things wrong. We all know how frustrating it is to deal with inept, crooked and ill motivated people in any type of the business. I want to start this thread to get ideas, opinions and valuable tips on how to do it RIGHT.

Lately I have been reading on this subject ,extensively , and trying to learn as much as I could. I am already doing the marketing (placed bandit signs, launching FB ad next week, selected   databases to purchase the list of properties that fall under high equity, vacant and other criteria, to be skip traced and cold called  and etc.). 

I started my journey by reading Wholesaling 101: How to Wholesale for Beginners thread by Chris Piper (https://www.biggerpockets.com/forums/12/topics/862964-wholesaling-101-how-to-wholesale-for-beginners) , which I think is great in terms of being FREE and STRAIGHT TO THE POINT, coming from someone who was actually doing it. But I don't know how outdated or still useful most of his insights are. 

I checked on current legislation (thank you @Russell Brazil for heads up on MD 2023 Bill and MD 2024 Law), watched videos such as How to Wholesale RE Step by Step (see https://www.youtube.com/watch?v=JFnUABPy-A8) , found this link/article from Jan. 2024 on how to do wholesaling in MD (https://www.realestateskills.com/blog/wholesaling-real-estate-legal-maryland) , read current articles and stubs (see https://ark7.com/blog/learn/cities/maryland-real-estate-wholesaling-guide/#), watched this linked YT video which covers 50 states and explains where wholesaling is legal and where it's not (https://www.youtube.com/watch?v=O_GRRivs-94) , found out about a lot of gurus that charge tens of thousands of dollars, went to seminars, met and spoke to people who were burned and decided not to pay anyone to get information that I can gather freely from various sources, including this one.

Now I want to hear from successful wholesalers who are operating in current market (preferably in MD/East Coast, but also those who do wholesaling remotely in all states where there are motivated sellers and buyers): how did you start? What works in current market? What realistically can be achieved if one starts lean and mean, with couple of thousands of dollars to invest in marketing and pick up as things move forward?  What works now? What you do now that delivers results, closes deals and makes buyers/investors happy? What are the best strategies you would advise to newbies and wish you knew when you started?

Let this thread to be a place for constructive, productive conversations, networking and working together to make some money and bring some positive light to this frowned upon industry in RE world.

Thank you all for your insights, opinions, comments!!

Quote from @Don Konipol:

Everyone has their own “take” on every aspect of “wholesaling” covering a full range of opinions, emotions, and of course self interest.

In an inflamed rhetoric environment I have previously been accused of being anti wholesaler and biased.  I don’t believe I am anti wholesaling at all.  I am anti committing fraud in a business negotiation; I am anti lying to homeowners, and I am anti recommending that inexperienced and undercapitalized people misleading desperate homeowners into believing they have a solid sale when all they’ve done is provided a “wholesaler” with a no cost, no risk OPTION to purchase their property.

1. THE FRAUD - this occurs when the wholesaler sign a contract to purchase a property he has no intention of buying. IF the wholesaler explains to the home seller (in writing and verbally) that he will only conclude the transaction IF he can flip the contract at a profit, then fraud is ELIMINATED from the equation.

2. THE LIE - this occurs when the wholesaler shows the homeowner false  comps or provides false information which lead the homeowner to believe his property is worth significantly less than it is.  The cure is either (1) the wholesaler makes his offer without indicating a false property value to the homeowner or (2) the wholesaler explains why he is offering X amount by showing the profit a fix in flipper requires, his own profit requirement, and the resultant price range he can offer. 

3. DANGEROUS WHOLESALE WANNA BE - This person is himself a VICTUM of mis information, fraudulent marketing or outright scam.  The situation is created when good people wanting to better their life’s are tricked into believing that wholesaling real estate successfully is the path they should take.  The saddest example is the people who pay $40k for a ,mentorship they can not afford, have no capital to invest, are poorly trained with no understanding of real estate principles, law or finance, and are unleashed on unsuspecting home owners to try to fool them into allowing the wholesaler a fre option to buy/sell their house.  The cure the various regulatory authorities have come up with is twofold, legislation that restricts the methods wholesalers may use, and regulations requiring wholesalers to hold real estate brokers license.  I do not necessarily agree with these solutions, although I am open to the argument that they may be effective.  I would much rather see wholesaler operating under the “I’m going to buy your property but not really” system sued for fraud and have fraud established so thoroughly that almost nobody would offer on a property they did not intend to close on.  But, then again legislators are attorneys, not business people. 

 I read your posts and don't think you are ANTI-wholesaler. I understand where you are coming from. I agree that FRAUD should be eliminated from business, it's just a bad business. As a wholesaler of goods that had to acquire liquidation products in bulk I have dealt with a lot of unethical , cut throat sellers and it never helped anyone along the way. Btw, new MD law in effect from October 1st mandates disclosure on part of the wholesalers and I see no problem with it.

Showing false comps is an outright fraud and deceit. Not sure why anyone would do this to sellers. It can come back biting the middle man in future, since one could be accused of acquiring the goods/property by misrepresentation and deceit. I would prefer to explain nothing to seller, except making an offer and making it clear that I may assign the purchase to another buyer if it's not an investment I am looking for.

Paying $40K for mentorship is indeed terrible investment to learn this trade. I know fix and flippers who paid $40K to Kiyosaki and other gurus teaching RE basics (and they are being vogue about it, selling 80% fluff and may be 20% of somewhat useful information that one could gather for free just by browsing the internet). 

I have a problem with requiring wholesaler to get Broker's or REA license. It's too cumbersome, very time consuming and absolutely unnecessary for someone who will be selling deals/transacting with investors in B2B environment and by definition can't have fiduciary duty to seller.  One would be motivated to inflate the price of selling property to maximize proceed to a seller and a commission on transaction, which would make it counterproductive and absolutely bad investment for a business that wanted to purchase distressed home to rehab and profit.

Quote from @Shane H.:

Quote from @Account Closed:

Quote from @Shane H.:

You either didn't read and comprehend what I wrote, or you deliberately put in my mouth things I didn't say. I equated a car owner to what you insist is invariably an "elderly individual" or a "widow" (as far as I know car owners come in different ages, genders, marital statuses, mental capacities and etc.). Car dealer, in that equation, is a prototype for a wholesaler in a RE transaction, not a seller of home. We are comparing RE wholesale transaction to trading-in a vehicle to a dealer for a wholesale value. 

You have a big long winded explanation of how you come prepared to the desperate drive a hard bargain and they don’t like you. That was what this was in reference to. 

 That wasn't to compare a licensed dealer to a home seller, it was simply to give an example of my negotiating tactics. Btw, it required ZERO lying, misrepresentation or fraudulent claims about the value of their car in the market. You can't fool car dealers in their own business. It involved on my part an understanding and knowing how much I wanted to pay for a car, making my offer and never wavering to pay dealer what he demanded. Here is my offer, take it or leave. Period. I don't care if you are a car dealer or home seller. I won't beg, lie or misrepresent anything to you. Offer is offer, money is money. Goods are yours and decision to accept or reject my offer is also yours to make. 

Quote from @Shane H.:

Quote from @Account Closed:

people are not hating you. You’re not the star of this show no matter how much you’d like to be. People dislike what they’ve seen run rampant in an industry. 

what are these insane regulations and licensing requirements you’re referring to to become an agent. In most states with no criminal background you can do it in an afternoon. Lol

I know very well about those Congressional Hearings, I even posted clips from one. And while they are ongoing current Boeing CEO continues to hold his job and plans to retire in due time, with all the perks and benefits that come with it. So, where is your outrage and all your "moral and ethical standards" when it comes to powerful and connected men who run businesses in such criminal ways that the commercial planes they manufacture started to fall off the skies? Perhaps you still consider that Boeing CEO a respectable, moral and upstanding guy, simply because he had $34mil bonus and salary package and runs such a "big and respectful" company? But you are on the @$$-es of wholesalers who won't offer to pay seller full ARV for dilapidated junk, while they owe it to sellers under your "moral and ethical" standards LOL
People are applying double standards and being hypocritical - that's the point I make when I bring Boeing CEO as an example. 

I think you are projecting some of what you might be doing here, such as hoping to be a star of the show or get 15 minutes of fame. For me that's high school stuff I couldn't care less of. I don't care if I am an anti-hero in someone's books or a knight in shining armor, their perception of me means nothing to me, has zero tangible value and significance to me. But it's obvious to me, from reading the comments and posts here, that a lot of people hate wholesalers as a group for reasons they would kiss @$$ of the Boeing CEO. So, as I understand, it's all about power, a piece of pie everyone wants to bite and selfish, monetary interests. No one, IMHO, in re business cares about sellers or anyone other than themselves (if they did they would be million times more vocal about Boeing CEO than wholesalers, at least wholesalers don't kill hundreds of people each time they eff-up a deal). :-) If you TRULY care for sellers, why don't you fire legislators and executives who make bad economic policies which lead to hyper inflation, high interest rates, economic downturn, mass poverty, loss of jobs, desperation and need to sell for cash a property that  fell into uninhabitable condition? Why don't you find some of those sellers before they are desperate to sell their homes and help them with their finances, jobs and lives? If you so much care about seller. Which, I am absolutely certain, you don't. 

As to REA licensing and gov regulation, you probably don't know anything about both. I have repeatedly stated that I have nothing against checking criminal background and registering wholesalers , like they do gun buyers in state of MD. That type of license would be beneficial to all. But putting wholesaler through 60 hours of training, then passing exam, then waiting 3 years under MD licensing regulations before they can apply to become Brokers, with fiduciary duty to sellers  is an absurd and preposterous requirement of someone who is out there to find a distressed, off market dilapidated property for half the retail/ARV price, to assign to an investor who will take all risks and buy it AS IS for profit.

Quote from @Johnna Lodge:

I am a real estate investor and Realtor in GA.

My wholesale contracts state I plan to make a profit. Noone works for free for a living.

I also state I am a realtor.

I have helped so many people where a realtor would not or could not help.

I have had seller's who state they do not want to work with a realtor.

I usually approach the seller by giving them options to list, what needs to be done to get their best return versus selling wholesale.

I've had people tell me they don't wish to do what it takes to list.

Sometimes I just buy the property where a Realtor would not. I do not wholesale the property. 

I have had some issues with other wholesalers mainly due to unethical sellers.

An unethical seller is one who goes under contract with another wholesaler while already under contract.  This scenario gets to be more of an issue when you have an unethical wholesaler on the other end.

In every industry there are bad seeds. It can't be helped because you have ethical and non ethical people in every field.

What I have found lately is inexperienced wholesalers lying to Realtors as if they are buyers. This provides ridicously low offers with crazy terms such as earnest money due after ridiculously long term due dilligence ends. This can lead to a bad taste in Realtors and Seller's mouth.   

Just be upfront. 

In my humble opinion there is a need for wholesalers and Realtors. Be ethical and upfront with everyone you engage with. 

Great post! Some individuals who posted comments on this subject appear to insist that wholesaler has to go way beyond being upfront, acting within boundaries of law and being honest. They insist that it's a moral duty of wholesaler to pay retail price to sellers who own distressed properties and also act like caregivers, counselors and advisors of sellers, to help sellers get top dollar on their property. They allege that it's immoral to buy property at wholesale price, which would fall under 70% rule minus cost of repairs and wholesaler's fee for locating it. Anything other than working for the seller and paying him 100% of the ARV is "immoral" in their books. They also insist that all sellers of houses are invariably senile elderly men or widows. I am not sure if they are trolling or truly believe what they say.