Quote from Account Closed:
Quote from @Anna Laud:
Account Closed Good post and lots of great feedback here, I think one issue that is missing is SHOULD wholesaling be outlawed and, while I know this will draw fire from some, overall the answer is probably yes at least partially. If you've spend more than one week in any market (I'm primarily in Indy and in the midwest) then you've seen:
- Houses that are "pending" and the realtor thinks closing is coming but it is being fished out
- MASSIVE spam and abuses of people that get HUNDREDS of calls a day from "wholesalers"
- The same deal advertised with 10 different prices
- Sellers who are lied to and taken advantage of
- Wholesalers lying about values, rents, etc.
Yes there are ethical wholesalers for sure but our collective immune system should be stronger and there shouldn't be so many people like this. Yes I do think eventually the laws will pass in more states and wholesalers will have to provide much more value. We do a lot of free training by the way on how to build your business correctly with wholesaling. Hope that helps. Thanks everybody!
@Anna Laud, thank you for sharing your perspective on it! All opinions are valuable, especially those we disagree with. Otherwise, our discussions would sound like an echo chamber))
I will just comment on some of the points you have made:
- Houses that are "pending" and the realtor thinks closing is coming but it is being fished out
Are these houses on MLS, made available to the public? Are they on-market? Because they shouldn't be.
- MASSIVE spam and abuses of people that get HUNDREDS of calls a day from "wholesalers"
There are DO NOT CALL lists and laws in place that prohibit abusive calls. The government should step up and enforce those laws. And it's not just wholesalers, a lot of other businesses subscribe to abusive marketing practices. They all should be prosecuted (they are already outlawed).
- The same deal advertised with 10 different prices
Wholesale deals should NOT be advertised to the public. Wholesalers can NOT sell a property, he can only assign a contract and do a B2B transaction (sell to investors, NEVER market to the public). And why does any wholesaler, if he has a TRULY wholesale deal, have to make 10 different advertisements? If the deal is REAL (meaning, all comps are accurate, the ARV is accurate, the cost of repair is accurate, and there is 30% profit to be made by fix-and-flipper), then investors should be ones lined up to buy it, and wholesalers can then assign the contract to the highest bidder. If wholesalers go around peddling in 10 places a deals that no one wants to buy then they DON'T have a wholesale deal. Market is the best remedy for those, since no intelligent buyer/investor will touch what they offer.
- Sellers who are lied to and taken advantage of
How exactly are they lied to and taken advantage of?
-Wholesalers lying about values, rents, etc.
I firmly believe that those "wholesalers" are idiots. You can't "lie" about values in this industry, all data is there and accessible to all. Especially to an investor who is going to part with 200K-700K of his hard-earned money. It takes one call to a realtor to run comps on MLS and tell you what the true numbers are. Only complete fools can be misled by false values, and RE is not a fool's business, thus if one is a fool one should never invest in RE.
I'm not sure if I need @ you or just quote this, still learning lol.
To answer your questions in order:
- Yes a house is on the market for let's 100k and the wholesaler gets an offer accepted for 85k then while telling the agent/seller they are good to go on closing they may make excuses to delay the date not telling them that they are trying to find a buyer instead. The realtor puts the house as pending while the wholesaler markets it for 85k. Many realtors still don't know what wholesaling is so they have no idea that closing isn't being delayed but it won't happen unless the wholesaler finds a buyer.
- About the DNC list, very few wholesalers respect this. They upload a list of absentee owners or whatever and spam them all with calls, emails, texts, etc. Over 90% of the replies are peopel saying STOP or cussing them out. This is NOT marketing or lead gen, and yes others do it but I don't know of any industry where so many new people are taught that this is an acceptable form of "marketing/lead gen".
- Go to any fb real estate group and search a "deal" and you'll likely find it listed on that same forum by different people with different prices. Wholesalers will try to jv or just copy and paste and market properties they don't have any interest in, this is happening all the time.
- Sellers are being lied to about value, repairs and when/how it will close. Realtors lie to sellers too to get listings but wholesalers in my experience are far worse.
- I get what you mean about knowing your market, but we are all nerds here at bp while the average person is just trying to get into real estate or make some moves to help their financial situation so when they see an "expert" say something it carries weight. Plus if you are getting priced out of every other deal, moving too slow for on market houses, your realtor telling you that this is a bad time to invest, etc. then you may pull the trigger on a bad deal. It is understandable and much more worth of forgiving then the wholesaler who lied to them about the values, rent, etc. for a quick payday.
I don't all wholesalers, I'm just saying there are good reasons to ban them and we shouldn't expect the public to differentiate them from us when we haven't eradicated these terrible practices. I welcome the thinning of the herd, more for us.
@Account Closed:
