True, and the thing I never take into account is cash. I always look at a deal that I send out as someone is going to get hard money for it, since we really have very few “cash” buyers. If you’re using cash or a credit line, you can buy at higher prices and still make the same money you would if you use hard money. But like you always say, I’ll only contract on a property I’d be willing to buy, so if they numbers don’t work for me, I wouldn’t contract on a so so deal. But there are times I’ll contract with the contingency to sell it, knowing I’m never going to take title and the homeowner is fine with that. As far as rentals, you can charge almost anything, it’s to hard to determine if they are putting alot of money down or not. And in our market, I think people have rentals just for the loss on purpose to balance out other income.
Newbie Wholesalers - what NOT to do - Posted by Natalie-VA
Posted by Natalie-VA on July 29, 2008 at 12:33:16:
Hello All,
I received yet another call today from a obvious newbie wholesaler who thinks I’m an idiot. This guy is actually in foreclosure on his residence while trying to wholesale me a different “deal” worth 250k for only 170k. And, this house, built in the early 1920s, needs no repairs! I did some quick research to see that the subject property probably couldn’t even retail for 200k. Do I have stupid written across my forehead? I’ve never met a house that didn’t need repairs, especially one this old. He also seemed quite surprised when I said I don’t put houses under contract unless I can close on them myself. By the way, he wasn’t interested in working a deal on his residence that’s in foreclosure.
Thanks for letting me vent. What I’m really getting at is that newbies (and experienced investors) need to try and be more professional.
Here are some DON’Ts:
Don’t give me bogus numbers on value.
Don’t call me and not properly introduce yourself.
Don’t pretend you own the house you’re trying to wholesale if you don’t.
Don’t tell me a house doesn’t need any work.
This was just one example of a recent call I received. I rarely get a call from someone who represents themselves professionally and is honest about his experience and intentions. There’s nothing wrong with being a newbie; just don’t try to pull one over on someone with experience, and don’t pretend you have experience you don’t. I won’t trust you and won’t want to do business with you if you sound like you’re full of $hit.
How about this… Advertised in a local investor group in regard to the deal, got me to call and after meeting with me where I’m willing to pay 25k in assignment fee, told me essentially that since a lot of folks were interested in the house, that she would simply keep the house by buying it herself. Make a decision and follow through with it. It’s a waste of my time and my business associate’s time. It also made me look bad in my associate’s eyes, too.
As a wholesaler who’s been doing this successfully for years, I couldn’t help but respond to this. I’m no newbie, so a lot of your post doesn’t even apply to me, but I still felt I had to give my perspective on this. As for your don’ts:
-Wholesalers giving bogus numbers on value will always happen. I don’t do that, as I know the people I’m calling will check those numbers on their own, but you have to expect that and be ready to do your homework on a property you’re going to buy.
-Calling and not properly introducing yourself is just a problem with phone manners, and can’t be attributed to wholesalers only. This is a problem across the board, and I personally can’t stand this either.
-Don’t pretend you own the house? We never own the house. That’s the point of being a wholesaler! We get the house under contract for a great price, then either sell you the contract or do a double closing, where we’ll only own it for about 1 minute. In the latter case, the wholesaler would probably tell you he owns it, since he technically will before you do. If the numbers work for you, why should this matter?
-Telling you the house doesn’t need any work when it does probably isn’t good for business for the wholesaler, since you’re obviously going to check it out before you buy it. That just doesn’t make any sense on his part.
So, as you can see, I don’t disagree with you on everything, but please try to be a little easier on them. Most of the things you don’t like that the newbie wholesaler does will be stopped as he continues in this business, or he won’t be in the business long. Even with their shortcomings, you’ll find that a good wholesaler is like gold to you and your business. You may have to kiss a few frogs before you find your prince!
Harold Wilson
Real Estate Wholesaler and Short Sale Expert
I certainly understand your point, they can be exasperating. However, it can lead somewhere good.
I remember getting a call from an obvious newbie wholesaler. He did all that…told me it was worth more than it was, underestimated repairs, and got me to go look at a house that was a total lemon of a deal. But I was nice and said to call again…and he did. Eventually I bought from him, then again, then again and again. Later, as we became friends, I got to admire his get up and go and ability to put deals under contract. He got better and better and started receiving some rather decent checks from me as I bought more deals from him. Much later, he became my partner.
Re: Newbie Wholesalers - what NOT to do - Posted by Kristine-CA
Posted by Kristine-CA on July 29, 2008 at 23:15:23:
This thread did make me laugh. In spite of all the things I have to do
to get a deal, solve some SERIOUS legal/title/lien/property distress
problems, in the end I am “wholesaling” to the rehab buyer. So I guess
I am one of the dreaded wholesalers…
For the record: I don’t upsell any properties. I don’t provide comps,
photos, repair values, rent values…nada. It’s totally self-service for the
more experienced investor…or those who think they are.
So, from the wholesaler to the newbie wholesaler trying to shop around
my deal:
Don’t tell me you have cash when you don’t. Period. Especially if
you can’t make any earnest money deposit.
Don’t tell me you are using 100% hard money unless you can come
up with a hard money lender that I know will actually lend you the
money you need to buy from me for the purchase price we agreed on.
Especially if I already have a hard money loan on the property…with
the same lender. Do a little research dude.
How about those phone manners? Anyone who knows me, knows
that I am no stickler for formality. I am one of the most casual people
you will ever meet (much to my mother’s chagrin). That being said,
PLEASE, start the conversation with your name and the purpose of your
call. If you leave a message and want a call back, try both your name
and phone number.
That’s enough for today. I’m getting all riled up. Kristine
DON’T try to wholesale me MY HOUSE at a ridiculously high price then find out I’m the owner and try to convince me why I should sell it to you $30k cheaper than your original price to me!
True story! It happened during the peak of the RE bubble. I advertised somewhere after I took title. I talk to a few wholesalers (masquerading as ‘investors’). The next thing I know it’s advertised to my REIA. I call the wholesaler up who tries to convince me why I should pay $135k for the property. After I tell her I’m the owner, she tries to (in the same d%$^ conversation) sell me on why I should sell it to her $30k cheaper!
Don’t send me a list of properties with prices higher than on the MLS. I’d be better off buying from the MLS myself!
Don’t show me comps of properties sold on large streets when the subject property is on a tiny boarded-up street.
Don’t tell me the rents are $1,200 a month, when I have houses in better areas renting for $800 to $850 a month. (Again, this was a boarded-up house in the middle of a block of boarded-up houses, so in realty it would be almost impossible to rent at any price).
As Michaela said, it helps to know the area really well: street by street, block by block, even house by house.
I know what you’re talking about all the way. I have constant emails about “deals”. I’ve no longer just ignored them, and email them back what the number has to be to actually work. I tell them the “secret” formula, ARV x 70% - repairs. I do this on all price ranges, I see guys buying at higher prices 250k homes at 80% and making money, but for me, that’s my formula for any house, for now. I sometimes see it as our job to educate wholesalors also. Being a rehabber/wholesalor both, I’ll tell people I’ll send their property out to my list of course, but the numbers have to work, I don’t want to look like the local idiot (we have quite a few) that sends out properties that don’t work. I want people to see a property from me and know it’s a great deal.
I’d like to add to the Don’ts:
Don’t show me comps unless you know what comps mean…
I hate seeing your 2 bed room 1 bath place for sale, and you’re giving me “comps” of 3/1s and 300 - 400 more square footage!
Now Natalie, what would you consider professional in a phone conversation? Did you at least get an introduction from the wholesalor?
Re: Newbie Wholesalers - what NOT to do - Posted by michaela-CA
Posted by michaela-CA on July 29, 2008 at 12:38:13:
hey, Natalie,
I know what you mean. How about this one:
Don’t pretend to know the neighborhood (after having pulled comps from Domania or other sites), when you’re trying to sell to someone that has been farming it for years and knows every nook and cranny of every street.
Re: Newbie Wholesalers - what NOT to do - Posted by Natalie-VA
Posted by Natalie-VA on July 31, 2008 at 18:35:39:
Good post Harold. I was venting in my post, but I definitly don’t give these people a hard time when they call me. I just politely decline the “deals” they offer. I wouldn’t want to burn a bridge.
Wholesaling can be done a number of different ways IMO. To me, it simply means selling a house at a reduced price. I often wholesale houses by closing and trashing them out first.
The part about owning the house is important to me. If you pretend you own the house, and I see in my research that you don’t, I will be suspicious. I’m sure you’ve met with many people over the years who tried to sell houses they didn’t own and didn’t control(ex spouses, children, etc.). I’d rather have you tell me up front that you’ve got a contract you’re looking to assign. That makes perfect sense to me.
Posted by Natalie-VA on July 30, 2008 at 06:29:11:
You’ve got more patience than me, Ken. It sounds like yours turned into a good one. As Drew mentioned below, he likes to train them a little. I just get the feeling, from a lot of them, that they’re not interested in learning. They just prefer to find an idiot and make a quick buck.
By the way, I have no problem getting calls from newbies who are honest about their means and intentions.
Re: Newbie Wholesalers - what NOT to do - Posted by Natalie-VA
Posted by Natalie-VA on July 30, 2008 at 06:26:32:
Nothing dreaded about a wholesaler, it’s just the unprofessional newbies that get on my nerves. I see you have the same experiences with the phone introductions.
Re: Huh! I got all yall beat! - Posted by Kristine-CA
Posted by Kristine-CA on July 29, 2008 at 23:23:06:
OK, you got us beat. That’s a pretty great story.
However, some credit has to be given to that wholesaler who had
enough cajones (or whatever the female version of that is) to stay the
course and try to get a deal from you. She had some seriously
misguided persistence, but persistence is a skill nonetheless. Kristine
Re: Newbie Wholesalers - what NOT to do - Posted by Natalie-VA
Posted by Natalie-VA on July 29, 2008 at 15:36:46:
Drew,
No introduction whatsoever. Not even a name until I ask. This isn’t the first time in recent months I’ve gotten calls like that. I mean, you’re trying to do business with me, and can’t even introduce yourself and why you’re really calling? They just call and say, “Yeah, I hear you buy houses. I’ve got one for you to take a look at…” I mean, WHO ARE YOU? That’s okay for Harry Homeowner calling, but a wholesaler who’s theoretically running a business could take a more professional approach. “Hi, I’m Natalie Lastname with Lighthouse Properties. I’m calling because…” I did have one who (after I asked) told me his name was “Mr. ____”. He didn’t sound old, so I’m thinking, why the formalities? Did he take some class where they told him he would get more respect that way? Didn’t work for me.
Another recent example…the wholesaler volunteered to me that the square footage in the tax record didn’t contain recent improvements.
I’m like, “Oh, thanks for letting me know. What is the correct square footage?”
“Uh, I really don’t know.”
Oh, you’ll like this one, Drew. I got a call a few months ago from “an investor” selling a new construction house in Prentis Park that they just weren’t able to finish. He tells me that it’s worth 170k. Well, I do my research and see it’s been listed for awhile for 165k and hasn’t sold. How can it be worth 170k? I went to take a look for Ss and Gs. This house backed up to Portsmouth Blvd, was next to a boarded up Church and you could tell the HVAC was recently ripped out. The caller evidentally didn’t make a good investment, and actually thought I was stupid enough to take it over.
By the way, it was nice meeting you at lunch the other day…
Re: Newbie Wholesalers - what NOT to do - Posted by Natalie-VA
Posted by Natalie-VA on July 29, 2008 at 15:20:30:
That’s a good one, Michaela. I don’t know why people think they can just pull one over on you. I think some of these people just think they’re smarter than everone else.
Yeah that’s why I didn’t get mad at her. I actually got off the phone and laughed. It was just funny how she went from “the property is great and easily worth $150k” to “you know you’re really not going to get that much for the property…it’s only worth $110k or so.”
I’m going to let the ladies here develop their version of ‘cajones’.
