In the fast-paced world of real estate, where every penny counts, many home sellers find themselves entangled with real estate wholesalers, only to discover the hard way that they’ve been taken advantage of. These self-proclaimed intermediaries often disguise themselves as saviors, promising a quick sale without the hassles of traditional real estate agents. However, the reality is far from what they portray.
Profit-Driven Deception: While they would never claim this, wholesalers often conduct business similar to that of real estate agents, searching for a “real” buyer, but their motives are far from altruistic. Their primary goal is to lock up your property at the lowest possible price. They do this by getting you to sign a binding contract with confusing terms only favorable to them and in the end, they pocket the additional profit that should have been in your hands.
Once they have locked up your property, they then begin hunting for the highest paying real cash buyer that they can then sell their contract to for a hefty profit. Their intention was never to actually close on your property.
Unlicensed Operations: Unlike licensed real estate agents who are bound by a code of ethics, wholesalers operate without any oversight or licensure. This lack of regulation leaves sellers vulnerable to unethical practices. This is not to say that every single agent is ethical or even knows what they’re doing. But, it’s a whole lot easier to find a great agent than it is to identify a wholesaler.
Cloaked Intentions: Wholesalers employ a slew of tactics to conceal their true motives. Contract language that allows them to assign the contract or vague terms like “vesting to be determined” may mislead sellers into thinking they’re dealing with genuine buyers, when, in fact, they have no intention of purchasing the property for themselves. Other terms you might see is, extended inspection periods like 30 days. They’ll use that 30 days to find a replacement buyer and if they can’t find one, they’ll just cancel at no risk to themselves. Another red flag is very low deposits. Sometimes as low as $100. They’ll also put in the contract that the deposit doesn’t have to be delivered to escrow for 30 days or more sometimes.
The purpose of a ‘good faith’ deposit is that in the event the buyer doesn’t continue to act in ‘good faith’ and they breach the contract, they’ll potentially lose their deposit to the seller. I don’t know many people where $100 will offer any reasonable kind of consolation for someone bailing on their contract. As a rule of thumb, we always ask ANY buyer for a deposit of a minimum of 1% but preferably 3% of the purchase price to be delivered to escrow in 3 days. A real cash buyer won’t hesitate. Wholesalers will run. There’s several other terms they’ll use to take advantage of you. Ask Anthony to learn more.
Misleading Savings Claims: Wholesalers often argue that they save you money by bypassing real estate commissions and closing costs. However, their methods can actually cost you much more than you’d have spent on a professional agent, all while undermining the competence of legitimate real estate professionals.
In a recent cash transaction we helped a seller close, the original wholesaler offered the seller $500,000. The property was pretty trashed. Through our cash buyer program, we ended up selling the property to a ‘real’ cash buyer for $621,000. And because there were no commissions or no closing costs, the seller actually netted $121,000 MORE than if they accepted that other offer.
If the wholesaler locked up the offer for $500,000 and found the same cash buyer we did, the wholesaler would have received the $121,000 instead of the homeowner.
Self-Interest Over Seller’s Interest: Wholesalers are under no obligation to act in your best interest and they won’t despite what they tell you. Don’t fall for it. Their sole focus is on maximizing their profits, which comes at your expense.
Friendly Facades: Wholesalers are notorious for their charismatic and friendly personas, a tactic aimed at gaining trust. After all, who would willingly hand over tens or hundreds of thousands of dollars to someone who’s abrasive?
I listened to an arrogant wholesaler brag about how they were able to get some little old lady to reduce her price an additional $50,000 just because he did her dishes for her. That’s an expensive chore she just paid for.
Blatant Exploitation: Some wholesalers blatantly take advantage of the seller’s lack of knowledge about the market and property values, often coercing them into deals that leave them shortchanged.
More Spending on Learning Than Earnings: Many wholesalers invest substantial amounts in learning the ropes of the trade, only to find that their earnings pale in comparison to their expenditures. This is important to understand because there is an entire industry of coaches that only teach wholesaling. And while some of these coaches may have made quite a bit of money doing wholesaling themselves, it’s very likely that their students have a very high failure rate. As a result, you have hundreds or more people being lured into the wholesaling space in your local area. So don’t be surprised when you get multiple knocks at your door offering to make a cash offer for your home.
While this may paint a grim picture, it’s crucial to note that not all cash buyers are unscrupulous. Legitimate cash buyer options do exist. In Southern California, for instance, the cash buyer program at HybridHomeSales.com has emerged as a reliable alternative for home sellers. This program places your property in front of hundreds, and sometimes thousands, of genuine cash buyers, fostering a competitive bidding environment that often leads to a higher net profits to the home seller. And the risk is very low.
Just know, it’s essential for home sellers to be vigilant and well-informed when navigating the real estate market. Wholesalers may promise quick fixes, but the true cost of their services often outweighs the perceived benefits. By exploring reliable alternatives and understanding the market, sellers can make more informed decisions, ensuring a better outcome for their real estate transactions.
Some details about HybridHomeSales.com
Area served: Orange County, LA County, Riverside County, San Bernardino County, San Diego County
Cost: There is zero cost to the seller. All fees are paid for by the buyer.
Risk: Very minimal. Once the property is submitted to the network, bids are received for 3-7 days. If an acceptable offer is presented, the responsible party accepts and can close as soon as 10 days later. If no acceptable offer is obtained, there is no cost or further obligation and the seller may pursue other options.
Property Types: Any property in any state of disrepair or being outdated regardless of how little or much. The only properties this may not be suited to is properties that are in excellent condition already unless they are in serious need of an expedited sale.
Questions: Call Anthony Nitz directly. 714-900-2710
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