So, I’m just going to say it Baltimore wholesalers are liars. They’re not lying about everything, but mostly everything. There are four main lies that we will focus on. And, in my opinion they are the most hurtful and unethical towards the property owner. Those four lies are: We Buy Houses, Offer Price, Quick Sale and 0% commission. Let us explain:
Lie #1 —— We Buy Houses!!
This is a big lie. Because, guess what? They don’t actually buy houses. Most wholesalers do not have the money, credit or the desire to buy any home in Baltimore, let alone yours. The truth is, the only thing a Baltimore wholesaler has to offer is a contract, called an assignment contract. This contract states three fundamental things, the offer price, consent to reassign the contract, and the ability to market the property usually for about 60 – 90 days.
Wholesalers simply take the time period allowed to them to market the property at a much higher price than is mentioned in your contract. When/if a buyer is found the contract is reassigned from the wholesaler to the buyer. If a buyer is never found, they’ll tell the property owner they never agreed to buy the home, to read the contract, and then they’ll move on to the next sucker.
How to catch them in the lie:
Ask for proof of funds or a pre-approval letter? It’ll get them every time!
Lie #2 —— Offer Price
The offer price is the most important component of a real estate transaction. Baltimore Wholesalers use simple formula’s combined with market research to come up with an offer price. However, their offer price will ALWAYS be significantly lower than the actual market value of the home in as-is condition (Off-Market or MLS).
Example: A wholesaler offers $40,000 for Property A. However, when Property A is placed on the market, the sales price increases to $50,000. When/if the wholesaler finds a buyer, the seller walks away with $40,000 as agreed upon. But, the wholesaler walks away with $10,000. That’s a hell of a commission; don’t you say?
Why this is Unethical? Well, it’s not fair. If the wholesaler marketed Property A for $50,000, it’s because they knew they could find a buyer that would pay $50,000 for the home. As a homeowner, wouldn’t you want that $10,000 in your bank account? I know I would.
What can you do about it? Hire a Realtor. They are bound by an ethics agreement. Those ethics prohibit realtors from intentionally undercutting clients.
Lie #3 —— Quick Sale!!
This is a fat lie. A quick sale isn’t a term wholesalers can guarantee. Title work is title work. If the title is clean, cash funds, no inspections, you’re talking two to three week closing on most real estate transactions. That means a Realtor, a wholesaler, even your mother would be able to close in that time period given those circumstances. Wholesale deals tend to be cash deals, with no inspections, because of that they tend to go to settlement very quickly.
However, there is a flip side to this. If you have a home with title issues such as citations, liens, taxes, water bills, etc., those issues can prolong settlement. And then a quick sale, can turn into a long sale, or even worse, but not uncommon in wholesaling a, NO SALE.
#4 —— 0% Commission
Wholesalers make big, juicy commissions. Their fee isn’t simply a percentage of the sales price; it’s a flat fee. The flat fee is usually hidden but is determined by two things, the market value of the property in its current state, and the final sales price. The idea is to get the property owner to agree to sell the home at a much lower price than the property’s current market value. The wholesaler knows the market value of the home, before they walk in the door. Therefore, the offer price will always be way below market value.
Example: Property A is finally sold for $50,000. Consequently, since the property owner accepted the initial offer for $40,000, the wholesaler walks away with a commission of $10,000 (20% Commission). Realtor commission fees are usually 4.5% – 6% of the sales price. Would you prefer to pay 6% commission or 20% commission?
Personally, I’d gladly pay 6% plus closing cost, and walk away happily with $44,000 – $46,000, but that’s just me. There are a lot of things I could buy, money I could save, and vacations I could go on for $4,000 – $6,000. And I would much rather it in my pocket, than in a grimy wholesaler’s pockets.
As you can see, Baltimore wholesalers tell a lot of lies. They deceivingly give property owners the impression of honesty. They are not honest.
If you would like to receive a free evaluation and learn the true value of your property, contact us today for a free evaluation. Our licensed real estate agent will be more than happy to help you sell your home as quickly and smoothly as possible. We value transparency, honesty, ethics, and providing our clients with the best customer experience available in this industry.