How Do I Tell A Wholesaler From A Real Investor?

Put your address into one of those “we buy houses” sites and you’ll get eleven calls this week. Some of those people are going to close on your house. Some of them can’t. And you cannot tell them apart from the phone call.

I know exactly how wholesalers operate, because I used to be one. I started in this business as the sales guy for a wholesale company.

So here’s what to listen for.

What a wholesaler actually is

An investor buys your house. The money is theirs or their lender’s, and at the end of it they own it.

A wholesaler doesn’t buy your house. They sign a contract to buy it, then go find somebody else to actually buy it, and they keep the difference. The person at the closing table is somebody you’ve never spoken to.

There’s nothing illegal about that. But how they get paid changes what happens to you, and that’s the part nobody explains.

The offer that looks great and isn’t

Say your house is worth $300,000 fixed up. It needs cosmetic work, maybe a roof, maybe an AC. You’re asking $270,000.

Somebody agrees to $270,000. Full price, no argument. And they want a fourteen-day inspection period and a thirty-day close.

That’s a wholesaler. One hundred percent.

At $270,000, on a $300,000 house that needs work, there’s no room. None. An investor can’t make that work and neither can they. What they’re doing is tying your house up so they can market it at $279,000 and collect a $9,000 assignment fee for handing off the contract.

Except nobody’s paying $279,000 for that house either. So the offers come back lower, and two weeks in they come back to you and tell you the most they can do is a lot less.

And here’s the part that costs you. By then you’re invested. You’ve told your family it’s sold. You’ve made plans. You don’t want to go back to square one with somebody new. So people take it. I’ve watched sellers accept a number they’d have laughed at on day one.

That inspection period was never about the roof. It’s a free option on your house.

What a real offer looks like

I come stand in the house. Not a phone quote. Then I run my numbers and tell you what I can pay.

On that same house, maybe that’s $200,000. That’s a lower number than $270,000 and I’m not going to dress it up.

But it comes with a zero inspection period, a large non-refundable deposit, and proof of funds.

Zero inspection period means I’ve already looked. I’m not asking you to hold your house off the market while I make up my mind.

Non-refundable means if I don’t close, you keep the money. That’s not a formality. That’s the thing that makes the number real.

Check the earnest money

This is the question that catches the smart ones.

A wholesaler will sometimes offer a zero inspection period, because they know that’s what you want to hear. So don’t stop there — look at the deposit.

If the earnest money is $100, or $500, that’s nothing. They will walk away from $500 without blinking, and you’ve lost three weeks.

A non-refundable deposit should be at minimum $2,000. We put down $3,000 to $5,000 on every deal we do.

And in my contracts, the only thing that brings that money back to me is a title problem — if it turns out clean title can’t be delivered. Short of that, if I don’t close, you keep it. We’re not in the business of losing deposits. I’d rather close a deal I committed to and make nothing on it than take a bad review. I’ve never lost a deposit walking away from a house.

When the offer with the inspection period is the right one

Here’s something that works against me.

A higher offer with an inspection period can absolutely be the right call — if nothing is forcing you to close by a certain date. No deadline, no house waiting on the other end, no clock. Then take the higher number and accept the risk.

Some of those buyers are completely legitimate. They want to look at the roof, check the foundation, rule out a sinkhole. Plenty of them close at exactly the price they signed.

But if time is not on your side, that’s a different question.

I got a call a few months ago from a woman who’d gone under contract with a cash buyer at around $360,000, long inspection period. She’d already gone under contract on a house in another state. Two weeks in, the buyer came back and said the most they could pay was $225,000.

She said no, and then she called me. But her closing on the other house was three weeks out and depended on this money. She’d burned two weeks she didn’t have.

She didn’t lose money on a crooked buyer. She gave away two weeks off a clock she couldn’t reset, and then had to sell to whoever could close in ten days. And a buyer who has to close in ten days is not paying top dollar.

The four questions to ask

Whoever you’re talking to, ask them these four. The answers sort people out fast.

• Is there an inspection period?
• How much is the deposit, and is it non-refundable?
• Have you actually seen the house?
• Can you show me proof of funds?

A long inspection period and a token deposit means you don’t have a number. You have a starting point they intend to move.

These four questions are the same whatever the house is. Whether it’s a house in probate, one with a tenant still living in it, or one you inherited from out of state — ask them anyway.

Send me the offer you already have

If you’ve got a cash offer in hand and you’re not sure what you’re looking at, send it to me. I’ll tell you what I think of it.

If it’s better than what I’d pay you, I’ll tell you that too. I’ve been buying houses in Hillsborough and Pinellas since 2015 and I’ve walked more than a thousand of them, and I’d rather be the guy you call than the guy whose postcard you threw out.

Call or text Mike: 813-200-7665
A+ Home Buyers · TMWRK Brokerage LLC
aplushomebuyer.com