How Not to Wholesale
By Vena Jones-Cox
A few months ago, I wrote an article about mistakes wholesalers make in dealing with their customers. Apparently, this is going to become a regular topic in my articles, because in just the past week I’ve run across 2 additional heinous examples of wholesaler/buyer relations that I feel compelled to discuss with you, even though I’m absolutely certain that you’d never do these things.
The first case involves a buyer in a wholesale deal who called to ask my advice about another local wholesaler. Apparently, the deal in question is never going to close: the selling bank has now delayed over 9 months and there’s no close date in sight.
This has happened to me in the past, and it’s the reason that I NEVER spend a wholesale fee until the deal closes. In this case, though, the wholesaler is refusing to give back the buyer’s money, based on this clause in his assignment contract:
“It is agreed between assignor and assignee that assignment fee shall be non-refundable under any circumstances”
Yes, the buyer signed the agreement, and yes, she shouldn’t have. But on the other hand, it’s your job as a wholesaler to bring the deal to closing. If you haven’t, or can’t, you haven’t earned anything. A clause like this probably seemed like a great idea to the wholesaler, but the reality is that it’s not fair and will almost undoubtedly NOT hold up in court, which is where this deal is headed. The buyer is just “out” $5,000—and the wholesaler has made and spent a profit he didn’t earn.
How the wholesaler thought that this was reasonable behavior is completely beyond me—and, in the end, the result is going to be a lawsuit that the wholesaler will lose, the loss of a good buyer to the wholesaler, and the loss of the wholesaler’s reputation with anyone who this unhappy buyer talks to.
The second “wholesalers behaving badly” thing DID happen to me.
A wholesaler called me last week about a property in a good resale area that he wanted $35,000 for. I quickly comped it, called the wholesaler, and left a message saying that I would probably buy it, and was on my way there. I drove an hour in rush hour traffic to see the property, evaluated it, and called the wholesaler back to tell him I wanted it. I then proceeded to spend another hour driving around taking pictures of comps, at which point the wholesaler called me back and told me that he had sold it—before I even left the house—to someone who had said “I’ll take it, but if I look at it tomorrow and it’s messed up, I won’t take it.”
So what’s wrong with this scenario? Not that the wholesaler sold the property to someone else—it happens. It’s that the wholesaler knew I was on my way, knew that the property was already sold, and allowed me to waste a bunch of time evaluating a property that wasn’t available.
Folks, let me remind you again that you’re in the business of selling great deals to people who want to make money off of those deals, and for making it easy for them to do business with you. Think of your business as what it is—a business—and deliver the product that your customers are expecting and the service they deserve.
Reprinted with permission of Vena Jones-Cox. To get more free articles and tips, subscribe at www.TheRealEstateGoddess.com