Wholesale Fees Have Gotten Ridiculous: Here Is How to Beat Them

TLDR

If you buy deals from wholesalers, you are probably overpaying. I did it for years and also ran a wholesale company that did 100+ deals a year, so I know both sides. The inner circle, the buyer list, and the Craigslist circle behave very differently. Three tactics beat the markup.

Table of Contents

• Why Wholesale Deals Are Fragile
• The Inner Circle Gets the Good Deals
• The Buyer List and the Craigslist Circle
• Tactic 1: End of Contract Timing
• Tactic 2: Find the New Wholesalers
• Tactic 3: Become the Wholesaler
• The Home Base and the List
• FAQ
• Related

Why Wholesale Deals Are Fragile

Here is the most important piece to realize about wholesaling as a business. The deal itself is tremendously fragile. The wholesaler is always scared of losing the contract.

It takes a lot of money to get a deal. You might spend 3,000 to 10,000 just to get one under contract. Especially when you have salespeople running outreach. Once the contract is locked, the wholesaler is very scared of losing it to a flaky buyer.

That fear drives everything about how deals flow.

The buyer who does not jeopardize the deal wins the deal. Not the buyer who offers the best price.

The Inner Circle Gets the Good Deals

A wholesaler’s buyer world looks like concentric rings.

First, the wholesaler takes the best deals themselves. Of course they do.

Then the inner circle. These are investors who will close. They will buy based on pictures. They will not walk through the property if they can avoid it. Every walkthrough is a chance to lose the deal because the seller starts asking who these people are. The inner circle understands the game.

When I buy from a wholesaler, I always ask: do you want me to act like a contractor? Who am I supposed to be? Because the seller does not always know they are dealing with a wholesaler. They often think they are selling to someone’s partners. Telling them they sold to three different buyers in a month freaks them out.

The inner circle gets a small discount for being reliable. Not the maximum price. The seller side.

The Buyer List and the Craigslist Circle

The buyer list is the big email blast. “Hey, got this deal at 123 Main Street for 60K, who wants it?” The thing is, on most deals, never even sent it out to the list. The inner circle would buy it first.

By the time a deal reaches the broad buyer list, it is because the inner circle passed.

I have to say this about being a wholesaler. I am lazy. 80-20 is my middle name. I think on my gravestone they will say “he gave 70%.” The inner circle was always more attractive to me. Take less money for the sure thing. Not sure it was the best strategy for optimizing revenue, but I wanted to focus on buying houses for myself.

The big wholesalers play the list differently. They have processes for working it. They get houses under contract in a way that lets people show. They go for top dollar. Those guys especially love out of state buyers and corporate high earners buying on the side. They bring those people into the inner circle and mentor them to overpay.

Then there is the Craigslist circle. Facebook Marketplace too. Nobody on the list wanted it. Nobody in the inner circle wanted it. So they post it publicly. Randos come in.

If you see a deal posted that far out, it is because it sucks. Nobody else wanted it. Or the wholesaler is doing the big demand play, pushing the market wide open to chase top dollar, basically acting like a real estate agent.

In some states you can list a contracted property on the MLS. Same idea. Biggest demand possible. supply and demand says biggest demand means highest price. Usually bad deal.

If a wholesale deal is easy for you to find, it is a bad deal. Either the house sucks or the wholesaler is running the broad market play for top dollar. The deals that actually clear 70% of ARV never reach you.

Tactic 1: End of Contract Timing

Remember the fragility. If a wholesaler has a contract that is about to expire and they have not sold it yet, they have a problem.

Say they have the house under contract for 150,000 and they are trying to move it for 180,000. Now it is day 85 of a 90 day contract. They either sell it to you at a discount or they get zero. You come in with 155,000. They take it.

Two reasons. One, they spent money getting the deal. They want to make something. Two, no wholesaler with any heart wants to call the seller and say “actually we are not buying your house.” I have sold houses for zero dollar fees just to avoid that conversation. So if you can time the tail of a contract, that is where the big wholesalers sometimes crack.

The big wholesalers are usually too good to let this happen. They have extensions. They have buyers. But it happens occasionally. Worth watching for.

Tactic 2: Find the New Wholesalers

The better tactic. Go find new wholesalers.

Building a wholesale business is hard. You have to do the sell side and the buy side at once. A lot of new wholesalers do not have great business skills. They get leads but they do not have buyers. You want to be the buyer they go to first.

New wholesalers sell you deals for 1,000 to 5,000 assignment fees instead of 30,000 to 40,000. I remember when we started, it was like, gosh, can we ask 5,000 for this? By the end, it was “let’s rip it for 35K, who cares.” Beginning, thousand bucks felt like a lot.

Where do you find new wholesalers?

• RIA meetups. Real estate investor associations, physical meetups or local Facebook groups
• Facebook groups for your local market. Look for people asking to find investors for their buyer’s list, or posting single deals
• Facebook Marketplace listings for houses. Where new wholesalers sometimes end up
• Their mail. Newer wholesalers send smaller, more desperate campaigns that look different

Work the relationship. Be a solid buyer. Know the fragility rules. Do not jeopardize deals. Become their first call.

Many new wholesalers do not have real estate background. You can be a mentor to them. They will call their mentor first for every deal. They might see you as a seasoned professional when you may have only done one or two deals yourself.

Pro Tip

Build a relationship with two or three newer wholesalers in your market. When their first real deal comes in, you are their first call. You pay 3,000 for an assignment instead of 30,000.

Tactic 3: Become the Wholesaler

The final tactic. Take control yourself. Go direct to seller.

This is a big block for a lot of people. They freak out about marketing and outbound outreach. Therefore they end up paying wholesalers forever.

It is the game changer. Imagine the same 150K house that a seasoned wholesaler gets and resells to you for 180K. If you went direct, you got it for 150K. That is a 30K padding. 30K covers mistakes in construction, timeline overruns, market shifts. If everything goes right, you are in the lotto. If something goes wrong, you have room to breathe.

That is why you become the wholesaler. It is way simpler than everybody thinks.

The Home Base and the List

Here is all you do.

1. Get a list. Go to PropStream, Property Radar, ListSource, Batch Leads. Whatever. I use Property Radar, no affiliation, just what I use. It costs about 100 a month. Pick your county. Get every address with owner mailing address. Then skip tracing for phone and email.

2. Set up a home base. A simple landing page. Hey, I am Ross, local investor, here is my local phone number, here is my picture so you know I am real. A local area code is non negotiable. Sellers want to sell to a local investor, not somebody out of town.

3. Send outreach. Three ways.

First, drive for dollars. Look out the window. Grass overgrown. Pull the address. Call the owner: “Hey, I saw your yard is a little overgrown. Looks like you might not want to keep caring for it. Maybe you would rather have cash.” That is the simplest version. That is called driving for dollars.

Second, cold call the list. Or hire people to cold call. “Hey, I am a local investor. Would love to make a cash offer on your house. If you are interested, let me know.” That script needs work, but you get the idea.

Third, direct mail. Use a service like open letter marketing or yellow letter marketing. Load the list, they handle the print and send. Money. You get calls.

Owning the deal flow makes all the difference. You get that padding. You get time. You get room to make mistakes because you will make mistakes. Because you are buying at a discount to the wholesale price, you have slack.

The biggest unlock in real estate is going direct to seller. Everything else is a tax on not doing it.

FAQ

Is Property Radar better than PropStream?

Both work. I use Property Radar. Pick one, learn it, run lists. Switching tools every few months is a bigger drag than tool choice.

What should my first mail list look like?

Pick one neighborhood in your buy box. Filter for owners who own three or fewer houses. Start with tax delinquent or pre foreclosure pain list. Send the same mailer three months in a row before judging results. Never quit after one send.

How long before I get a call?

Usually two to three months of consistent mail before steady calls. Some markets faster, some slower. Cold call brings responses same week. Combining mail with cold call accelerates both.

What if I do not want to talk to sellers directly?

Hire a virtual assistant or a local cold caller to do the initial conversation. They qualify the lead and schedule you a call with the motivated ones. That removes the scariest part for most newer investors.

Should I still buy from wholesalers while I build my direct channel?

Yes, selectively. The new wholesaler tactic still applies. But start building your direct list today. Even if you do not send mail for six months, having the list and the home base ready means you can flip it on whenever you are ready.