Posted on 05/30/2021 12:39:31 PM PDT by blam
Wholesaling real estate is the process of finding a deeply discounted home and passing it along to an end investor. Bearing fast cash, wholesalers are flooding low-income neighborhoods, seeking distressed homeowners who want to sell quickly. Record low mortgage rates, low housing inventory, and a real estate frenzy have increased the amount of wholesaling conducted nationwide since the pandemic as many were lured in by YouTube tutorials.
The entire strategy behind wholesaling is finding a discounted property, get it under contract, and then flip it to an interested buyer for a quick profit. Bloomberg reports some wholesalers are using strong-arm tactics and misinformation to force sales. Wholesaling a house is a strategy unlike flippers, who obtain ownership of the home during the renovation period ahead of the eventual sale. A wholesaler negotiates with homeowners to find an investor (usually a cash offer).
“I don’t buy houses. I solve problems,” Scott Sekulow, who leads an Atlanta-area congregation of messianic Jews, told Bloomberg. He bills himself as the “Flipping Rabbi.” Many of his clients come to him who are distressed. Sekulow can find them an investor who will take over the property to flip for resale.
Sekulow said hedge funds are getting into the game. He told a conference of wholesalers: “When you can get in with them, they’re there paying stupid money.”
Wholesaling is entirely legal, but advocates for low-income areas say these folks are tricking sellers into deeply discounting their homes.
After residents in Illinois, Oklahoma, Arkansas, Kansas, and the city of Philadelphia, have been bombarded with wholesalers overrunning street corners with “We Buy Houses” signs, local governments have begun to crack down on these types of transactions.
“In my neighborhood in West Philly, I probably get three postcards a month from one of these guys,” said Michael Froehlich, an attorney with Community Legal Services of Philadelphia. “If you can get leads, you can dupe somebody into signing a contract for far less than fair market value, and you can make $30,000, $40,000, $50,000 on the house.”
(snip)
That actually is built into the common law on contracts, most states have similar statutes, but in any event material fraud is still either a tort or a crime.
Yeah! YouTube University. That's the ticket.
The Florida land boom of the 1920’s was known for its “Binder Boys”:
https://www.saundersrealestate.com/binder-boys-in-the-1920s-florida-land-boom/
http://dpanther.fiu.edu/sobek/content/FI/07/10/09/02/00001/74434_Chapter16.pdf
The Florida Land Boom of the 1920’s:
https://www.sun-sentinel.com/news/fl-xpm-1991-03-10-9101120716-story.html
Snakes (those that walk in shoes and those that slither on their belly) with every acre.
Guessing, as in the past, many of these properties will end up having Communist Chinese or Indian absentee landlords.
Sorry to change subject but I need to know:
Where I live every used car dealer is loaded loaded with used cars/trucks. They look in great condition too...new looking.
Why? Usually the lots are half full.
We have to buy a house in the hot Phoenix market. We are getting outbid even though we are offering well above asking price, or we get beat by someone who waives the appraisal.
My fear is that interest rates will be going up soon, so the time to buy is NOW.
The zoning nazi always seems to pop up a day or two before scheduled mowings just to harass you. It has gotten so bad that I prepay a neighborhood kid to mow if I'm going to be gone for much more than a week.
Yep and sadly we just started getting back into it. I’m setting a limit with hubs. 2 duplexes and a single house. No more!
It’s fairly standard 6%, split between selling agent and buyers agent. Sometimes 5%. But those rates are negotiable and in a city like mine (or, where I used to live I moved to the county) where the dinkiest 3 bedroom 1 bath 1920’s track home sells for $1.5 million, it’s crazy to pay that much. 3% split between agents is plenty imo especially for $2 million+ homes.
Read that 56% of homes listed are in escrow in less than 2 weeks (A friend of mine is moving to Florida, sold his home in 2 days) and a similar percentage are going above listing price. Guy I know bought a foreclosure in 2009 from the bank for about $200k. He did remodel and built a great yard but his family expanded so he moved to a bigger home and rented it for years. Just sold it. Listed for $875,000 and sold for $999,000. 2 lots, great yard, pool, waterfalls, jacuzzi etc. House was OK - redone but sort of old bones. And this was not what you’d consider a “premium” neighborhood.
You wrote:
“You are wrong. They are using contract law as it was designed to be used.”
Maybe, yes, but I think not. If dealing in real property, as opposed to purchasing for yourself, I believe licensure is required. Historically:
“By the first of July[1925], the city of Miami had issued 5,917 real estate brokers’ licenses and was putting new ones out at the rate of 60 a day.”
http://dpanther.fiu.edu/sobek/content/FI/07/10/09/02/00001/74434_Chapter16.pdf
Extortionate PayDay loan sharks are behind such schemes.
They also rent bank names so they can appear as banks thereby evading state regulations on usury.
In other words, Top Boss PayDay Bonanza can call itself ‘US Bank’ Loan Services LLC and give US Bank a cut.
"Why? Usually the lots are half full."
Can't answer that. Look at this: (dated may 19 2021)
> This time, it is investor money buying rentals.
The investor money is coming from the trillion$ that are being pumped in by the Federal Reserve. With inflation flashing warning signs, they are are giving signs that they’re going to take their foot off the gas pedal.
via google:
“6049 S 19TH Pl, Phoenix, AZ 85042 | MLS# 4344943 | Redfin... › Phoenix › home
3 beds, 1 bath, 941 sq. ft. house located at 6049 S 19TH Pl, Phoenix, AZ 85042 sold for $35000 on Mar 29, 2010. MLS# 4344943. Ranch charmer offers 3”
I buy UGLY houses!
.
I got a nice one
Until I move in
July 1st.
.
Beauty is Skin deep,
UGLY is to the Bone!
I plead guilty. I can only do one at a time. Anyone wanna buy my current? It’s overpriced.
Yep.
They are technically buying for themselves under contract and then reselling - not “dealing in land” as you put it.
That depends, on how long you are financing for, and how much down you are putting.
As interest rates go up, home prices come down.
“He’s a part time barista and she walks dogs in the neighborhood. Their budget for this renovation is $1 million, next on House and Garden.”
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