Defining Wholesalers

Hi Leo,
I am a wholesaler.  To answer your questions, see below.  Keep in mind, there are wholesalers direct with the banks / asset managers / etc….and there are wholesalers who have bought properties turned over several times…Unfortunately, there are more of the latter than those direct.  A wholesaler typically models their business model very simply.  A to B contract, and B to C re-sale.  The "A" part is the seller we buy from ie..banks.  The "B" part is me or those direct with banks acting as the buyer.  The "C" part is the exit to the B, which are typically investors like yourself.  ABC is where it stops for us.  The other wholesalers look more like ABCDEFG and your price goes up with every sale of that property.  Check tax records to be sure of how many times properties were turned over.  It's public record.

• How would you define wholesalers?  Someone or a firm direct with the bank or the best access to the original note/mortgage of the distressed asset.  You are looking for a direct discount from the distressed seller or REO supplier.  True wholesalers have a true A to B transaction.
  
• How do they operate and earn their profit or commission? Most of our properties require some rehab.  Our model for profits is this:  A to B acquisition + Rehab + 8%.  The 8% is our fee / commission. 
  
• Do they bulk buy properties from banks or they are lenders' agents?  In most cases, yes.  We will buy small bulk packages.  Long gone are the days where a typical wholesaler can walk into a bank and ask for their huge portfolio of toxic assets.  It is much harder these days.  It is all predicated on relationships and past performances of closing.  We also work with distressed sellers and assist in negotiating their deed in lieu or short sale.  In many cases, these homes are homeoewner occupied.  Minimal to zero rehab is needed so typically on these we will pay a little more versus those owned by a bank that have been neglected.
• Prepared option to deal with: Bank or Wholesalers?  It is very difficult to get in direct with the banks.  I get calls all the time from websites claiming to be bank direct that want our inventory because they just cannot get in with the banks.  At one time, we were one of the top firms with most bank direct access.  Our sources have either dried up, sold everything to Wall Street, or those that are left, have dwindling supply.