Wholesale/Retail - Two Different Worlds
The topic has come to my attention that many are confused about the two vastly contrasting worlds of Wholesale and Retail real estate.
Let me begin by emphasizing why I do not like the term Flipping. Mainly because flipping often involves the commingling of the wholesale and retail markets.
Also many people who use the term have no idea what they are even talking about. But when you decide to think of the real estate business in clear cut terms such as wholesale or retail your business life will become so much easier and better focused.
The wholesale world in real estate involves investors and their affiliates. The retail world involves consumers and their many advisors.
Sadly enough far too many people mix the two, to a disastrously counterproductive outcome.
Investors are guilty of mixing, such as assigning to retail buyers or attempting a bank loan when buying an assignment contract.
Agents also mix the two worlds when they try to sell a junker property to a retail buyer at retail prices.
Wholesale real estate, involves, investors who deal directly with the source. Within the wholesale side of the business institutions play a minor role in the overall equation.
I personally prefer the wholesale world and avoid dealing with the retail side of the business as much as possible.
I like dealing directly with the home owner, skipping the agent or other 3rd parties when buying. I also prefer to deal with fast acting money sources such as hard money lenders or private lenders.
I do not care that the rates are higher. I factor that into the price. It is about the ease and availability of the money, not the cost. (You factor cost into the price).
I prefer to deal with other investors when selling my properties. I avoid the endless hassles of the retail buyer and their army of advisors who can kill your deal at any stage of the process.
When selling or renting properties to the consumer I prefer to contract that out. I am too impatient for the red tape mentality.
The wholesale world is fast, mostly unregulated, discounted, creative and all about the bottom line.
The Retail world on the other hand is the complete opposite. The Retail world is bloated with regulations, laws and customs created to protect its players but actually often kill creativity and the deal.
Mostly institutionalized, the retail world is slow, burdensome, and is process oriented. Results, it seems are an after thought. Rewards and certificates are valued more so than actual income.
Another stark contrast between the two worlds is that investors are concerned with NET dollars per transaction. Agents, on the other hand, are more impressed by total gross dollar sales. Never mind that their NET was a drop in the bucket by comparison.
Some real estate brokers even brag about the number of agents they have in their office. Never mind that a third are dead weight and few are doing little in the way of actual sales.
Let me sum it up, the Retail real estate world is more about the warm and fuzzy. The emotional side of the business. The Wholesale world is about the bottom line. Get in, get it done, and get out!
Some might argue as I have heard many agents, make the point. That investors are cold fish, and out to get a fast buck. I can see their point and will agree there are many investors whose attitude reeks of selfishness. But they are the exception, not the rule.
Finally, I say to you to each to his own. Enter that world which best suits you. But be careful to never mix the two.
Keep things clear, clean, in the right lanes and watch how simple life is meant to be.
Take Action!
Ken Williams aka The Wholesale Wizard....
http://www.thewholesalewizard.com/
The topic has come to my attention that many are confused about the two vastly contrasting worlds of Wholesale and Retail real estate.
Let me begin by emphasizing why I do not like the term Flipping. Mainly because flipping often involves the commingling of the wholesale and retail markets.
Also many people who use the term have no idea what they are even talking about. But when you decide to think of the real estate business in clear cut terms such as wholesale or retail your business life will become so much easier and better focused.
The wholesale world in real estate involves investors and their affiliates. The retail world involves consumers and their many advisors.
Sadly enough far too many people mix the two, to a disastrously counterproductive outcome.
Investors are guilty of mixing, such as assigning to retail buyers or attempting a bank loan when buying an assignment contract.
Agents also mix the two worlds when they try to sell a junker property to a retail buyer at retail prices.
Wholesale real estate, involves, investors who deal directly with the source. Within the wholesale side of the business institutions play a minor role in the overall equation.
I personally prefer the wholesale world and avoid dealing with the retail side of the business as much as possible.
I like dealing directly with the home owner, skipping the agent or other 3rd parties when buying. I also prefer to deal with fast acting money sources such as hard money lenders or private lenders.
I do not care that the rates are higher. I factor that into the price. It is about the ease and availability of the money, not the cost. (You factor cost into the price).
I prefer to deal with other investors when selling my properties. I avoid the endless hassles of the retail buyer and their army of advisors who can kill your deal at any stage of the process.
When selling or renting properties to the consumer I prefer to contract that out. I am too impatient for the red tape mentality.
The wholesale world is fast, mostly unregulated, discounted, creative and all about the bottom line.
The Retail world on the other hand is the complete opposite. The Retail world is bloated with regulations, laws and customs created to protect its players but actually often kill creativity and the deal.
Mostly institutionalized, the retail world is slow, burdensome, and is process oriented. Results, it seems are an after thought. Rewards and certificates are valued more so than actual income.
Another stark contrast between the two worlds is that investors are concerned with NET dollars per transaction. Agents, on the other hand, are more impressed by total gross dollar sales. Never mind that their NET was a drop in the bucket by comparison.
Some real estate brokers even brag about the number of agents they have in their office. Never mind that a third are dead weight and few are doing little in the way of actual sales.
Let me sum it up, the Retail real estate world is more about the warm and fuzzy. The emotional side of the business. The Wholesale world is about the bottom line. Get in, get it done, and get out!
Some might argue as I have heard many agents, make the point. That investors are cold fish, and out to get a fast buck. I can see their point and will agree there are many investors whose attitude reeks of selfishness. But they are the exception, not the rule.
Finally, I say to you to each to his own. Enter that world which best suits you. But be careful to never mix the two.
Keep things clear, clean, in the right lanes and watch how simple life is meant to be.
Take Action!
Ken Williams aka The Wholesale Wizard....
http://www.thewholesalewizard.com/
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