The Titanium Vault hosted by RJ Bates III

Are Shady Wholesalers Ruining The Industry?

• RJ Bates III • Episode 520

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If you’re new to my channel my name is RJ Bates III. Myself and my partner Cassi DeHaas are the founders of Titanium Investments.

We are nationwide virtual wholesalers and on this channel we share EVERYTHING that we do inside our business. So if you’re looking to close more deals - at higher assignments - anywhere in the country… You’re in the right place.

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Over 10 years in the real estate investing business
Closed deals in all 50 states
​Owned rentals in 12 states
​Flipped houses in 11 states
​Closed on over 2,000 properties
​125 contracts in 50 days (all live on YouTube)
​Back to back Closers Olympics Champion
Trained thousands of wholesalers to close more deals

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Speaker 2:

I. I raise my hand like a champion, taking the cheers in the ambience. I got a ring to think then again, I'm such a winner, I'll win again. Some think I'm a viking or maybe a wizard. I feel like I'm both when I'm in the ring. Victory brings serenity. I give them a three piece that's for the three P and then I leave with the trinity True ball. I got with the Trinity True. I got all the amenities. All the others just want to be many knees. It is mad when they in my vicinity, cause I must be the goat. No, we just dip in the ghost Baby. My style is colder than stone, cause I'm doing the Outro Music. I'm outside every day. I ain't staying in. I'm like Kobe, I'm playing up another ring. I don't care what they saying, I'm doing me.

Speaker 1:

And when they pay me, they know that they paying him REITs, airbnb's. I hear arbitrage on everything. Bank my line if you would develop a contract in company.

Speaker 1:

Double the bag. I've been already doubled up, baby. I ain't even mad. I doubled up on all that stuff. It's all in and all. I ain't even mad. I doubled up on all that stuff you're doing and I'm glad you. Let me learn you. It's like you're dying. I got big relationships. You know I say dying. Some people they call me the Dactylion Titan. Let me learn you. Take a seat right here. I'ma show you how it all passes In the car. Like a dipton, start to go with it. How I cut these deals. I'ma kill you so I never lose. These cells need to boost my moves. Steal like clothes. Yeah, cut you loose. Had to kick it in the curb but he like, ooh, let I do what's up guys.

Speaker 3:

For those of you that don't know, that's my brother and good friend, adam Ramey, lead singer of Dropout Kings. He tragically passed away yesterday. Woke up this morning to a text message saying had you heard the news? Immediately hopped on Facebook and saw the announcement, just kind of wanted to do a little bit of a tribute there to Adam man, it's just he was 32 years old. We wrote that song together. The King Closer.

Speaker 3:

Never thought I'd have an opportunity to ever create music, write a song anything like that. First time I ever flew out to Phoenix, arizona, to to be on a real estate disruptors. We were renting the car and, uh, adam's dad was the guy that was working the counter and he asked me what kind of music I like and I said I love rock and heavy metal. And he said, man, my, my son's a lead singer of a band called dropout Kings. You got to check them out and I fell in love with their music. Uh, that night, that picture there at the end I'm not sure if I can bring it back up or not that picture right there, cassie and I took that picture with Adam. He was at the bar getting a drink. I walked up to him and introduced myself. I walked up to him and introduced myself and it was just like a surreal moment. And they're not a big band. They did well for themselves. I mean 266,000 monthly listeners on Spotify. I introduced myself, told him that we're huge fans, told him the story about meeting his dad. That's how we became fans and he actually recognized me. He said man, you're the hello. This is RJ guy. You use all of our music all over your TikTok and from there we became friends. We trade cell phone numbers.

Speaker 3:

I came up with the idea of writing a song together and we released the King Closer. We had such a good time writing it together. Then we wrote 11 out of 10. We were in the middle of writing a third song together. We had plans on working with several different bands, like the Browning, the Defect, concord, divide just different bands that I love to listen to.

Speaker 3:

And he, adam, gave me an opportunity to do something that I never thought I would ever get to do and tragically, last night we lost him to suicide and it's horrible. I don't understand it. I don't think many people do. You know I've been lucky enough not to know a ton of people that have taken their own life. You know I've been lucky enough not to know a ton of people that have taken their own life, but Adam always seemed happy, he was married, he had an 18-month-old. Just guys, if you're hurting out there, reach out to somebody, have a conversation. I don't know if Adam did or not. I knew something wasn't right. I had reached out to him numerous times to try to have a conversation with him, but I wasn't able to get a hold of him. And it's horrible, man, it's horrible.

Speaker 3:

So I wanted to say something before we get on to today's topic. Show my respects to Adam. I love you, brother. I'm going to miss you. Alright, I'm going to try to get through this as best I possibly can, because obviously, my head's in a different place today, but we don't miss a day around here, so, especially Tuesdays at 2.22, baby Listen, I have a responsibility to you guys, and so we're still going to get through this.

Speaker 3:

Today, we're going to be talking about our shady wholesalers ruining our industry the industry that puts food on the table for my family and everyone in this office. This comes from a post that was in our free Facebook group, the Vault, and I've seen different posts. This is actually going to be one of a couple videos of posts inside the vault asking questions, concerns about what's going on in the industry. I'm just going to read this. This comes from Sean. Sean said I'm sorry, but the wholesaling industry is getting much more difficult. Not because of the market I thrive in difficult markets, but this is just too much. Not because of regulation, laws, competition, skills or systems We've got most of that locked in. It's getting difficult because inexperienced wholesalers are offering way too much. I'm losing deals because of this. This is the fourth deal this month. Here are the numbers for the latest deal I lost after months of rigorous follow-ups and great rapport building After repair value 200,000, repairs 30,000.

Speaker 3:

Conservatively he offered $120,000 to $130,000, which is a really good offer range. I also have a VIP buyer in the area who has already offered me $138,000, which would net me at least $8,000. However, the seller said they have cash offers ready at $150,000 and $155,000. In my area, if a wholesaler locks us up under contract for $150,000, it will never sell. I know my local market like the back of my hand and this price doesn't make sense. Running the numbers, it's not feasible. Logically speaking, it doesn't add up. I thought I was crazy. So I asked my buyer and they said I'm not going to give you $150,000. It ain't even worth it. They sent me their calculations, which showed a 7% rate of return. That's crazy. This month, I've been through this scenario four different times. This isn't competition. It's ruining the industry. I appreciate healthy competition, but this isn't it. Thank you, sean. So, sean, I appreciate the post.

Speaker 3:

I'm going to give my take on this, as well as other factors in regards to shady wholesalers and the tactics that are being used and some of the regulations that are coming down and how I think that is going to impact the wholesaling industry. A couple of things that I want to talk about there. In regards to Sean's post there, to to sean's post there one, it's not this this is not the first time that, uh, some wholesalers come in and offer too much for a property. Right, it's pretty common. I I don't think this is a new thing that can potentially ruin wholesaling, if I feel like that's been around since I've been in the industry and, I'm assuming, even prior to that. Why? Because it's a low barrier to entry industry, right, you don't really even have to be trained whatsoever. I mean to go in and offer something on a property is. I mean you don't even. You don't have to be anything, you just a regular person can come in and offer whatever they want for a property. So running numbers incorrectly is commonplace in this industry Now is commonplace in this industry.

Speaker 3:

Now, in his scenario where he was willing to offer $130,000 and there's offers for $150,000 and $155,000, I know that he says that he's got everything on lockdown right. It's not because of skills or systems or anything like that. But one paragraph down it says that he had done rigorous months of rigorous follow-ups and great rapport building. So when I read this, I see the outcome. But also you have to understand that if you're doing rigorous months of follow-up and you're focused on rapport building over those months, what is that seller doing along the way? Well, of course that seller is shopping your offer.

Speaker 3:

The other thing is we have no idea that that $150,000 offer and that $155,000 offer is a wholesaler. We have no idea. He doesn't know that. He's assuming that it is. That could be an owner-occupant and then, boom, there's no problem there whatsoever. What if someone's a contractor and they wanted to come along and purchase that property and fix it up and live in it? This might be a better fit for their life. So I think sometimes, by nature, we make conclusions and assumptions that this really negative thing is happening inside of our business because we missed out on four deals inside of a month. But realistically, this has nothing to do with potential wholesalers and if that is a wholesaler's offer, then it's not going to go through. So he shouldn't even really be worried about it, because you didn't necessarily lose the deal. It's just a temporary postponement of you having the opportunity to close that transaction.

Speaker 3:

I look at this and I always point back anytime I hear this. Cesar LaCosta is the one inside of TU that has been saying this. I think he even commented on Sean's post in the vault. It's music to my ears when I hear a seller tell me this where I go. Well, an offer at $150,000 or $155,000, that makes no sense. Here's my math. Their math has to be very similar. Those numbers don't work out. I don't think that deal, that contract, is going to make it to the closing table. So what's your closing date, mr Seller? Okay, it's the middle of June. How about I follow up with you in the middle of June or when they terminate? Why don't you reach back out to me and let's rediscuss my offer and see if we can move forward. It's very common. So for me it's either one, someone's going to come along and they're going to buy this property for $150,000 to $155,000 for whatever reason, or, two, it's going to end in a termination and you have an opportunity at that point in time to come in if your system and your process is set up correctly.

Speaker 3:

Now, moving away from, necessarily, sean's example and just other things that are going on inside of our industry, first and foremost, when we look at our competition, I firmly believe that our competition inside of this industry sucks. I don't fear the competition whatsoever. I get y'all's questions all the time about hey, rj, on speed of lead, should I purchase a lead if it's already been purchased? Two, three, four, five times? And my answer has repeatedly been yes. That should not be the reason why you don't purchase that lead, because one, if it's already sold, it's a refund. Two, your competition sucks. So best case scenario again taking a line out of caesar's book here if it's already sold or under contract with another wholesaler, refund. Two, you now have a free lead that you can follow up on to see if that contract doesn't actually make it to the closing table. So again, it's a win-win situation for you across the board.

Speaker 3:

Competition being bad is a good thing if you utilize it to your advantage, and I think at times we're so worried about the market being saturated or us calling leads and they've already talked to 10 other wholesalers. Guys, that's going to happen, no matter what you do. Lead generation wise, even going back to the texting and cold calling days, we were all pulling the same list. We were all using the same skip tracing services. Now on PPL or running your own PPC campaigns, it's still going to happen. Campaigns is still going to happen.

Speaker 3:

I use the example of getting a lead Zolo lead in the morning, closing it that afternoon, going on to speed the lead, scrolling down and seeing boom, a lead in the same city buying the lead, and it was the exact same seller. Sure enough, they had filled out two different forms. Why? Because they were motivated. They were going to do everything in their power to make sure that their house got sold. So there is no such thing as an exclusive lead. Don't worry about your competition so much. Worry more about you. And then what happens if the competition has inserted themselves in to already conversating with that seller? It should be an opportunity for you to stand out.

Speaker 3:

The next thing is with your buyers. Okay, if this is truly the case, where if this is a wholesaler that locked this deal up for $150,000 or $155,000 and Sean believed he needed to lock it up at $130,000 to then dispo it to his end buyer for $138,000, which end buyer is going to be more successful Sean's or the other wholesalers? The other wholesaler is probably not even going to have an end buyer. This allows you to stand out and crush your competition. On the disposition side. You now are actually providing equity to your end buyers and bringing them good deals. It's an opportunity for you to stand out across the board, both on acquisitions and dispositions.

Speaker 3:

The facts are, every industry has competition, because if there wasn't competition, then there would be no money to be made. What I mean by that is we're solving a problem. The problems exist, and that's what allows us to make money. The sellers are in debt or a physically distressed property, or there's a situation where they need to sell quickly. This is the problem that comes across. Us having competition is what beats that price down on the disposition side, and it allows us to excel through our skill sets that we develop. This is across any industry, it's not just wholesaling.

Speaker 3:

So, yes, are there bad wholesalers out there that do negative things? Yes, of course. But this does not mean it's necessarily taking food off of your table. Because if a bad wholesaler goes out and locks up a deal and then disposes it for a price that otherwise is not a good deal, that end buyer is going to feel that. Is that end buyer going to want to buy more deals from that wholesaler? Is that transaction going to be successful? On the backside? Probably not. But if you're always going out and you're consistently getting good deals and bringing that to your end buyer and your end buyer is profitable on the flip side of that transaction, they're going to want to continue to do business with you. That's what makes you successful in the long term. This is what makes it easy to separate yourself from the poor competition. All right.

Speaker 3:

Now the next thing is when you talk to these sellers going back to the acquisition side and say a bad wholesaler has come along and offered them too much money, it's easy to go ahead and establish yourself with like seller allegiance capital. Like, oh man, they offered you $150,000. Man, that's crazy. The most I could offer is $130,000 because of the math. I mean the house could be worth this much. You said it needs this much to get fixed up and then it wholly costs, closely costs in my profit. I just can't make those numbers make sense, mr. Mr seller, I don't think that person is going to be able to perform. So do you mind if I check back in with you right around the closing date to see if they've terminated? That that right there builds immediate credibility.

Speaker 3:

When that other wholesaler does inevitably terminate because their numbers were incorrect. It's low-hanging fruit. It's very simple for us to type into our CRMs Other wholesaler offered $150,000. Most we get offers $130,000. Closing date's June 6, 2025. Follow up on June 6 to see if that deal closed or not. Do you know how many deals over the past decade we have gotten using that tactic right there? If you're not doing that, with every lead that comes in that tells you they're under contract with another wholesaler, you are literally just leaving money out there. You paid for the lead already. I know that you guys are going in and you're cashing in your refunds with the PPL providers. Why not do the exact same thing with the sellers? Follow up. It's one or two phone calls, it's really not that difficult of a process and the facts are this gives you massive trust with the seller. If you call that seller back and they say, yeah, they sure did terminate, that's what I feared, mr Seller, what do you think now about my offer of $130,000? I know that my numbers are firm. I told you that 30 days ago. Would you like to move forward with me and see if we can get this deal across the finish line? Massive credibility right there.

Speaker 3:

The next thing is majority of wholesalers need to quit worrying about what other people are doing and focus on getting better inside of their own business, developing their own skill sets. I mean again, looking at what Sean posted here about this. He was so worried about the fact that his numbers were correct. He offered $130,000. The other wholesaler, or another buyer, offered $150,000 and $155,000. And that's why he felt he lost the deal. When I actually look at it, I fear that the reason why he probably lost that deal was not so much the other offers. It was the fact that he allowed the time to lapse where other offers became relevant. Time kills all deals. He said he spent months on follow-up and building rapport. The facts are. I think if we were to look at this and stop worrying about what happened out here and we worry more about hey, why weren't we able to close this without doing months of follow-up? Now, there might have been a situation that the months of follow-up was warranted, but I doubt that. I doubt that was the case, because very rarely do we have to do months of follow-up without it just being allowed on our part.

Speaker 3:

The next thing if you're worried about the market being oversaturated, ask yourself this Is the problem I'm focused on solving solved. What problems do we solve as wholesalers? New ones pop up every single day by motivated sellers Divorce, death, inherited property, pre-foreclosure, tax delinquency, vacancy, being a tired landlord all of these motivating factors that we're constantly talking to. New ones happen every single day. Do you really look around your market and look at your competition and say these guys have got it figured out? And every single time there's a motivated seller pops up, they're getting in touch with them faster than I am. I can tell you, if you feel that way, you're delusional. If you think these people have it figured out on how to talk to these sellers and how to solve the problems, again you're delusional. That's just not the case.

Speaker 3:

I have never actually felt like wholesaling was oversaturated. I think it might be oversaturated in specific markets, might be a little bit more difficult. I saw someone in here asked me about my thoughts about Colorado. Denver might be a little bit quote unquote oversaturated. Once you get into the other tertiary markets, it's not whatsoever. So quit worrying about that and worry about what you're doing internally. The next thing is look at where we are sitting right now as a country in regards to debt. That's at an all-time high. People are financially stressed right now. That is the ultimate motivating factor for people wanting and needing to sell a house quickly. If that problem right there were to get solved, then I feel like we might run into an issue, but until it is, I do not think we have any issues whatsoever.

Speaker 3:

Now, looking around some of the other things that are going on in this industry in regards to shady wholesalers ruining our industry inside the state of Texas I don't know the specific details. I've seen a couple of posts about it, but just yesterday it looks like a seller is now going to have the ability to remove a memorandum of contract by signing an affidavit. Now why is that the case? A memorandum of contract was a tool that was provided to protect buyers from having sellers go around us. Mr Seller, I can offer you $100,000. By us I mean any buyer, not just wholesalers, just any buyer in general. Mr Seller, I can offer you $100,000. Next buyer comes along two weeks later after we've done our inspection, and all that offers $105,000. Now, at this point, the seller can actually get your memorandum removed. Why is that the case in the state of Texas? I believe it's because wholesalers have misused this tool.

Speaker 3:

I have run across numerous situations where a wholesaler had zero intentions of trying to close on this deal, got it under contract, filed a memorandum and then just let that memorandum sit until someone else came along aka me got it under contract, disboded, opened up title and found out there's a memorandum and then they wanted their payday. I've actually heard across the industry there are several people that that's their entire business. That's their actual business strategy. Now that's pathetic. And yes, those wholesalers they didn't ruin our industry, but they are going to make changes to our industry and I welcome the change Personally. We don't ruin our industry, but they are going to make changes to our industry and I welcome the change Personally.

Speaker 3:

We don't believe in filing memorandums around here. The seller really wants to get out of the contract, that bad, there's a problem, I'll let them go. It's just like if I talk to a jerk on the phone hey, I choose who I want to do business with. I embrace being the buyer. If I don't need to do that deal, I'm not going to do business with someone I don't want to do business with. It's the same thing here. They truly don't want to sell me their house anymore, then fine, we terminate it, we move on to the next. There's no shortage of deals out there, so the memorandum has been misused and because of that, now there is a bill being passed where sellers could just have memorandums removed. This is what I foresee happening more across our wholesaling industry is that the tools that have been available to us, that we can use and we can leverage in the right circumstances are going to be removed from us and more leverage is going to be handed over to the sellers because of us.

Speaker 3:

Now, personally, I welcome the majority of this. The reason why is because we do business transparently and authentically and we'll tell sellers we're a wholesaler. We'll tell sellers straight up we want to do innovation or, subject to the existing mortgage or seller finance, we actually use the correct terms, we don't make things up, we don't lie, and because of that, the deals actually make it to the closing table because they don't feel misguided, they don't feel like they were lied to. And I feel, like some of these states where now the sellers have the right to back out of contracts all the way up to the day of closing, that is a direct response to the way that wholesalers have navigated their transactions and so, moving forward, what's going to happen is, if you are a wholesaler that has not done things transparently and authentically and told the truth, you are probably going to miss out on deals. There's going to be circumstances where a seller does back out on you the day before closing, but for us, I don't really fear that. I feel like it's just another tool in our tool belt where we can address it up front. This is the situation. These are your rights, these are my rights. This is how we would like to handle the transaction. Are we on the same page and move forward the same way that we've always done business? So, for me, I don't necessarily believe that the shady wholesalers have ruined our industry. I think they're just changing it and in regards to that, I do think some people are going to be negatively impacted, the ones that haven't done business the correct way.

Speaker 3:

Now, the other part of this, and a sad part of this, is as these regulations come down. I think the people that are going to be impacted the most are sellers, and the reason why is because it is going to eliminate some competition. And when competition gets eliminated, what happens? Well, my price goes down because I don't have as much competition. So instead of having to offer a seller $30,000 for their house, I can now come in and I can offer $20,000 to $25,000 because I have much less competition and I also know how to get around the hurdles that exist.

Speaker 3:

So I foresee in the future there will be some struggles for some wholesalers Of course there will be, and some of them some of you probably listening to this right now will be run out of this industry. For the rest of us that stay around and make it through those tough times, we're going to figure it out. We're going to realize that there's less competition and we are going to be able to profit more. So in the long run, what I foresee happening in our industry across the board is that tools that we have had, for our leverage points are going to be taken away and given to sellers for their leverage, and in return, competition is going to be weeded out inside of our industry, and the ones that are left standing after that are now going to make more money than they ever have.

Speaker 3:

So are wholesalers ruining the industry? No, I think they're temporarily giving us a very bad look. I wish things would change. I wish we could self-regulate ourselves and actually behave like real businesses do, but unfortunately I don't think that's going to be the case. So I do see more regulations, more rules, more leverage points getting used against us. Because of that, in the long run, I think we will make more money.