Why Bidding Wars Can Backfire For Wholesalers

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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
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​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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Chapters

• 0:00 The Problem with Bidding Wars
• 1:40 Prioritizing Buyer Relationships
• 3:24 First Come, First Serve Strategy
• 4:59 Building Sustainable Business Relationships
• 7:22 Setting Fair Prices vs Scare Tactics
• 9:00 Final Thoughts on Customer-First Approach

Transcript

Speaker 1: 0:10

Welcome back to the series where we talk about some of the biggest mistakes newer wholesalers make, and today we're going to be talking about starting bidding wars during dispositions with our end buyers. Now, the reason why I don't agree with the bidding war strategy and I believe you should set your price and once you receive that, you should accept it and assign the deal is because the end buyer is, technically, our customer. It is the person that we want coming back to us over and over and over again and, I believe, to be a successful virtual wholesaler. One of the things that you should prioritize is building relationships with your end buyers, and one of the things that I feel like can tarnish a relationship between an end buyer and a wholesaler is bidding wars. For example, I have bought many deals from wholesalers and one of the things that irritates me and rubs me the wrong way is when a wholesaler says, hey, check out this deal that I have for $200,000. And it's a great deal and this is the reason why you should buy it and you stop what you're doing during your day. Now, mind you, as an end buyer, you are busy throughout the day, right? You're managing your projects and your contractors and trying to get loans and close the deals and meet with notaries and all these different moving pieces inside your business. So to stop what you're doing and then to truly analyze the deal, to look at the pictures and the videos and run the comps and do your rehab analysis, or, even worse, go out and physically do a walkthrough of the property to then say I will take this deal at $200,000. And for that wholesaler to then say deal at $200,000. And for that wholesaler to then say, well, hold on, we have multiple offers. I need you to come up with your highest and best. It, to me, completely ruins my desire to ever want to work with that wholesaler again. And so for that reason alone, we do not do bidding wars.

Speaker 1: 2:24

Now you might be sitting there thinking to yourself well, rj, what happens when I get a deal and I go on to investor lift? Then I blast it out to my buyers and I immediately get a ton of traction. That's your job as a wholesaler. That's great. First come, first serve. The first person that says I will take that deal. I've already performed my due diligence. I don't need an inspection period, I don't need an option period. I'm willing to sign an assignment and put down non-refundable earnest money. That's the person it goes to. And the reason why is because I want that guy, that end buyer, to be so happy with doing business with me that in the future when I send them a great deal, they don't even need to run numbers. They trust what we are sending over to them.

Speaker 1: 3:14

Now I feel like newer wholesalers make this mistake because they see wholesale operations like the Kegleys and the New Western Acquisitions and the Net Worth Realty's running this business model. Now you have to understand their business model is high volume of newer end buyers coming in and they basically run through them and get as many deals as they possibly can and then realize they're going to tarnish that relationship. That's why they're constantly putting out bandit signs and trying to bring in newer end buyers. Now, if you want to run your business that way, you can. I personally believe that is a nightmare scenario and you're basically always on the hamster wheel of who's going to be my new end buyer for the next one to three deals. I would prefer to have a go-to end buyer in each market that I know. If I get the deal that hits their specific buy box, I know exactly who's going to buy my deal and that's what's enabled us to be sustainable in our virtualing wholesaling model.

Speaker 1: 4:19

When you go out and you do the bidding wars, the other thing is that you're prioritizing your deal over everything else that's going on inside of their business. Again, when you come from a customer service background like I did, that to me is poor customer service. You're asking an end buyer to drop what they're doing to then prioritize running the numbers on your deal, instead of saying hey, man, whenever you get a chance today, take a look at this deal that I sent you, run your numbers and let me know if it's a good fit for you. I want to know that it's a good deal for them when they have the opportunity to do all of the due diligence up front. The reason why is because I rely on my end buyers to be successful on the transactions that I sell them. I need that person to still be in business in 2026 and 2027 because of the deals that I sold them, not despite the deals that I sell them.

Speaker 1: 5:16

So when we send them over a deal, I want them to take their time. I do not want them to feel rushed Now. Of course, we want to provide some sense of urgency. They can't sit on it for seven to 10 days, but if you give them seven to 10 hours, that's a completely different scenario. We want to see that they're interested, that they want to do walkthroughs and that they're willing to make offer on the deal. Now, when we do these bidding wars, the other thing that comes to place is a lot of times it's a group showing. I also do not believe in group showings.

Speaker 1: 5:51

I think that you should give some respect to your end buyers to allow them to come in and perform all their due diligence that is necessary and not feel like they're a dime, a dozen. Again, this comes back to prioritizing what's important inside of our business. On the acquisition side, we treat each lead as a priority. We want to make sure that we are truly listening to their scenario and offering them a solution. And then, on the disposition side, we want to build long-term relationships with our end buyers, prioritizing that we're getting them in the best position possible to be profitable in their business and make our spread and our profit in between those two situations. I personally believe that is the best way and ultimately the best way to build a successful virtual wholesaling model.

Speaker 1: 6:45

If you're constantly running through your end buyers because you're one doing bidding wars. You're tarnishing that relationship. You're making them feel pressured into making decisions. Inevitably they are going to make a mistake and get into a deal that they probably shouldn't have. And where will they point the blame? Where will they point the finger? It's going to come back to you. They're going to say you forced me into making a quick decision on that and I was not able to determine that this property had foundation issues, roof issues, something that came up that cost me more money long days on market, and they're going to blame that on you and not want to do future business with you moving forward. So for me, I think you should prioritize setting a price, knowing exactly where you're going to make your money and then allowing your buyers to come in.

Speaker 1: 7:39

Now, if you were to ask a buyer to pay $200,000 and the offers are coming in at $190,000, $185,000, $180,000, you absolutely continue to try to get them up to your price. Educate the buyers on why you set the price where you did and see where the disagreement is, but if it comes in at your asking price, your priority then should shift to how are they funding the deal? Can they close in the timeline and vetting that buyer out, not pressing them to get an additional five to $10,000. You make your money on the acquisition side of things, not by pressure tactics and scare tactics into getting your buyer to overpay for a property. This is how you build a long-term, sustainable virtual wholesaling model.

Speaker 1: 8:30

So, as a newer wholesaler, don't fall into this trap of feeling like you need to have bidding wars and mass showings and using scare tactics to get your buyers to come up. Treat them like the customer that they are for your wholesaling business. Prioritize that relationship and also prioritize that they're getting in to the most profitable deals as possible. Now, if you've been a virtual wholesaler for any point in time, let me know if you agree with my take on this. I'm sure some of you out there will wholeheartedly disagree that you should be. I want to hear you in the comments. Let me know why you believe the bidding war is the better strategy for a wholesaling business. Regardless, show me some love, like today's video, and we'll see you guys tomorrow.