How Daisy Chainers Can Ruin Your Wholesale Deal!

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Episode Transcript

Speaker 1 (00:07):
Welcome back to Wholesale and Red Flags, the
series where I discuss thingsthat you need to be aware of
before it costs you your dealmaking it to the closing table.
Today, we're going to betalking about daisy chainers.
These are wholesalers that takeyour deal, they don't have any
equitable interest and they tryto just sell it off to another

(00:28):
end buyer, and it's been rampantthroughout of our industry for
years.
Right, and, quite frankly, it'ssomething that we have done a
pretty decent job of here atTitanium avoiding, and so I want
to talk about some of the waysthat you can avoid this
happening and why this canactually end up costing you your

(00:50):
deal making it to the closingtable.
So, first and foremost, I wantto explain.
There is a difference betweendoing a joint venture and a
daisy chain.
All right, a joint venture iswhere you set the expectations
with another wholesaler up front.
There is an agreement signedand executed, submitted to the

(01:14):
title company, and also theexpectation of how the
assignment fee will be split anddispersed upon closing and
funding.
Okay, now, this I actuallyrecommend for many people when
they're first getting startedinto wholesaling is hey, jv,
that dispo out to someone thathas already developed the

(01:37):
relationships with the endbuyers.
They have that skillset andthey can move that deal with
ease.
So you don't stop your leadgeneration, you don't stop with
your acquisitions calls, youdon't stop with your follow-ups.
So then you have to go doanother task, which is
dispositions.
And it's really hard forwholesalers to find that,
especially when they're soleopeners, find that time to be

(02:00):
able to do both acquisitions anddispositions.
So I actually recommend doingjoint ventures early on in your
career.
In fact, for the first coupleof years here at Titanium we
almost solely did joint venturedeals.
The difference between a jointventure and a daisy chain is

(02:21):
when there is not a signedagreement in place and the
expectations are not set, andwhat they're doing is they're
taking your deal, thiswholesaler is taking your deal,
and then they're adding theirfee on top and marketing it out
without your permission, or evensometimes with your permission,
but not understanding how thisis going to work.

(02:44):
Because one of the things wenever want to do is stigmatize
our deals by saying, hey, myASCII price is $100,000.
And then the next thing, youknow, the end buyers in the
group or in the community and inthe market start seeing well,
this same property was sent tome by daisy chain, or number one

(03:06):
at 120,000, daisy chain ornumber two at 110,000.
And you're asking for a hundredthousand.
It shows a a lack of control inyour business and what I've
seen is most in buyers willactually just got to push back
and say you know what?
There's plenty of deals outthere for me.

(03:28):
I don't quite understand andknow what's going on with this
deal, so I'm going to pass onthis one.
Bring me the next deal when Idon't see it at three different
prices and it will crush yourdeal and your marketing because
in buyers will not even give youthe time of day, they won't
even run the numbers on it,they'll just kind of back away,

(03:50):
even if you are in control ofthe contract.
So each and every time you domarketing of your assignment
contract, it's very importantthat one you know who you're
reaching out to right.
This is why we really don'tlike going into Facebook groups
and posting or Facebookmarketplace, because a lot of

(04:12):
times that is the lowest hangingfruit for daisy chainers.
They can go in and they can seeyour deal existing.
And okay, rj has got a propertyunder contract.
He's asking for a hundredthousand.
I'm going to go submit it, orI'm going to push it out at 110,
120,000,.
I'm going to go submit it, orI'm going to push it out at
$110,000, $120,000.
And I've got zero skin in thegame at this point.

(04:35):
So they don't care if the dealdoesn't move.
They can just do this hundredsof times, over and over and over
again, without investinganything except for the time and
energy to take that deal,repost it, add their fee on top
and when the buyer comes along,then they reach out to you and

(04:57):
they will pretend to be a buyer.
Or, if they happen to be ahonest daisy chainer which,
quite frankly, I don't thinkI've seen very many of them they
will come to you and say, hey,I presented this in front of one
of my end buyers and I've gotan offer at this price, front of
one of my end buyers and I'vegot an offer at this price.
The other reason why thisrarely works is because, as a
wholesaler, if you're asking$100,000 for the price for the
property, then $110,000 and$120,000 probably doesn't work

(05:24):
for your end buyer, right?
So it just by nature the daisychainer is always setting
themselves up to fail and thisis why they don't build
relationships with those endbuyers and eventually have a
negative reputation inside ofthe market.
So, posting your deal onFacebook marketplace, facebook

(05:46):
groups, like if it's the cityreal estate investors, dfw, real
estate investment right, wherethere's 40, 50, 60, 70,000
people in there, it sounds likea great idea.
But you're opening yourself upfor those daisy chainers to come
in and stigmatize that deal.
The other thing that can happenis daisy chainers will at times

(06:09):
, not go out and try to marketthat deal.
They'll try to snake the dealfrom you, right, they'll reach
out directly to a seller and say, hey, I saw this deal got
posted over here.
This person is trying towholesale your deal.
Now, if you do business the waythat we do and you're
transparent with sellers, theseller will just call you and

(06:34):
say, hey, I got this weird callfrom one of your competitors
saying that you're marketing thedeal, which I already knew, but
I just wanted to let you know.
That's like the super shady wayof doing things.
And then the other thing thatthe way that you protect
yourself from the daisy chanoutside of not putting it out
there for the masses to see, iswhen you utilize the dispo

(06:55):
softwares that exist today.
Right, the investor lifts theinvestor base, the deal speeds.
These allow you to see whoyou're sending the deal out to
and you can also see the tags ontheir profiles.
So if I go to post this dealinside of InvestorLift, I could
say I only want to send it tocash buyers, I only want to send

(07:18):
it to flippers, I only want tosend it to land buyers, and so
if it has the tag of wholesaler,you don't want to send it to
them.
Well, for one, why would youwant to send a deal to a
wholesaler?
You're literally asking forthat deal to be daisy-chained or
to have them reach out and sayhey, do you want to JV this?
That's not the power of theDyspo softwares.

(07:42):
The Dyspo software is puttingyou directly in contact or
seeing the end buyer's contactinformation so you can reach out
and you can do the dispositionsof this deal.
So, choosing the end buyers thatyou send this deal out to
wisely paying attention to thosetags, truly learning the

(08:03):
software and leveraging all ofthe different facets of it
that's the key here toprotecting yourself from daisy
chainers.
When you receive address,requests, inquiries, incoming
calls from the end buyers, it'salways important for you to vet
out these end buyers and askwhat is your true intention of

(08:24):
this?
Do you plan on flipping it?
Do you plan on holding it as arental?
How do you plan on financingthis deal?
Do you need a walkthrough?
Do you have proof of funds,truly putting them through the
vetting process andunderstanding what is going on?
The last thing I would sayabout this is trust your
intuition.
Trust your intuition insidethat conversation when you're

(08:47):
betting them.
If something just doesn't addup, that probably means that
this is not going to be thesolution for you and what you're
looking for inside of this deal.
Deals can get lost when daisychainers attach themselves to
your deals.
The more that you can keep yourdeal private to where the

(09:08):
masses don't see it, the betterit will work out for you.
Now, this can be extremelydifficult when your deal's not
moving in a timely manner.
Right, we all want to go intoInvestorLift and blast it out to
5,000 to 7,000 emails at a time.
We want to send out a ton oftext messages.
I get it.
The issue with that is not onlyare the good end buyers going to

(09:30):
see it, but the bad wholesalersin this industry are also going
to see it, and it opens you upfor the risk of someone trying
to daisy chain your deal.
Again, the priorities here arepay attention to who you're
marketing it.
Again, the priorities here arepay attention to who you're
marketing it.
Really.
Eliminate yourself for puttingyour out there in public forums
where you have no control, butultimately take control of that

(09:54):
contract during the acquisitionsphase.
If you do this withtransparency and explain to the
seller the process of what'sgoing to happen, even if someone
tries to stake the deal, daisychain the deal, you will be in
control because the seller isgoing to appreciate that
authenticity and understandingwhat you're trying to accomplish

(10:15):
as a solid wholesaler.
So, guys, this is our lastepisode right now for a while,
that we're going to do aboutwholesaling red flags.
To be honest with you, I didn'tthink that this was going to be
a long running series.
I figured it was going to beshorter, but at this point I'm

(10:35):
just going to be honest with you.
I'm struggling to come up withspecific red flags that last a
long time.
So I'll keep the series openwhen something does arise inside
of our business to say, hey,that could be a good red flag
series, but we're going to stopdoing them every single week
we're going to transition to anew series for you guys.
I appreciate all the messagesand the comments that I've

(10:55):
gotten about the love aboutwholesale and red flags.
Here's one way that you canrevive the series.
Is there a specific red flagthat you have seen inside of
your wholesale and business andmaybe you didn't know how to
overcome it?
If you have one of those, dropit in a comment below Me and my
team will analyze it.
We'll see if it would make agood video and if it would,

(11:18):
you'll see the Wholesale and RedFlag series come back.
Like I said, I appreciatey'all's support.
Drop those comments with anyideas you have.
Show me some love and we'll seeyou guys tomorrow.