The Deceitful Trick Wholesalers Use to Increase Profits

^{June 30, 2025 | 2 Minute Read}

While browsing the MLS, I found a property listed for $57,500. I contacted the agent—only to learn it was actually a wholesaler, who failed to disclose “seller holds equitable interest.” That’s a required disclosure when marketing a contract on the MLS.

Still, I scheduled a showing. The home was a 3 bed, 2 bath, 1,600 sq. ft. with a 2-car garage. It needed about $60K in renovations for a retail flip, including full mechanicals (roof, HVAC, plumbing, electrical). The rest would go toward cosmetic updates like kitchen, baths, paint, and finishes.

ARV & FLIP PRO FORMA

Comps ranged from $152K to $209K but market softening led me to conservatively peg the ARV at $190,000.

Purchase:

Purchase: $57,500
Closing: $1,150
Renovations: $60,000
Contingency: $6,000
Holding: $2,700
Lender Fees: $10,582 (6 months hold at 12%)
Total: $137,932

Sale:

ARV: $190,000
Less: $5,000 seller concessions
$9,500 agent commissions
$2,000 closing
Net Profit: $35,568 (~26% ROI)

RENTAL EXIT STRATEGY

If I held it:

Reduced reno budget: $50,000 (rent ready renovation)
Total investment: $121,932
Rent: $1,600/month
Cap rate: 12.73%
Cash flow: $396/month
DSCR: 1.57

Numbers looked solid for both a flip and a hold.

THEN CAME THE SWITCH…

I called the wholesaler and said I was ready to close—cash in 14 days. He said he needed to check with his manager. A few hours later, he sends me the following text:

“Buy now for $73,000”

That’s a $15,500 price hike—a sneaky tactic wholesalers are using more often: list cheap to draw interest, then raise the price when buyers are serious.

At $73,000, my projected profit drops to $20,000 and ROI to 14.5%.

Then I checked the active comps:

10 listings
73 average DOM
$5K–$20K price cuts

If I only got $180K on the resale, I’d net $10K (7% ROI). Too thin for the risk.

Even as a rental, cash flow would drop to $357/month and DSCR to 1.38—tight margins but still doable as a rental. However, I need two viable exit strategies to agree to a purchase and with the new price, I have only one.

Now, I do not care what the wholesaler makes on the deal. The last closing I had a week ago, the wholesaler netted $20,000. What irks me is the deceptive way this wholesaler presented the property and then jacked up the price and made it seem like he was doing me a favor by giving it to me exclusively.

So, I pass on the deal.

A few days later, I saw the property went pending.

I wouldn’t be surprised if a newer investor ended up buying it for $73,000. If so, it’ll be interesting to see how their deal turns out. If they re-list for sale, I’ll revisit the property and write a follow-up post to compare their results with my original projections.