This episode reveals a fundamental market shift where 22 of 24 recent deals from a trusted Austin operator were structured as wholesale transactions rather than traditional flips, indicating that increased competition and aggressive wholesale pricing are drying up traditional flip opportunities. This trend forces a strategic reckoning for funding businesses built primarily around equity flips, requiring potential pivots toward transactional deal support, higher-value assets with more value-add components, or direct deal sourcing to maintain deal flow.
Key Takeaways:
- Wholesale Deals Now Dominate Acquisition Channels One operator reported 22 of 24 recent deals structured as wholesale versus only two traditional flips, reflecting how aggressive wholesale pricing outcompetes traditional flip buyers in seller negotiations.
- Sellers Accept Wholesale Pricing for Higher Payouts Even when payments are delayed versus immediate cash, sellers increasingly choose higher wholesale offers over traditional flip pricing, especially on deals above $100K purchase price where speed motivation is lower.
- Funding Business Models Face Structural Headwinds If the industry shifts predominantly toward wholesale transactions, businesses built around funding traditional flips must adapt by supporting transactional deals in restricted states, pursuing higher-value development projects, or directly sourcing their own opportunities.
Listen to the full episode for complete analysis of how market evolution requires business model adaptation, the importance of staying ahead of industry trends, and strategic options for maintaining competitive positioning as acquisition dynamics shift.
(Podcast transcript below)
Hi, Chris Duff, over, Serious Land Capital, Vacant Land Funding Partner. So today I wanted to reflect on a conversation I was having with a very trusted land investor, local here in Austin, and trying to suss out how their acquisitions have been going, especially after the holidays and to start the new year.
Um, like I mentioned in a previous episode, we’re trying to revamp marketing efforts as, know, last quarter had slowed down as far as funding leads were concerned. And, you know, a lot of that was our fault for, uh, not continuing with the, uh, existing, um, more diligent marketing efforts, but you know, also just wondering, Hey, there aren’t as many outbound leads. Um,
to reach out to anyway here too. So just trying to understand the market and you know, this other land investor was just mentioning that yeah, especially the last couple of weeks of December were not particularly productive from a lead perspective, I guess from a texting side it was, but less so from cold calling. And so, know, they’re
trying to ramp things back up. So that kind of aligns with what we were suspecting, at least from an outbound lead perspective for the funding business. But a bigger change of notes, and this is something that we were already paying attention to, but it seems to only be strengthening is that the percentage of deals that land investors are pursuing that are wholesale.
you know, where you’re trying to set up a double close or transactional deal is only increasing. And, know, this particular land investor was mentioning, I forget the exact timeframe. It might’ve been last couple months or few months, but was saying that I think out of 24 deals, had, they had sourced that only two of them were set for
you know, full on purchases, you know, for, for a typical flip and the rest were set up for, wholesale. so that aligns with what we have been hearing again, you know, it’s if the overall market has become more competitive in terms of, outreach to sellers. So if you’re having people,
various land investors who are making their bread by just doing wholesale deals. And the sellers kind of get used to that. Then it starts to dry up the market for the traditional flips. Just because you’re going to be outcompeted from a pricing standpoint, which is what most sellers will care about, especially if the investor has a solid Dispo system.
they’re going to be paying the price where it’s like, okay, I’m not going to get money today, but I might get a higher check. So especially you get to some of these more valuable deals, 100K purchase price plus, then, you know, oftentimes the sellers will just be a little less motivated from a speed perspective. And we might even overvalue that particular motivation for many sellers.
Anyway, here I know Adya was talking about that a bit more recently, you know, just really plugging in to figure out what the true motivation is for Seller. So that is something that’s, you know, pretty glaring and, you know, obviously of interest to us because, you know, most of our business runs off funding traditional flips, but if it’s more of an industry wide phenomenon,
to be focused more on wholesale deals, then yes, we can assist from a transactional deal perspective in states that don’t or, know, title companies that don’t allow like a true double close. And, you know, even some of these regulations that have come into make double closes more tricky to deal with. Obviously, there’s still a market for them. You know, we’ll see how that continues on.
you know, you just have to adapt to wherever the, the market is going. but yeah, this was a very insightful conversation. because now I, I really have to consider, okay, you know, doing all these marketing efforts to try to grow our business. But if the overall funnel is getting much slimmer for flip deals.
you know, do we have to source some of our own potential double closes or again, just shift more into higher value asset plays that require more value add to them, but still relying upon our underlying expertise in assessing land valuations.
So yeah, you might hear some of the hesitation in my voice here just because it’s a lot to reflect on. And I think the market’s going to continue to evolve and that’s just nature of being a startup and a small business owners that every year it’s it’s going to be a bit different, especially nowadays with the rapid tech advancements. You got to stay on your toes and you can’t get too complacent.
Otherwise, yeah, the market’s going to change on you and you might just be out competed or having an outdated model. And we’ve seen this a few times, even since we’ve entered into the land sphere in late 2019, just been through multiple different types of markets and shifts of business model and so forth here. And yeah, I know that’s when a lot of land businesses started was, you know,
similar timeframe as us or after. And, you know, if you have this larger shift of operators, you know, it can kind of start changing the entire industry for, for, for, for everybody who’s operating within it. So, definitely something to note. It’s an evolving situation. Something,
That’s a top priority for us to figure out and I’ll be commenting more on this as we continue to investigate further. Again, we’ll see how things come. With marketing efforts, it is still barely after the holidays, less than two weeks after the holidays and a lot of leads can come in, bad weather around the country. So this is generally not the highest volume time of year anyway.
from acquisitions or, or a Dispo side, but, um, you know, pending how the next few weeks go, uh, it could, you know, dramatically shift our, um, focus areas within our, within our own business. Um, you know, fortunately we’re still extremely well capitalized. Our, our Dispo systems are very solid. have, um, you know, uh, industry leading expertise when it comes to underwriting. So, uh,
we feel confident in our ability to shift to where the market is heading and adjust accordingly. But yeah, that’s just the nature of, of being a business owner, regardless of how big you are, evolve or die. With that, just recall if you are looking for funding, SiriusLand.Capital, you can read our FAQ there on what we typically look for.
landpricer.ai if you are looking for assistance in pricing your land deals as accurately and simply as possible. And the Land Daily Diligence Group on Facebook for any deals that you want zero cost review on, regardless of whether you want funding or not, Mondays and Thursdays.
this has been a really interesting journey so far. I’m starting this podcast. It fills me with some extra energy and it just, again, kind of forces a level of focus, every day to, really be thinking hard about my, business and where we’re going. and I believe that, it’s really going to pay off, internally, for, you know, many years to come.
With that, take care everybody, bye.
