Boston, MA · Member since 2013 · 14 posts · 0 votes
Since I am new to the concept of Wholesaling and I am finding my self going into information overload is there a step by step guide to keep me on track.
@Account Closed great questions. Lets examine the first part is there a criteria for a seller? Your marketing should push/pull your sellers to you by getting them to take action by calling or filling out a form on the internet. They will be calling based on their motivation which could be one or more of the following: financial problems, inherited, tired landlord, tired home owner, moving, downsizing, upsizing, etc. You are searching for those that WANT to sell and sell with out the hassles of showings, agent commissions, fixing things etc.
To answer the next part of the question I would have to say we are always focused on their motivation which in other words is their "problem" that needs to be solved. We are the problem solver and can make it go away by buying the home with as little hassle and as quickly as possible if that is what they want.
I would also like to add that not every one that calls is as motivated as we want them to be. I take them through a scripted conversation in order to collect the data necessary to determine their level of motivation. Then if it warrants I book an appointment to come out and see the house and will usually make a verbal offer based on my diligence to that point.
I already have performed my comps, I already have a price range that the seller was willing to accept or even the least amount of cash they want, and now at my visit I have a good idea of my rehab costs. I have what I need to make an offer.
Need to sell vs Want to sell they both work. It is a numbers game and you have to fill the pipe line and filter the leads to find the good deals.
This forum is a fantastic wealth of knowledge and as you could guess, just about every question has been asked before. The search feature is your friend, and there are some "sticky's" at the top of each forum that include great info that is often asked by new members.
@John Beck You might want to modify your screen name or post a pic since there is (I assume he is still alive) a well known real estate attorney guru named John Beck
The buyer or the seller? Good question and my answer is both. Your day to day activities should always include networking and marketing for deals and adding new buyers to your list. You can find cash buyers from networking at REIA meetings and Landlord Associations. You can find sellers while driving around, telling people you buy houses, bandit signs, Direct Mail, door knocking, radio advertising, etc.
As you build your list of buyers focus on cultivating your relationship with them. Most wholesalers sell 80% of their deals to a handful of people so you don't need a very large list to get started.
Paul Sorgi
Thanks for the insight. Getting started, is there a certain criteria for a seller? Besides motivation, what are things you look for when negotiating a contract with a seller? Do they all ways have to be in need to sell or face foreclosure so to speak?
@Account Closed great questions. Lets examine the first part is there a criteria for a seller? Your marketing should push/pull your sellers to you by getting them to take action by calling or filling out a form on the internet. They will be calling based on their motivation which could be one or more of the following: financial problems, inherited, tired landlord, tired home owner, moving, downsizing, upsizing, etc. You are searching for those that WANT to sell and sell with out the hassles of showings, agent commissions, fixing things etc.
To answer the next part of the question I would have to say we are always focused on their motivation which in other words is their "problem" that needs to be solved. We are the problem solver and can make it go away by buying the home with as little hassle and as quickly as possible if that is what they want.
I would also like to add that not every one that calls is as motivated as we want them to be. I take them through a scripted conversation in order to collect the data necessary to determine their level of motivation. Then if it warrants I book an appointment to come out and see the house and will usually make a verbal offer based on my diligence to that point.
I already have performed my comps, I already have a price range that the seller was willing to accept or even the least amount of cash they want, and now at my visit I have a good idea of my rehab costs. I have what I need to make an offer.
Need to sell vs Want to sell they both work. It is a numbers game and you have to fill the pipe line and filter the leads to find the good deals.
As a scenario, seller Adam contacts me, he is underwater with his mortgage, has no equity. Can't afford to pay any longer he is working less hours, and going through a divorce. The house is a 4bd 2ba zillow estimates price at 313K the comps of similar houses in the neighborhood are around 345-350K.
1. Before the meeting what should I be prepared for? Should I be equipped with a contract right then? Where would a newbie get these contracts?
2. How do I determine the repair value on the house?
3. Once under contract, who do I contact; the title company?
4. Should I have a set price to offer before I go in?
5. Is there anything I'm overlooking?
I believe a lot of new wholesalers have the same questions, and the failure to act is because not many of us can grasp the bigger picture of how the whole system works.Thanks Paul, I appreciate your advice and have been taking detailed notes.
Welcome to BP and crei. You have been given some great info here already. All I can add is to read the FREE BP Beginners Guide http://www.biggerpockets.com/real-estate-investing All the questions you asked above will be answered in the guide above.
You have so much available to you to gain a good start. Now it is up to you to study >> apply >> study >> apply and so on until you succeed. I use the search resource which Tim mentioned above regularly to sharpen my understanding of things.
Thanks for the response @Paul Sorgi
As a scenario, seller Adam contacts me, he is underwater with his mortgage, has no equity. Can't afford to pay any longer he is working less hours, and going through a divorce. The house is a 4bd 2ba zillow estimates price at 313K the comps of similar houses in the neighborhood are around 345-350K.
1. Before the meeting what should I be prepared for? Should I be equipped with a contract right then? Where would a newbie get these contracts?
2. How do I determine the repair value on the house?
3. Once under contract, who do I contact; the title company?
4. Should I have a set price to offer before I go in?
5. Is there anything I'm overlooking?
I believe a lot of new wholesalers have the same questions, and the failure to act is because not many of us can grasp the bigger picture of how the whole system works.Thanks Paul, I appreciate your advice and have been taking detailed notes.
You have spoken to your prospect Adam and BEFORE you leave your house to go see his you want to make sure you have a deal.
Based on your scenario will assume ARV of 345k. To wholesale this you are going to have to leave some meat on the bones and I will also assume you do not have any cash buyers with specific price points. Here I would start by using the the 70% rule. ARV * 70%-repairs-AssignmentFee=MAO until you develop a solid list of cash buyers and know their specifics.
During the Conversation with Adam you discovered he is underwater, going through a divorce (going to need his spouses signature), and NO Equity. If you are looking to wholesale you will need to short sale the property. You will need the assistance of a Short Sale Negotiator or Real Estate Agent who handles short sales. You would get the property under contract your states P&S should work and you will use your Attorney who can advise you legally. Of course you are putting this under contract for the price we established above.
For you to even head over to Adams's house you will want to know if a) a Short Sale is an option if so b) is your wife on board? You will want her phone # as well.
The other issue to consider is does Adam even qualify for a Short Sale and this is where having a good short sale expert on your team is crucial.
@Account Closed you didn't throw a simple transaction out there but it is something you will run across. Besides wholesaling you could Lease option or take over subject to and place a tenant/buyer in the property.
Let's assume everything works out perfect. You get it under contract (you can get a contract from your attorney, Real estate agent if using them for the SS) You do want to make sure the contract is assignable or you take title in an entity and you can then sell your position in the entity. (your Attorney can help with the details)
Once it is approved by the bank and you have a signed P&S you can legally begin to market the property. Once you find your buyer sign an assignment of contract agreement (your attorney can get you one) and collect your money. I advise this happening at the closing with the help of your attorney.
All the people I mentioned above are needed and this is the mistake most newbies make they don't start building their team. If you go to your local REIA meeting I am sure you could find an attorney or at least find someone to recommend one. The key to successful Real Estate investing is to Network, Network, Network.
@Paul Sorgi Wow that wasn't a simple scenario. The advise is gold, thank you! One thing I haven't focused on was building my team. I have work to do starting with this weekends REIA at an wholesalers intensive in my area!
@Account Closed enjoy your wholesalers intensive and I do want to add that wholesaling is ONE strategy and not as easy as many want you to believe. Keep learning and the picture will become much clearer!
You can say that again,being new to the game can make your head spin with everyone and his brother trying to sell you there own version of wholesaling 101.
@Paul Sorgi all though ny focus is wholesaling, buy and hold is also my niche. I believe wholesaling is a way learn to recognize good deals. Currently I'm in the market for a owner occupied SFR with units. With the calfha program that also has programs for a downpayment assistance and closing costs at the moment. I have met with lenders and gathered information about what they look for in qualifying for a loan. I'm from the Antelope Valley so the only investors I meet is the ones that rent SFR houses usually 3-2's. So I have been networking out here. Real estate is new to me and with any apprenticeship you start with you have to gain as much information as you can and practice it. I admit it's pretty exciting! One question I do have is being a perspective investor is it really necessary to get my real estate license?