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How to Find Real Buyers for Your Wholesale Deals

by Jason Hanson on October 23, 2011 · 26 comments

  
finding real buyers wholesaling

Many new investors start out wholesaling, and that’s the smart thing to do to quickly build up some cash reserves; however, it doesn’t matter if you know how to get your phone to ring off the hook from motivated sellers or if you’re a master at getting properties under contract, if you don’t know how to find a buyer to assign the deal to.

What are the best ways to find buyers?

First, go to your local REIA meetings and network. When I first started out in this business I was going to at least two meetings every week. Go to any and every real estate function you can attend, and while there, find out who the rehabbers are in your area.

Screening for Real Buyers

Find out what types of properties they are looking to buy. Find out the zip codes they specialize in. Get their business cards and enter their complete information in an Excel spreadsheet.

Do not be lazy about this.

I realize it’s not fun, but if you want to make a lot of money, this is what you have to do.

Next, you can place ads on Craigslist and in your local newspaper advertising your current deals. For instance, run an ad that says “Desperate owner, must sell now, only $97,000.” By placing these ads you’ll bring investors out of the woodwork who you haven’t met before, and who you can also add them to your buyers list.

Don’t Waste Your Time on the “Tire Kicker” Real Estate Investors

If you’ve been in the real estate investing business for any length of time you know that 90% of people are “tire kickers.” In other words, they go to every REIA meeting and they talk the talk but they never take any action.

This means that as you’re building your buyers list, most people will not really turn out to be rehabbers; you’ll be lucky if a list of 50 people has 3 people you can count on. Unfortunately, the only way to find out who the “players” are, versus the tire kickers, is when you get an actual deal.

Simply put, when you send out an email to your list about you latest property, who answers you? And out of the people who answer you, who actually comes through? It won’t take long for you to figure out the people who can’t be trusted and who should be on your “blacklist.”

In fact, just last week I had a guy call me who is on my blacklist. I hadn’t heard from him in about three years and he called to see what I was doing. This guy was always unreliable and would tell me he wanted a given deal badly — he was about to get the money; he just needed more time; but he never came through.

In short, finding buyers is not easy and takes some patience. But, after networking and running ads, you will eventually get a small handful of buyers who you can trust and who will become your regular “go to” guys for your wholesale deals.

Photo: bark

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{ 26 comments… read them below or add one }

Joey Wang October 23, 2011 at 9:24 am

Great advice Jason. I ask how much cash the investor has available and what deals they’ve done before. Their history helps me gauge how serious they may be in future deals.

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Sharon Vornholt October 23, 2011 at 11:11 am

Jason -

I too am a big fan of my REIA club. There is no better place to learn and to find out who the major players are. Folks who have been around for a while, also know who the “folks to stay away from” are. I am constantly amazed that investors don’t utilize their local REIA’s. Like you I have added folks to my buyers list from Craigs list. Putting up handwritten bandit signs around the property I am selling has also worked for me.

One thing I would like to point out regarding building a buyer’s list, is that I got one of my BEST cash buyers from posting on Bigger Pockets. I have told Josh this story, but its’ worth repeating. If you have a deal put it on BP. As this site grows, more folks from your local area will show up here. Great article Jason.

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Jim Ingersoll October 25, 2011 at 5:37 am

Finding the buyers with the ability to pay cash or use hard money loans is the key to wholesaling today. When credit was loose a few years ago it was super easy to find the buyers and hard to find the houses, today the opposite is true. It is easy to find the houses and a challenge to find cash buyers.

Timely article given the wholesale market of today.

Regards
Jim

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Sharon Vornholt October 25, 2011 at 7:23 am

I couldn’t agree more Jim. I have been lucky this year to have added a few more buyers to my list that have cash or can actually get an investors loan from the bank. It sure makes wholesaling a whole lot easier.

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Melinda Allen October 31, 2011 at 2:31 pm

Jason,
I’m a fan of many of your articles. This one was a real pick-me-up. As a newbie, my buyer’s list is very small, I am a little discouraged by the lack of time I currently do no have to work my business. However, it seems that those who are true buyers (not tire-kickers) will still be investing as I slowly build my list and find properties.

As for Craig’s List, do you recommend posting a phantom property just to get buyers? How would YOU (and others) handle calls of potential buyers who want to see a property you don’t really have?

Thanks!
Melinda

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Cheng Vang November 2, 2011 at 2:39 pm

Jason,

You definitely nailed it! As a new investor I have yet to close a deal due to tire kickers falling through down the road. Fortunately, it doesn’t faze me at all, more so its motivated me and shown me that quite a number of “investors” are more talk than walk.

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Matt Midden November 7, 2011 at 12:52 pm

Another great way to build a buyers list for your wholesale properties is to purchase 18″ x 24″ blank bandit signs. Take a sharpie and write an ad similar to this “Cheap House, 45k, Cash Only, 123-456-7890″. Even if you don’t have a house for sale this will still get cash buyers calling your phone. Pre-screen them and find out what types of properties they are looking for and in what part of town. Then you simply go find these properties for them and profit off the spread.

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Joshua Dorkin November 7, 2011 at 1:03 pm

Matt – Deceptive tactics like placing ads for properties or deals that don’t exist is just a bad way to build your business. Investors should NOT do these kinds of things, as building your business upon a lie will quickly catch up with you. There are plenty of ethical ways to go that are equally as effective.

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Matt Midden November 7, 2011 at 1:14 pm

It’s not unethical because all you are doing is taking phone calls from people. I’m not taking money from anybody or giving a false impression of my company. They call the number and I tell them exactly what I do. I then find out what types of properties they are looking for and I then go out and find it for them. How is helping somebody find a great cash-flowing property or rehab project that could make them $30,000-$40,000 unethical? I have helped people make hundreds of thousands of dollars using this tactic to find my buyers. All of them have nothing but great comments about how professional and ethical me and my company are. Please explain

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Joshua Dorkin November 7, 2011 at 2:37 pm

Matt – You’re lying to them by advertising that you have specific properties available that simply don’t exist.

Melinda Allen November 8, 2011 at 12:10 pm

Well Josh, that answers my question about posting a phantom property on Craigs List (see above).

I did a couple of ads like that on Craig’s List, it didn’t feel right. When people called I explained what I was doing, that I did not have a property exactly like the one listed but that I was looking for cash buyers, to find out what they were looking for, and go from there. Some of the people were fine with it, some sounded like they had been expecting an actual prop. I decided I really don’t want to be deceptive. I got more calls with those ads than I do advertising for cash buyers, advice to make the phone ring more?

Thanks,
Melinda

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Kevin March 23, 2012 at 8:40 am

Some people may see this as an unethical method but I don’t see it as that. If your ultimate goal is to find buyers to eventually help them out by providing them with deals in the future, there is no harm in posting phamtom ads. You are not trying to deceive them or waste their time, you are simply finding buyers that you can provide a service to in the future.

This method was especially helpful to me in the beginning when I was just starting out. It’s all a matter of how you look at it and what your ultimate intent is.

Jim Ingersoll November 7, 2011 at 2:42 pm

What a heated debate.

We as investors do need to be very careful to be as ethical as possible and advertising housing to sell that does not exist is not ethical. I am sure it is effective, but if you want to be ethical it should be avoided. There are many other methods of finding buyers than to have to try and sell houses that you do not have under contract or any kind of equitable interest in.

Jim

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Matt Midden November 7, 2011 at 2:44 pm

Joshua – So if you called on one of my signs and I sold you one of my properties (in a legal way) and you made $30,000 profit on it, you would still consider that unethical?

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Sharon Vornholt November 7, 2011 at 3:37 pm

Matt -

In this business, you live and die by your reputation. You will quickly lose your credibility if you advertise deals that you don’t have. This is kind of like the “boy that cried wolf”. There are many ways you can get your phone ringing. If you want to use those signs, why don’t you put one up that says “Wholesaler needs cash buyers”. When they call, just be upfront that you are building your list. Anyone looking for deals, will be glad to get on your list.

This way

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Iris Reyes October 13, 2012 at 12:44 pm

Hi Sharon,
I’ve been reading up on Real Estate Wholesaling for the past few days trying to learn more about it and how to get started. I’ve come to realize that my biggest hang up has been about finding buyers and using the “phantom” method. I liked your suggestion on what to put on the bandit signs as far as “looking for buyers”. It’s honest and straight to the point. I’ve NEVER posted on anything like this before but felt the need.

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Sharon Vornholt October 13, 2012 at 3:14 pm

Hi Iris-

One of the best places to start developing a buyer’s list is at your local REIA group. There will always be plenty of investors there looking to find a good deal. Make it your first priority to learn how to buy the property at the right price. That is the biggest mistake most all of us make when we are brand new. We just pay too much for the first few properties.

Find a great deal first which involves making offers and getting a lot of “no’s”. Then you can take the deal to your REI group, put an ad on Craig’s, or do any one of a number of things to find a buyer. When you have a great deal, you can always sell it.

Just make sure you have an “escape clause” in your contract then you don’t have to worry about finding a buyer. Also, write in a little more time to close in the beginning. If you do these things you will be fine. Best of luck.

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Matt Midden November 7, 2011 at 4:20 pm

Ok maybe i’m getting off on the wrong foot here. Let me clarify. I put up a “ghost ad” for a property looking for cash buyers. Once a buyer calls I explain to them right away what my intentions are, that I am a wholesaler looking to sell them dirt cheap properties way below market value. I am honest with them about every question they have and do everything by the books. I’ve never been reported to the better business bureau. It’s kind of like using Santa Clause against your kids to get them to act right. Are you being honest with them up front? No, but it’s for there benefit in the end. My reputation from people that call me on these signs is that I hook them up with cheap a** houses and make them rich. Boom!

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Joshua Dorkin November 7, 2011 at 5:06 pm

Are you being honest with them up front? No

That’s all that matters in my world.

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Shawn East December 13, 2011 at 8:51 am

I came across this blog and thought I would offer insight about how I find real estate investors using Craigslist. I work for a wholesale brokerage and we provide full service for investors looking for properties.

Below is an actual ad that I post that tells investors exactly what I do and does not (intentionally or un-intentionally) mislead with a “ghost” property for sale.

“If you’re ready to buy investment properties in the greater Houston are, I can help. I sell wholesale real estate. I do not sell educational materials or charge for seminars. Instead I supply the following four critical and often hard to find services for investors:

Find – I find investment properties and make them available to investors at wholesale prices. The houses I supply are not simply a list of foreclosures that everyone wants to sell you. They are actual opportunities to purchase properties at pennies on the dollar.

Fund – I will help you find the financing to purchase the property; hard money or private money.

Fix – I can give you access to contractors who will work with you even before you purchase a property. I often have several bids available prior to closing.

Exit – I have numerous strategies to help sell or rent your property depending on your investment goals, including flat fee listing with our brokerage.

Whether you already own 100 rental properties or are just getting started I can help. Newcomers require help learning the ins and outs of investing while seasoned investors enjoy the access to multiple deals at wholesale prices.

Please check out my company’s website at the link provided below, and call me to schedule an appointment to view my current deals and get added to my list for future deals. I look forward to helping you find great investment opportunities.

Shawn – Realtor/Sales Associate
NetWorth Realty

I hope this helps give some ideas to those who are struggling with how to market themselves online.

Thanks for your time,

Shawn

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Melinda Allen December 13, 2011 at 9:13 am

Thank you for your input Shawn,
I will try something similar.

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martin October 24, 2012 at 7:19 pm

Hey,
I am totally green to wholesaling but am very intrigued with the possibilities. I live in North Carolina. Can someone tell me where to look/find properties for cash buyers? My town is chuck full of those will buy any property for cash so thats not necessarily a problem but I need to know where to find properties and after i find them one, how does the rest of the process work. I have heard so many different things…Can someone just say step 1, step 2, step 3, cash check….lol

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Joshua Dorkin October 24, 2012 at 8:08 pm

Martin –
Here are two articles that I think you’ll find helpful.
- Which Comes First: The Real Estate Deal or the Buyer’s List?
- Congratulations, You Have a Real Estate Buyer’s List. Now What?!

If you have lots of specific questions, feel free to post them in our real estate forums. Good luck!

Josh

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Kevin October 25, 2012 at 10:42 am

You can find sellers by buying lists online (listsource.com, usleadlist.com), posting ads online (craigslist.com, backpage.com), putting up bandit signs (signwarehouse.com), etc. This will get the seller calls coming in. Then, make offers on the properties at roughly 40-60% of the ARV. Sign a contract with the seller. Market the property to your buyers list for roughly 5-10k more than the seller contract price. Sign a contract with the buyer. Send both contracts to your title company. Set the closing date. Sign the final documents. Get your check.

That’s a basic idea of how it works. There’s definitely a lot of details but that’s the jist of everything.

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Katie Trankina January 19, 2013 at 4:50 pm

I am negotiating with the Banks on 4 condos, to wholesale, in a very cool building in a great area of the city (400 E. Randolph) of Chicago. My buyers list is not as long as it needs to be.
Could anyone give me some suggestions on how to find buyers?
I have run Craigslists Ads and put an ad in the Reader –
Thank you!
Katie

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Brandon Turner January 19, 2013 at 5:49 pm

Hey Katie – this is a great question and while I am not the guy to give a good answer – I’d definitely recommend posting this question in the BiggerPockets Forums – where you’ll get a ton of eyes and answers from a lot of great investors!

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