Using the MLS to Sell Your Wholesale Properties VS Building a Buyer’s List

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There has been a lot of talk lately about selling your wholesale properties to your buyer’s list versus putting them on the MLS. There are several good things about both of these tactics. A lot will depend on whether you want to actually close on the property and hold it for a while as opposed to doing a double closing or an assignment of the contract.

Using the MLS to Sell Your Wholesale Properties

There is a lot to be said for having a large audience like you do on the MLS. In theory, there are a lot of real estate investors that look for properties there, and your deal will get “snatched up” in no time. I have had people tell me that they have been able to make more money on every property by using this strategy, and if it works for these folks then I am happy for them.

I just never found that to be true for me. Many newbie investors find an agent and have them look for properties on the MLS. This is their strategy for finding deals. If you are working with an investor/agent that really understands what a good deal is, then you will probably have good luck doing this. But what I found out pretty quickly was that most Realtors don’t understand wholesaling, and they don’t want to make a lot of low offers. And, the buyers that came to me from the MLS listing were more like retail buyers. They wanted a half dozen contingencies in the contract, repairs on an “as is” property, and most of the time they didn’t have a source for cash. In addition, they still had to figure out the financing end of the deal. In the end, ost of the buyers I found through the MLS were just a pain in the neck.

Now this certainly isn’t true for all real estate investors looking for deals on the MLS. In my area, we have a large REI group. These folks are savvy, experienced investors. It doesn’t matter where they find a deal, they are only going to pay a certain amount for the property. Typically it is only the inexperienced investors that over-pay for a property.

Do I Need a Buyer’s List?

Even if you close on all of your wholesale deals and then list them on the MLS, I believe that building your buyer’s list should be one of your top priorities. To be honest, it’s not even that hard. You can begin with your local REIA. After attending some meetings, you will figure out pretty quickly who the heavy hitters are. Ask these investors if you can put them on your buyer’s list. They will always say yes!

I love being able to call the cash buyers on my list, tell them I have a property for them, have them run out and look at it, and then have it under contract within the first 48 hours. I have closed many deals in 2 weeks or less start to finish. You can always use the MLS as your “back up plan”.

I would love to hear what works in your market. Do you use a buyer’s list or list your properties on the MLS?

Photo: nola.agent

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About Author

Sharon has been investing in real estate since 1998. She owned and operated a successful home inspection company for 17 years. In January of 2008 she took the leap of closing her business to become a full time real estate investor.

13 Comments

  1. Sharon, thank you for bringing up this topic. It is a conversation we are having right now in our business. We are becoming steadily frustrated with many of the buyers that we have obtained on our list. Very few have communicated honestly and ended up wasting our time. I do need to work on my buyer’s list. It is thinning out quickly!

    On the other end, I like listing on the MLS (other than having to close twice and carry the cost for a month) for a couple of reasons. Your directives can be clearly laid out in the listing. Though the house is “as-is”, our agent can tell the buyer’s agent what we “do not want to see” on a contract, etc. The other is the accountability through agency. The agents are held to a high level of accountability by the local board and the process is fairly standard to close a deal. If you understand how agents typically work, you can easily work within those boundaries!

    Thanks Sharon!

    • Jason –

      I think there is a place for both a buyer’s list and the MLS. For me, I have great luck with my buyer’s list, but it wasn’t always that way. I now know who the “real buyers” are on my list, and I work with these guys over and over again. They are the first people I call. It is a win-win for both of us.

      When I get a new buyer on my list, I ask for $2,000 earnest money (instead of $1,000), and I get a proof of funds letter from a local bank; none of those letters that you can buy for $5.00. If they can’t provide that within 24 hours, I don’t sign the contract, and I move on. If they are a serious buyer, they will have funding in place.

      I think in the end, you just have to choose what works for you in your business and your area. Thanks for your comments.

      • Hi, Sharon!

        I am a realtor and I was referred to an investor from a friend. I am seeking some advice. I contacted the investor and he is willing to work with me. I haven’t worked with investors before so am quite excited and looking forward to working with him. He said he looks for properties that are 10-15% below market value. He advised me to look on the MLS for those properties that have been on the market for about 200+ days and to do a mailer. However, if the property is listed in the MLS, being a realtor, I cannot solicit those properties that are already listed. What would you suggest me to do in this situation. I definitely want to show him that I can effectively perform. However, what would be the most effective way to find properties for him? I did search the MLS for listings over 200 DOM and there are oodles of them, ranging from $200,000 – over $1,000,000. Even found FSBOs/Expireds from a daily list that I receive.
        I would appreciate any advice you can give me.

        Thank you, in advance for your assistance.

        • Gail –

          I think you are working with an inexperienced investor. A good deal for an investor is usually more in the range of 70 % of the ARV (after repaired value) less repairs. Saying he is looking for properties 10-15% below market value isn’t enough for any investor I know. The only exception would be if he is planning to lease option the property or try to get those already reduced properties down another 20% or so.

          You should look for your local REIA group and join. (real estate invetors assoc). The Realtors that work with investors can be found there. You need to learn how they work, and what they look for to effectively work with them. Look up the National REIA and see what is available in your state.

          Secondly, there is nothing that would prohibit you from calling anyone that has a property listed and asking if they would be open to an offer from an investor or simply sending them an offer. Why on earth would you mail to them?

          Also, you could just simply pull a list of properties that might be of interest to your investor and show him those just like you would a retail buyer.

          You need other criteria though when doing a search and pulling leads like: must sell, extremely motivated seller, distressed, needs work, estate, pre-foreclosure, and any other keywords that would indicate they might be a motivated seller. DOM alone is not enough.

          You still would be acting as the agent, and he would be the potential buyer. But before going to all of that trouble, tell him you need a proof of funds letter. My guess is he doesn’t have one. Don’t waste your time otherwise for a “tire kicker”

          Sharon

  2. @Jason, how are you listing on the MLS if you aren’t going to close twice? From reading all the back and forth on this topic on the forums, most MLS’s won’t let you list unless you own the property. There’s been some discussion of “controlling interest” of a property, having it under contract, listing on the MLS, then assigning to the end buyer, but it all seems very gray to me still…if anyone is actually doing that…you being in TX I’m especially interested.

  3. Nice topic here I found sharon, In my own opinion based on my experience here in Utah market still the most effective way of selling a home is through the use of MLS. I have been in this business for about 5 years and most of the buyers inquiring regarding the homes I were selling said they found it in the MLS.

  4. Shane — you misread Jason’s comment He said he likes listing on the MLS with the exception of having to close twice. So yes, you need to own the house to list it on the MLS.

  5. I have a property listed on the local MLS with my Realtor, and all I have is an Option. She knew that going into it, and said she could still list it.

  6. Over the past few years I have seen a few deals on the MLS listed this way. I think they got away with it because it was in escrow before the local real estate board noticed it. Although, truthfully, I don’t know if it is strictly forbidden but it certainly isn’t common in my market.

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