After three years as a full time real estate wholesaler, I’ve pretty much made every mistake in the book, and have learned some valuable lessons in the process. Following are five wholesaling tips that I’ve picked up while out in the trenches:
#1) Always collect an earnest money deposit from your end buyer
When I was just getting started, I was nervous about asking my buyers for an earnest money deposit. I learned the hard way that it’s much easier for someone to back out of a deal if they have no skin in the game, so I started collecting a 2k non-refundable earnest deposit on every deal I sold. No exceptions!
#2) Never accept a personal check as an earnest money deposit from a new buyer
This is another lesson that I learned the hard way- not once, but twice! Fortunately, I got the message the second time around, and now I require my buyer’s earnest money deposits to be in the form of a cashier’s check or money order.
#3) Always follow up with sellers, even if they flat-out reject your offer
Whether you’re dealing with a private seller or an REO, there is no telling when their level of motivation will change from low to high, so it’s important to keep following up every 30 days or so to see if they’ve had a change of heart. I’ve gotten some of my best deals from sellers who have rejected my offers multiple times before finally dropping their price to what I was offering.
#4) If you want to close deals and get paid, you have to make offers
I know this one might sound obvious, but it took me longer than I’d like to admit to come to the realization that I was actually going to have to make offers if I wanted to make any money as a wholesaler. I would spend hours and hours researching properties, and then trying to guess what the seller’s response would be. Most times I would convince myself that they were going to say “NO!” so I would never bother to make an offer. Eventually I got tired of being broke, and so I decided to start making offers on every single property I looked at. It wasn’t too long after making that decision that I also started closing deals and cashing checks!
#5) Don’t count your chickens before they hatch
Unfortunately, every deal that you put under contract is not going to make it to the closing table. As a matter of fact, I’ve had deals fall apart at the closing table, when I was so close to getting paid I could taste it. There are a myriad of things that can make your deal go up in flames, so do yourself a favor, and don’t go spending your profits until the deal is actually closed!
Hopefully you will find these tips useful in your own wholesaling business, and they will help you to avoid some of the mistakes I’ve made!