Real Estate Wholesaling

Do I Build a Buyers List, or Start Marketing for Properties First?

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Wholesaling

I see the question asked often on the BiggerPockets Forum.

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“Do I build a buyers list, or start marketing for properties first?”

The short answer is BOTH.  No reason you can’t market for sellers via your chosen marketing strategy and also be marketing for buyers on craigslist and at networking events.   But the giant buyer’s list won’t do you any good if the people on that list don’t look at you as a trusted resource.

One of the biggest hurdles in convincing my wife that starting a real estate investment company was her perception of real estate investors as being one step below the used car salesman.  Wholesalers tend to be typecast by other investors in the same way.  Unprofessional wholesalers get a property under contract, inflate the ARV with bogus comps, talk up the bad part of town as “transitioning”, and generally have no understanding of what it really costs to renovate a property.  These wholesalers still make money but these tactics only work once per customer.

I preach a business mindset in everything that you do as an investor.  I don’t even like calling myself an investor.  I own a business that buys distressed real estate.  So with the business owner mindset – how do you differentiate yourself from the unprofessional  wholesalers?

Build trust.

How to Build Relationships as a Wholesaler

Instead of getting ANY property under contract and marking it up and presenting it in a way that SOMEONE will come along hopefully buy the property, be picky.  If you can’t get it under contract at a price that will benefit you AND your end buyer, just move along to the next.   Throw that unprofessional wholesaler a bone, his bad deal will strengthen your brand.   Build a brand around your homes and ensure that brand is only associated with realistic returns, accurate representations and excellent customer service.

This is how you start long term relationships.  This is how you attract the big fish.

The Path to Long Term Success

So now instead of being just another new wholesaler, you become a trusted resource, your properties are in high demand and your buyers are calling you for advice. It’s a good feeling when you have local buyers buying and closing on your properties without even going to look at them.  It never happens on the first one, but it does happen on the third.

So don't worry about having a massive buye'rs list. If it's a good deal, venues like Craigslist, the MLS, Zillow ect will do just fine. Instead, work hard to ensure the property you have under contract is in fact a good property, and if your contractor quote comes back higher than you estimated don't inflate the ARV, just take a smaller fee, learn your lesson and buy lower next time.

Thoughts? Leave your feedback below!

    Valerie Pastore
    Replied over 6 years ago
    Very good article. It is not the fastest way to get started but in the long run relationships are what counts. I just started working on this but every seasoned investor I have spoken to has stressed this point.
    Travis Daggett
    Replied over 6 years ago
    Good article. Let’s say you build a relationship w/ one cash buyer who is buying 20 houses a month in your area. How much time would you spend cultivating that relationship? If your average buyer bought one per month, you’d have to find 20 of them to equal the one “big” buyer!
    Shaun
    Replied over 6 years ago
    Great advice. Get a couple good deals and sell them to a few big players in your market and the rest of your list is just a backup when those guys are super busy.
    Sharon Vornholt
    Replied over 6 years ago
    Sam – As a wholesaler, I agree with you completely. You should do both at the same time but the best buyer’s list in the world will be of no use to you if you don’t send them quality deals. That is something a wholesaler needs to be clear on; what exactly a good deal is. I have found that some folks attend a webinar and then go out a buy a house or two really with no idea what they are doing. They get in a pickle because they have a property that is priced wrong, possibly isn’t in an area where wholesalers want to buy, or for a number of other reasons. Wholesalers should always be clear on where they folks on their list want to buy and how much they are willing to invest. Getting this right usually involves something pretty simple; just ask them. I also agree with Shaun. Find a couple of great cash buyers and you will be set but have a back up “buyer’s list”. Sharon
    Sandy Thayer
    Replied over 6 years ago
    I have started marketing to find motivated sellers first. I did not know how to convince a buyer that I will present profitable opportunities if I do not have any properties and estimates to show them.
    Frank O
    Replied over 6 years ago
    Good article… The thing you highlighted on the most which I feel is key is finding authentic quality deals, which will result in buyers trusting you, and in turn, them becoming repeat customers and giving an effective buyer’s list in the process.
    Lindell
    Replied over 6 years ago
    Great article, good advice, very informative. Thanks!
    Donald Placide from Babylon, NY/NJ
    Replied about 5 years ago
    Great article Sam, I just listened to your interview on episode 33 wow great ! I took a whole page of notes. I hope to model my eventual wholesale biz, into a similar fashion.
    Justin Smith Wholesaler from Anderson, South Carolina
    Replied almost 4 years ago
    A general question about wholesaling and how it works- If you can find a buyer on craigslist, why won’t the seller? Why would the seller need a wholesaler?
    Emile Hurst Jr Real Estate Investor from metairie, louisiana
    Replied about 2 years ago
    I agree. From my experience, good deals and open communication is the best way to build relationships with buyers. In most cases there is a reciprocity with transparency and value. Many of my buyers have become great advisors, partners and friends by over time through discussing the values of properties and settling on numbers that make sense for everyone. I actually get buyers from referrals and those are the best. Once you get a reputation as a no B.S. straight shooter, as stated above, buyers won’t even look at the property in some cases they’ll just tell you to write up the assignment, based on relationship.
    Dan D. from Green Bay, WI
    Replied almost 2 years ago
    Great article. I, too, just listened to podcast 33 and it had great content. As far as starting out, what is a good book or blog I could look into that will show me how to get a house under contract? Also, what is a good system to set up from the beginning to organize these deals and keep them coming?