What Comes First for Wholesalers: The Buyers List or the Deal?
Which is more important to have a property or a buyers list? In wholesaling, this is the classic tale of what comes first, the chicken or the egg? I’ve decided to bring up this topic because I’ve been asked this question hundreds of times when speaking with newbies during my 30-minute free consultation. So I would like to explore the pros and cons of both, and you can make your own determination.
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So lets look at the position of building your buyers list first…
Finding the Buyers First
We can all agree that a buyers list is important. Now, how big you should build the list is a conversation for another day. Building a buyers list can afford you the ease and comfort of thinking you will always have a buyer for your deal(s). The concern with believing in this philosophy is that a buyers metrics can change. One month people may buy in a certain area, or buy a certain property type, or certain price points — and the next month it can all change due to market volatility.
Having a buyers list can help you be super targeted on your property search. If you truly evaluate your buyer before adding him or her to your list, you’ll know what they want, where they want it, how much they are willing pay, and how much risk (rehab) they’re willing to take. By knowing this, you can target your marketing to those buying criteria.
Getting the buyers can be difficult because they are very limited with their time. They do not like to waste their time, and many newbies waste prospective buyers’ time. So they may not be as eager to talk with you.
Buyers are pitched too often by newbies. Someone called me the other day asking me commonly asked questions:
Are you still buying?
If so, what area are you buying in?
What exactly are you looking for?
I asked him, “Are you truly going to look for what I want or are you just trying to add me to your list?” He stumbled and stammered, answering the question knowing he was just trying to build a list. That is fine we all had to do it but make sure you’re truly looking for properties and not building a list you will do nothing with.
I would suggest that until you build your buyers list, work with a seasoned wholesaler who will do the disposition for you if you find a property.
Finding the Deal First
Now, let’s take a different approach to the same scenario I spoke of above: What if the newbie called and asked me if I was buying, and then said, “I have a property that you may be interested in.” I would then be all ears to see if the deal fit my criteria. A different approach, but you will reach the same results. Here are the results:
I would assume this person is out trying to hunt for deals, and if the current deal didn’t work, I would gladly give him what I’m looking for.
In markets everywhere, finding the deal maybe a lot harder than finding the buyers. Since it’s a sellers market across the nation, buyers are scrambling to be the first to a good deal.
I know, I know, finding the deal first is a little scarier. What if you don’t find a buyer? So what if you don’t find a buyer. Guess what you did find?
You found out how to have a conversation with a motivated seller.
You found out how to build your team (i.e. attorney or title company).
You found out how to write a contract.
Don’t just look at what you don’t have, you have to look at what you learned in the process.
Finding deals is more challenging, so it depends on what you want to do first. So what’s hard first (finding deals). or do what’s a little more easy (finding buyers). Either way, you gain something from both.
Why Not Both?
Everyone always says, Find the buyer first or the property. Here’s my suggestion now: Find both. While you’re working on finding the property, why not talk with sellers and try and find them simultaneously? It does not have to be either/or. By doing only one, you put self-imposed limitations on what you want to do. Our brains can handle the capacity of looking for both. So do both.
Although there are benefits to building a list and finding the deal independently, there’s a bigger upside if you work on doing both to speed up the process and help you build momentum.
I would really like to hear your thoughts; especially if you are just getting started.
What are some of the things that are stopping you from doing either/or or both?