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Posted over 7 years ago

Increase your wholesaling profits using realtors

When I started wholesaling a year ago, my general impression was that wholesalers and realtors were at odds with each other. I did not like the idea of wholesaling properties already listed on the MLS so I never really interacted with realtors. I spent the majority of my time building my cash buyers list through investors and an occasional retail cash buyers. However though local REIA meetings and other networking events, I started to meet realtors and share with them what I do. Many didn't understanding wholesaling initially but when I explained it, they understood quickly. The final piece of the conversation was always along the line "hey, I have cash buyers looking for stuff, let me know what you have." Boom, why not tap into a network of cash buyers that already exists!

Why Network with realtors?

1) Realtors have a long list of both cash investor buyers and cash retail buyers (retail buyers pay more than investors). These are buyers that probably are not on your buyers list. You may have a relationship with 10 realtors but really have access to a network of 50 buyers. 

2) Trust: many investors have developed relationships with realtors and trust their expertise in the market. If the realtor tells them it's a good deal, they will do it. How many times do you talk with an investor at a REIA meeting that talks about investing but will never buy a property? Why? If money isn't the issue, it's usually fear. Fear of failure. Fear of making a bad decision. How does one over come this fear? It's simple- education and someone else supporting the decision. A realtor essentially is that 3rd party helping to educate the buyer and giving them the vote of confidence they are getting a good deal. 

3) Increased profits: who knows the markets best, the trends, and what buyers are willing to pay? That's a rhetorical question. My biggest sales have come from either listing with a realtor or selling directly to a realtor's buyer. I probably average an extra $3K when selling to a realtor's buyer (plus the realtor gets paid too). 

4) Speed: how long do you want to take to sell a property? If you can network with realtors and sell it a week faster to their buyer, was it worth the time saved even if you have to share part of the pie with the realtor? I close on the properties I wholesale so time is money. The faster I can sell, the quicker I can turn the money into another property. 

How to work with realtors

1) Build a realtor list just like you do with cash buyers. Make sure the realtors understands wholesaling. If you are only assigning, make sure they fully understand the process. Show them a HUD so they can see a completed deal and what it looks like one paper. Double closing makes it a lot easier (or closing on the property first before you even market). 

2) Pay the realtor: I typically tell the realtors to add a fee on my purchase price. I don't care what the fee is. I've had realtors add on $1k and some add on $10K (on a $60K property). The nice thing is that most investors want to negotiate the sale and will knock off some from the purchase price. Well if you tell the realtor the sale price is $55K and they add $5K but the investor only wants to pay $58K, the difference comes out of the realtor's part. Likely if the investor was told the property was only $55K, they still offer a tad less which now affects your bottom number. If you've started the price too high and there's not room for the realtor to add on top, include a fee or percent in your price. If you want $55K, give the realtor $1500 or $2000. I also allow the realtor to do a one day listing so the realtor can get credit for the sale. A lot of times before I even set a price, I'll talk with a realtor in that area and ask them what they think one of their buyers would pay for a property. If they say $60K, great- go get me that buyer at $60K and I'll toss you $2500. Maybe in my mind I was going to email it to my cash buyers at $52K so you're still coming out ahead. Give them 2-3 days exclusivity on it before you send it out at the price they thought a buyer would pay. 

3) Don't go around the realtors back once you meet one of their buyers. They've invested time, energy, and likely money on that relationship. Have an abundance mentality and be willing to share those profits with realtors for the bigger picture. Just in the past 3 weeks, I've paid 1 realtor $8K for bringing me buyers on 4 houses. That's a lot of money but those are 4 houses that are now sold and I'm on to the next ones. It was a good deal for those buyers, for the realtor, and for my company. Sure I have all the contact info for those buyers now, but I wont contact them and try to cut the realtor out on future deals. 

Get out there and network with people better than you. 

Happy Investing


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