Flipping listed property???

Question

I had a wholesaler come to me with a deal that looked like it needed work, but the price he locked in was too high (after figuring costs).

He brought the deal to another investor who wanted to just buy and flip it.

Well, according to the other investor, he said since it was listed for a certain price, regardless of whether the comps were 50K less, because it was listed you couldn't just up and flip it for more.

He thought the wholesaler was dealing with an unlisted/FSBO.

Is this right? If so, I'm assuming if you fix it up, you can reprice and make profit.

Thanks,
Al
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Ryan Webber · Answer

I don't believe his user ID denotes any professional understanding of wholesaling.  I think his username denotes his professional understanding of loans and loan processing.

Loan processing and wholesaling seem to me to be two very different expertises.  I am an experienced wholesaler and have a full understanding of how to buy a property for less than I can sell it for, but I don't know much about being a loan officer and processing loans.  I would expect the same is true for Al.  I would expect that his branch manager would still have no idea about wholesaling a property, since he is a branch manager for a loan company and is still not a real estate wholesaler.

I think sometimes we all have a bad day, and its good for us to take a deep breath and not take it out on others.  :D

Group hug for EZloanz.

Ryan Webber · Answer

Let's not complicate this.

Price overcomes all objections.

If you are selling it for a low enough price, you will be able to sell it whether it was listed or not.  Yes, you can find good deals on listed property.  No, it is not very common, and, no, the property won't stay on the market for very long at a listed price that is a deal.  Now if the listed price is significantly higher than what you are offering and what they accept then you might have a deal.  If the house has just in the last day or two been listed at a low price then you might have a deal.

Tom McGiveron · Answer

in a nut shell - webber summed it all up.

this is an old post right?

lol.

i've been through so many on so many different sites, i'm losing it.

Ryan Webber · Answer

I was looking through this post again, and I wanted to reiterate a point that EZ brought up and Noob addressed.

If you are trying to wholesale property, you need to find CASH or NON-conventional investors (i.e. commercial loans, lines of credit, hard money).  Wholesaling to end users is not wholesaling.  It's retailing.  Wholesalers sell to investors.  We do this so for several reasons, and one of those is so we don't have to deal with seasoning requirements of conventional and FHA financing.

Wholesalers WHOLESALE property from motivated sellers to investors, who will then profit from it by fixing it up and taking it to an end user by either renting it, carrying the note, or reselling it to a buyer who will normally get conventional financing.  Seasoning requirements should not be a wholesaler's issue.

Tom McGiveron · Answer

LOL

no ryan, i was talking to Loan - but yes i'm guessing you're a damn good looking son of a gun!  aren't all wealthy people good looking?  lol

anyway, this post is getting more complicated then it needs to.

here's the bottom line.  if a property is listed at 90k and you think or the comps suggest that it is listed for 50k less than what its worth (140k in this case)...the only thing you have to figure out is

1. how long has it been listed?
2. why hasn't it sold in like a week?

something that's 50k below "market" - should sell FAST.

check your comps, maybe they're not so accurate.  or maybe we just don't have enough information here (i.e. the property was just listed a week ago).

i realize you say it's a divorce - but a divorce doesn't necessarily mean that the people selling are "dumping" their property for nothing.  i got seperated and sold my property for spot on market value...

wholesaling is simply

house selling for X - whatever

wholesaler contracts to buy it for below market value with clause to assign it to a buyer

wholesaler assigns the contract for a fee - total price is MOST LIKELY still below market value - that's why it gets sold quickly.

wholesaler has a buyers list and moves it through that list fast and that's why they make A LOT OF MONEY.

it really has nothing to do with conventional loans.  the wholesaler will also have brokers they work with that offer financing to their "customers" - buyers or they've got a nice list of cash buyers (investors) - "customers" who can close quick.

it's all about the network.  a branch manager at WaMu or whatever is really nothing to the wholesaler.  a wholesaler CONTROLS his business - no bank or branch manager does.  like a business owner/entrepreneur - if he/she is good they use the banks and financing to their advantage, increasing sales and generating more and more revenue using debts and branch managers to accomplish their business plans.  period.

N/A N/A · Answer

LO650,

Seems like the question you're asking is whether or not someone would be willing to pay full price for a house that was just listed for slightly less.  If that's your question, I would venture to say that no one can answer it, because the market will do what it does.  Will anyone find it and want to pay full price.  If they know it recently went for less? They might complain, but ultimately, do they like it enough to pay the current asking price.  If your clients are getting such a great deal on it, they might want to pull it off the market for a wee bit, make some minor updates, and then put it back on -then they can go to the default "look at all the improvements we made!"  I hope that helps, but I'm not really sure I understood the question.  Another concern (the seller's problem), is that if it was recently listed with a Realtor, and now they're selling it on the side without his help, they probably have a financial/legal obligation to him...  Good luck.

Scott Miller · Answer

These issues have to do with lending (title seasoning, chain of title issues, etc) as well (unless the wholesale fix and flip/purchase is not going to be financed conventionally when he/she sells it).

Regards,

Scott Miller

N/A N/A · Answer

Because the property is listed  50K less than what the surrounding comps sold for. It's a divorce sale and the couple just want out.

Is it a situation where because it was LISTED, you wouldn't be able to turn around and try and sell it for more (what the comps sold for)?

All I'm trying to figure out is if I stumbled across these folks before the realtor did, and we agreed to the same below market price, would what I'm talkin about make more sense?

:roll:

Scott Miller · Answer

With all due respect, your user ID implies that you are professionally obligated to know this information; go ask your branch manager.

Regards,

Scott Miller

Ryan Webber · Answer

Wow, noob, you don't think I'm good looking enough?  How do you know I'm not good looking enough?  I could be good looking enough.

I think Al got confused.  I stated that I sell it for "less than it was listed for."  Listed for 90K, I put a contract on it for 60K, and I wholesale it for 70K.