Under contract before feeling out buyer interest?

Question

Hi BP,

situation: Ive recently built up a buyers list in my area but am still feeling the majority of them out for specific buying criteria.  Today, my friend just brought me a house that he wants to wholesale to a cash buyer asap.

Questions:

1. Do wholesalers have to have a property under contract in order to gauge their prospective buyers probability of interest in a deal?  (It doesn't seem like there is a huge spread here so I'm not eager to lock it up really, but I do want to help my friend)

2. If I have to put it under contract before even feeling out any potential buyer interest, do you have any advice for that?

3. Any general advice for this type of situation?

Thanks in advance for your help all

Jerryll Noorden · Answer

1. Do wholesalers have to have a property under contract in order to gauge their prospective buyers probability of interest in a deal?  (It doesn't seem like there is a huge spread here so I'm not eager to lock it up really, but I do want to help my friend)

No. Usually yes, to not waste anyone's time, but we don't. Our buyers trust us so much, that we get the lead from our website, and we just send a select buyer to the property and we just tell them, make them an offer, we just want an $X amount of assignment fee. That way it saves everyone time and effort. Of course we need to trust the buyer as well. They know that they can pull a fast one and steal the deal, but then they will never get anymore opportunities from us. And we are quite known to get the best deals period!

But usually yes, you should get the deal under contract first otherwise all serious buyers will think you are a waste of time.

2. If I have to put it under contract before even feeling out any potential buyer interest, do you have any advice for that?

You don't feel the buyer out... not really. You just need to get deals under contract that make sense. No buyer will pass up a deal in the city they invest in with 1 weeks of rehab making $300K. Obviously an exaggeration ... to highlight my point. Just make sure everyone is happy. Buyer has enough meet on the bone and seller gets the house sold at a fair price and you get the assignment you deserve.

3. Any general advice for this type of situation?

This specific situation is hard. The advise I would give, is that you need to be prepared for these kind of situations.

Here is what you should do. Run the numbers yourself. If you are going to get a buyer for this "deal" it is your butt on the line, your reputation and credibility. You take responsibility for everything now on the depo end of things... so run the numbers, scan the area, make sure you are knowledgeable on the area, house, condition everything. You need to be able to answer common questions about the house.

Confirm all is well, ARV, Cost of Repairs and if so, send the deal out to your buyers. There is nothing special or custom to this procedure. I have the feeling you are making it more complicated in your head than it really is. Relax, and know you are the Goat... what ever that means. You can do it. Others have, so can you!

Matthew Masoud · Answer

I'm fairly new to wholesaling myself but from what I understand you must be the agent listing the property or have the property under contract in order to market it to sellers.

Pretty sure marketing property you don't own, are listing, or have under contract is one of the reasons wholesalers get a bad wrap.

Run your numbers and if it works actually place and offer and lock it up before you share it with your cash buyers. If you want them to take your offers seriously you actually need to have them.

Jerryll Noorden · Answer

I will give you my numbers but know this.. we are not normal. (Other then me smelling like 3 month un-washed ape and Goofy AF, rude, don't like people very much, blunt, direct, lack emotion, compassion and allergic to stupidity....

our lead generation game is off the charts. We get houses for 1-% of the ARV quite often so my profits are significant and my ROI is infinite (I don't pay for lead generation. My leads come to me for free).

But to answer your question..

I wouldn't blindly pick a % of the profits.

If there is risk involved my fee goes up. If I had to work 300 hours on this deal, my fee goes up. This is like any other job.

We recently bought a condo for 105K and the ARV was 150K. That is the most I have EVER paid for a house. The reason why this was OK, is because the hosue was immaculate. It just needed cleaning and we put it right back on the market. So my profits were not as high as usual, but I did less than 2 hours of work for it.

Capisce?

Under contract before feeling out buyer interest?

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