Nervous about the wholesale contract. Do people really buy it?

Question

hi guys. I'm new to wholesaling. Currently I have a property under contract, but it's a shell in the hood. I'm trying to make a fresh start on a new deal. I work really hard sending out letters, but I'm worried about showing up at someone's house who thinks I will buy the property only to hand them an option to purchase contract.

Does anyone else have a problem selling this concept? How can I make my seller feel better about it?

Ned Carey · Answer

Good deals come from motivated sellers. If someone is truly motivated then they probably wont care. If they care they are probably not truly motivated and there is not liekly a deal there anyway.

One thing you can explain is "If I flake out and decide not to buy it, is it ok if I find another buyer for you as long as you get the price we aggreed to?

Or "If for some reason I decide not to buy it, as long as I find a buyer to take my place at the same price are you OK with that?"

J Scott · Answer

Most people AREN'T truly motivated.  If you send 1000 letters, you may find a motivated person.  Or you may have to send 5000 letter.  Or you may get lucky and only need to send 1 letter to find a motivated seller.

It's a numbers game...the more people you contact, the more likely you are to find someone who is motivated and can work with you...

Bill Gulley · Answer

Don't put yourself in a position where you need to mislead. Your letter can say you're interested in a property, you don't have to say "I'll buy your house".

Only cowards lie. I agree with Ned. Don't use BS like my "partner" when you don't have one, is your "partner" going to sign the contract too? Are you going to show where your partner agreed to you signing for the company? Why did your partner show up at closing but sat in the lobby?

As Ned mentioned, you can be working on the deal with others.

I've never met many sellers who really cared who bought a property, some out of sentimental reasons or other relationships, but most don't care.

If they don't care then why do people feel the need to make up stories to hide what you're doing? Is it wrong or illegal? Are you screwing the seller? If you have such issues, don't do it at all.

My last "wholesale" flip.....I met the seller while getting lunch. He was motivated by a divorce, but the motivation is irrelevant. I asked about the property, then asked what's you bottom dollar on it to close in quickly? I knew he was shooting a good price for that area and size home. I acted like.....well....I don't know.....I'll tell you what, I then explained my experience briefly and then said basically.....I know some cash buyers who might be interested in that, instead of listing the property would you mind if I called them and you give me an option where I could sell to them costing you less than having to add commissions? His reply was basically, he didn't care who sold it as long as he could get his price.     Simple, tell the truth, just belly up and tell them what you'll do. I assure you, most won't care.

If he hadn't shot a good price, I could have still been interested, saying so, I'm interested in putting a deal together on your property. I don't have to say at that point what kind of deal. My offer to do something will be to give them an agreed price and having decided I don't want to keep it, I'll sell it to someone I know. Big deal, who cares?

I'd think it would be something to hear a seller object when they have basically agreed to a price.....I can hear them now "Oh no, you might make something, I'd rather list it, pay a Realtor or get caught up in a contract to find some buyer that fails to qualify so I can keep it on the market and put up with all the open houses and showings. Really...?

Account Closed · Answer

You go in with a contract to purchase, with a healthy inspection time frame and you bring any potential buyers through as an inspector, a contractor to do an estimate, etc. You don't need to go into detail with anyone on what you are doing.  That being said, be sure that you will be able to move the property prior tying up the homeowner.  If they are truly motivated, that means that they have some stress-or in life so they don't need anything else to worry about.

I would not use an option to purchase contract.  I don't think that presents well.

And despite what the gurus say - have your buyers list in place BEFORE you put anything under contract.  I know they all have the "put it under contract and they will come" mentality.  Not so.  You will have far less sleepless nights if you have some hungry investors already circling and salivating prior to putting your name on a contract.

Reverse engineering a transaction is always a good thing!

Steven J. · Answer

I've found a pretty helpful strategy when talking with sellers. When I get a call I ask about the property and get the basic information. Before I'll willing to give a ball park offer I will ask them, if they haven't inferred it already, what price they are hoping to get. After I feel I have enough information I may make a ball park number as long as its around the same ball park the seller is hoping to get. Sometimes the seller is very optimistic and hoping for a lot more and my number is much lower. At this point I'll keep my ball park number to myself and tell the seller "I'll be honest with you but I believe my offer, from what I conclude sight unseen, is much too low and you may find it insulting." Quite often they still want to know the number but it avoids that really uncomfortable silence they tend to give when you put in your low offer. They realize they've requested to hear the number and I am being honest about my offer so they can't be as mad at me.

Kay H. · Answer

Ned,

Thanx and do you find that yellow letters find the truly motivated sellers? I have sent out over 300 but I get people mostly saying...if you give me the right price, I'd sell. These people done sound truly motivated to me.

Ned Carey · Answer

Oh yea regarding other investors. I often ask for access to the house with a key or lockbox. If they are not OK with that then I just say I want to bring somone by who is working with me on this deal.

Bill Mitchell · Answer

Thats not what Ned said Bill. He just tells them that he will have a partner working with him on the transaction. For us wholesalers that might be 5 people in mind on our buyers list that we know that might want to buy it. I guess that is "BS" according to you, but as long as you perform thats all that really matters.

Ned Carey · Answer

I have never sent yellow letters. In general what I hear is you get  higher response rate with them but they tend to be lower quality leads  (less likely to be motivated)

You are right they are not motivated.  @J  Scott said it very well above. It is a numbers game.

Nervous about the wholesale contract. Do people really buy it?

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