When your intentions are wholesaling, what do you tell the seller?

18 Replies

I think I would feel some guilt if I'm not truthful with the seller, after all it is their home. 

So question is, how do I tell the seller in a nice way I'm actually not the end buyer? I don't want to go around their backs, act like I am the end buyer, when in fact I'm just looking to assign the contract and make profit... any suggestions would be good. Also, I do know about double escrow, so I could do that, but I'd rather not.

Thanks in advance guys!

@Jaccob Heath  welcome to BiggerPockets. Do you have a network of buyers? Do you consider them your team? You inform the seller that you or your team will be buying the subject property.

You simply tell them;  "What I do is I help owners like yourself sell your home through my network of cash buyers and that you would like the opportunity to market the home for X amount of time to them". 

Try something like that.

Awesome thanks guys!

I read online that a guy says he works for a group of investors and has the authority to purchase homes.

Then he says he is going to have some of his investors come by to look at the property (a good way to allow buyers look at the property when the homeowner is present)

Seems like a good idea to me. Also, I do not have my networking up yet, got my bandit signs purchaced. Working on my website as well.

Do you guys recommend me creating a LLC for wholesaling propertues?

I simply say this is what I can offer you. 

If you think it will be an issue you say "If for some reason I flak out and decide not to buy the property, as long as I find a buyer that will pay you the price we agree to, are you OK with that.?"

I like that idea @Ned Carey, thanks!

As far as the LLC goes, should I have one while wholesaling?

Hi @Jaccob Heath

About the LLC, if you're considering to be a pro in wholesaling, an LLC will give you more credibility, and at the same time, you'll be able to run a business with the benefits of a LLC. Protect your assets!

I would wait until you got some experience under your belt before attempting to set up your company as LLC etc. Otherwise, if this does not pan out as you have hope it would be wasted money down the drain.

having an LLC does not give you any more credibility when wholesaling. Buyers don't caret the name of the buyer as long as you purchase. Using words like flake out is never going to help you get the home under contract. Do t say you work for a group of investors unless it's true. Too many people try to act slick and it makes them boarder line shady. Follow my words and you should be just fine.

FYI- Apple iPhone auto correct is horrible!!!!

Thanks guys for all your answers I really appreciate it! I'd tag you guys but my phone won't let me tag anyone :/

I'm going to be completely truthful with the seller, and also going to wait until after my first deal to start a LLC.

Your buyer is a funding partner, a partner who has all the money, something like that. Your contract can say the deal is contingent upon the buyer (you) or one of buyer's associates approval of the property's condition. I don't believe you can say you are negotiationg on someone else's behalf without a license but you can certainly ask your end buyer's advice on value.

If it comes up in casual conversation with seller you can say your partner will let you know how much he will release for a particular property and can even mention if he or she really likes a deal they may buy you out and take it themselves.

I get lots of "No's" but I believe its because my offers are low and not because sellers are confused, I dont believe sellers need or want a dissertation on wholesaling so I try to convert the concepts to clear and common language.

How about just saying this:

"I know a number of people who purchase homes.  I would like to place your home under contract and try to get one of them to buy it."

All of this nonsense about "partners" and so forth is just a slightly slicker form of lying.  If you have no intention or ability to close on the property yourself if you cannot find an end buyer, you should say so.  People may well be willing to move forward anyway.  But if you are thinking of clever ways of concealing your true intentions, make no mistake about it: you're lying.

People are going to make major life decisions on the basis of having "sold" their house.  Do you want to be the guy who causes them to quite their jobs, because their house finally sold?  When in fact, it won't sell, because you have no intention or ability to close?  Do you want to be the guy who costs some kids their seats in a competitive school district because you were lying to their parents?  Or the guy who kept a homeowner who was in bad straights from listing their home with an agent for a critical 30 or 60 days, causing them to end up in foreclosure when you fail to follow through?

Just tell them what you are doing.  No "dissertation on wholesaling" is needed, but honesty is a good policy.

@Richard C. 

Thanks for your reply! It really makes sense to me that you would want to be honest, especially with the valid points you made. It can be considered false hope of getting out of a bad situation, when in fact if I can't find a buyer, my "subject to" clause gets me out of the deal and leaves them hanging wet in the sun.

Mr. Heath, you don't really care who buys your property do you, just as long as you get it sold? Well then, I may buy it, but if I don't I'll sell it to another investor and you'll get your price, consider it a done deal! Then shake hands.  :) 

Well done @bill Gulley. You had me sold (: 

@Richard C.  I like your suggestion, simple and clear. If you're working in partnership with a buyer then of course its not lying, and the process of confirming value by way of partner's inspection should be completed in a matter of days. I agree, to lock up a property for weeks or months especially with minimal chance of closing is unethical to put it mildly. Personally, I feel that the mechanics of wholesaling can be a little inside baseball for most sellers, they just want their number, but I may be wrong.

Originally posted by @Russell Ponce:

@Richard C. I like your suggestion, simple and clear. If you're working in partnership with a buyer then of course its not lying, and the process of confirming value by way of partner's inspection should be completed in a matter of days. I agree, to lock up a property for weeks or months especially with minimal chance of closing is unethical to put it mildly. Personally, I feel that the mechanics of wholesaling can be a little inside baseball for most sellers, they just want their number, but I may be wrong.

Certainly if you are actually in a partnership than saying so would not be lying.  Equally certainly, an antique dealer who acquires one of the art nouveau monstrosities my wife collects is not in "partnership" with her when he buys a piece hoping she will buy it from him.  Even if she has in the past, and even if chances are greater than 50% that she will this time.

I think buyers want to actually GET their number.  Evaluating the likelihood of that happening requires transparency on the part of supposed buyers.

There is a simple test, really.  If you are really in a partnership, or are really going to close yourself or with a "partner", then you do not need contingent language that allows you to bail out of the deal.  If you have that language, you should be very clear about what it means, rather than trying to hide it in the contract and hope the seller doesn't notice.

@Richard C.  Haha Im guessing you're not a huge fan of said monstrosities??

I agree with everything in your last post and you bring up two important points. First of all, a good contingency should be used as an ounce of prevention and not as a license for reckless behavior.

Secondly, if there is anyone out there who isn't 99% sure their deals will move should get some help with their valuations. Its more important to do it right than than to do it alone.

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