Newbie Wholesalers - don't be THIS Guy
During my closing today - I wholesaled a house in Zion, Illinois and made $5,309.84 - my real estate attorney approached me and introduced me to a real estate agent - let's call her Pam. I can see a sense of skepticism in her eyes...and later, I learned why.
My real estate attorney has just talked with Frank - a newbie wholesaler. Pam was working with Frank for the past couple of months. Pam called my attorney to seek help.
Pam submitted 25 offers for Frank and got 5 offers accepted. She thought she would be cashing in but she got the surprise of her life when she found that Frank has NO EARNEST MONEY to lock up those 5 deals. Frank used a Proof of Funds provided by the "gurus". And get this: Frank does not even have a car (probably sold it so he could pay the guru). Even though Pam has been a real estate agent for a long time, Frank talked a BIG game and she was convinced Frank is the real deal.
So now...Pam had to go back to all the listing agents on all 5 properties and told them that her buyer does not have the money and cannot close. Pam hates wholesalers because of Frank. BUT, my attorney explained the process to her and assured her that wholesaling is completely legal. My attorney told her I've wholesaled enough number of times and I do lock up my deals with earnest money. I offered to help her out by being able to close on the properties that Frank couldn't. So we ended the conversation in a positive way and maybe I will buy 1 of those 5 properties that Frank messed up on.
So...to all the newbie wholesalers out there...do NOT be like Frank:
1. Before you waste the time of real estate agents who will put in all these offers for you, get your act together. @James Wise and other agents have bad experiences with wholesalers who just graduated from the guru seminars. Realtors are people too and their time is valuable, maybe even more valuable than yours.
2. You need earnest money when tying up a property listed on the MLS. That's just the reality and there's no getting around to it regardless of what the gurus say. If you don't have any earnest money, don't try flipping a house. Find a job flipping burgers and save up $500 or $1,000 instead.
3. You need the right contract valid in your state and don't use one these "guru contracts". It makes you look like a fool or worse, you'll end up messing a deal up because your guru contract does not work in your state.
4. Don't be "trigger happy" with regard to making offers on properties all over town. I know the gurus say make 100 offers and you buy 1 property. Well, choose a market, a farm area within that market and make intelligent offers for houses in your farm area. By doing so, you don't waste the realtor's time.
5. If you don't have any money...here's an option for you: partner with an experienced wholesaler in your town and work for him or her. Find him a great deal. He puts in the earnest money and coach you as well. You do the work, he takes the risks so he deserves to make more money than you. And last but not the least ....
6. Don't pay any guru thousands of dollars. Listen to the BP Podcast, read the BP blogs, network with BP folks...specially in your market. And keep those few thousand dollars as your earnest money and your marketing budget instead.