Clarification please!

28 Replies

I have read so much literature that it should be coming out of my wazoo. LoL But seriously, every other book I read seems to differ on which process of wholesaling should be your first call to action. So my question is, should you find investment properties (sellers) first or should you find investors (buyers) first? Please elaborate. Thanks

Whenever I teach, or do any Wholesaling, I always start with my buyers.  To me it makes no sense starting with the sellers since having a property, researching a property, analyzing a property all take time.  If the property doesn't match my buyer's needs, then I wasted my time...and my (your) time is too valuable.  You can always get your money back, you can never get your time back.

If I know what my buyer's criteria is, then I just have to fill orders.  The key, is to find a number of buyers that are actually players...not just tire kickers.  Once you do, Wholesaling can be very profitable.  Depending on your market, it can fund your own properties using all cash.

Joe Villeneuve
REcapSystem
A2REIC

@Joe Villeneuve  your pounts are very valid. I just finished reading something that says that you post the houses you have and THAT'S what brings the buyers. Is that a good strategy in your opinion?

Updated almost 4 years ago

I meant points..

You Need to do both at the same time. At least that's what I did. Grab you classified ads and look under the rental section and call all the ones not listed by a rental company and also look under the homes for sale section and you will see the "I buy houses" ads. Those are potential buyers. Do this as you market for motivated sellers. Then once you have your first deal you should have at least a few buyers that you've spoken too.  Make sur that your numbers work and sell the deal. 

That sounds logical @JPaul Mills  . What are some things or "script" that you might say to the buyers when you call them?

Tell them who you are and what you are doing and aske them what they are looking for (3/2 in certain areas) then just build rapport with them. You have to make them aware of who you are and get your name familiar to them. Also get involved with a local REIA group

Cool. Thanks @JPaul Mills  . I just hope that is enough for them to trust doing business with me seeing as though I am new.

No one will trust you until you start getting your name out there get some deals under contract and if the numbers work then you will get some buyers on your side 

Originally posted by @Joe Villeneuve:

Whenever I teach, or do any Wholesaling, I always start with my buyers.  To me it makes no sense starting with the sellers since having a property, researching a property, analyzing a property all take time.  If the property doesn't match my buyer's needs, then I wasted my time...and my (your) time is too valuable.  You can always get your money back, you can never get your time back.

If I know what my buyer's criteria is, then I just have to fill orders.  The key, is to find a number of buyers that are actually players...not just tire kickers.  Once you do, Wholesaling can be very profitable.  Depending on your market, it can fund your own properties using all cash.

Joe Villeneuve
REcapSystem
A2REIC

I've heard this time and again and I quote "Start with buyers". In my travels and coaching, having buyers is cool perhaps if you're only wholesaling high equity deals. There are so many types of "buyers" in the market I'd hate to see you box yourself in... Great deals are made, not found. In my opinion, finding a buyer is the easiest part of the wholesaling game. Especially since you can can simply list your contract on the MLS with an agent and pay a small flat fee. That way you're not just limiting yourself to your buyers. To me this is the fasted no brainer way to flush out real buyers..... If this info helps in any way, pls vote for my post.....

Thanks hun. I appreciate your advice.

@Kris Haskins  Let me ask, should I get one deal made with a seller then post it all around to look for a buyer while actively looking for other deals? Is that what people mean by "buyers will come to me"? From the deals that are posted? I've seen others say that they get the deals but can't find buyers. It would be horrific to get a deal but not be able to unload it.

Originally posted by @Shante Harris:

@Kris Haskins Let me ask, should I get one deal made with a seller then post it all around to look for a buyer while actively looking for other deals? Is that what people mean by "buyers will come to me"? From the deals that are posted? I've seen others say that they get the deals but can't find buyers. It would be horrific to get a deal but not be able to unload it.

 what's so horrific, You have NO money at stake, you lose NOTHING.   Now.....  horrific is losing 10,20 or $30k, that's a rough day.....    I've been there, stings way more than having a wholesale not sale. 

@Shante Harris  

Not being able to sell a wholesale deal is a big deal, because you may leave the seller in a lurch.  Remember, you're trying to help solve their problem, while making a profit for yourself.  You don't want to tie up their property without being able to follow through.

You can avoid that situation by ensuring you analyze your deals correctly, meaning you value them (ARV) correctly and analyze the rehab costs correctly. If you get your property analysis skills nailed down and ensure you have good deals, you shouldn't have to look very hard for buyers. As I said before, the buyers will find you.

Originally posted by @Shante Harris:

Is that what people mean by "buyers will come to me"? From the deals that are posted? I've seen others say that they get the deals but can't find buyers. It would be horrific to get a deal but not be able to unload it.

Buyers will come to you if you have a good deal. A good deal means different things to different people but, if it's truly a good deal and you post it here on BP, on Craigslist, take it to a REI meeting, etc., someone will take it off your hands. A good deal will "sell itself" and the "buyers will come to you". It just means that if you have a good deal, you don't need a list of people to unload it, it'll sell quickly on its own merits.

Horrific would be telling someone you'll buy their house then not following through after stringing them along for a month or two. This is why you need to be upfront and honest with homeowners. Tell them exactly what you're going to attempt to do and don't promise anything you can't follow through on. Simple, no? 

Very simple. Thank You all for your advice. I know exactly what I need to do now and appreciate everyone's help. I swear I was truly lost but feel I am found especially with everyone's thorough explanations. Awesomeness! Just one more question. If I'm not using a title company, do I need to collect an EMD or just have the buyer provide proof of funds? @Troy S.  @Hattie Dizmond  And where plus how do I conduct the closing?

@Shante Harris  

Most of the wholesalers around DFW, who are "open marketing" their deals are requiring a non-refundable deposit to lock the property up.  The deposits for average priced homes have been running from about $3500 - $6500.  If you are posting that deal to random investors, which you're likely to have to do at first, it won't surprise the investors for you to ask for a reasonable deposit from them to lock the deal up.  Once you find "your buyers", then you can operate differently, after you both have a track record with one another and a level of trust.

As for the closing...remember, you are assigning the contract.  There is no closing.  You can meet the investor buyer anywhere to get the assignment contract signed and pick up the deposit.

This has opened up my eyes @Hattie Dizmond  . So what is the end process. I bring the seller and buyer together to exchange the monies and receive contracts, etc?

@Shante Harris  

Nope.  Remember, I told you before, you are assigning the contract to the end buyer...the investor.  Once you sign the assignment contract with them, you're done, unless you feel the need to make sure the deal gets to closing.  The investor buyer becomes the purchaser of the property.  That's why you write your purchase contract as Shante Harris or Assigns.  They...the investor buyer...are your assigns.  The contract is now between the seller and them. 

You should have already told the seller that you probably won't be the end purchaser of their property.  It will probably be a business associate of yours that actually purchases the property.  If you have explained it and are solving their problem, they shouldn't care.

You don't go to closing at all, if you are doing an assignment of contract.  There is no need for you to be there.  If your wholesale fee is larger than the non-refundable deposit you required from the investor buyer, then the title company will wire you those funds or send you a check.  The total of the wholesale fee (and an indication of any amount that has already been paid) is provided to the title company as part of the closing information.  The wholesale fee appears on the HUD1.

Okay...okay. SO do I ask the buyer for the title company they will be using in order to provide my wire information, or will they contact me via the information on the contract the buyer will give? It's so annoying that none of this was made clear in the books that I've read. @Hattie Dizmond  I was under the impression that I go to closing, the buyer hands me my check in hand and the seller and buyer complete the deal. 

@Shante Harris  

You go to closing exactly as you have described, if you are doing a double closing (a.k.a. simultaneous escrow).

However, unless you are working on a deal where the seller has disallowed assigning the contract (HUD doesn't generally allow it, for instance.), there is no reason to incur the additional expense of a double closing.

A lot of folks who use double closing on deals that could be done with an assignment, do so because they don't want to either disclose to the seller they are not the end buyer, or they don't want the end buyer to know what they are making on the deal.

I operate completely transparently.  Everyone knows what's going on. 

Thanks @Hattie. I appreciate you.

Those were some really good questions and answers.  I've been wondering and trying to figure out some of those same things.  @Hattie Dizmond do you ever wholesale REO's?  I've heard them described as "low hanging fruit".  I know the EMD is typically higher and you can't assign an REO.  So that means you have to do a simultaneous closing, right?  

As far as I am aware, yes, you have to simultaneous close the deal because you can't assign. In addition, if you don't have the money in your account to pay for the property, you will need to use a transactional funding company to provide you with the funds. The transactional funding, and the closing, must occur on the same day...unless stipulated otherwise by the transactional funding company. This is the only work-around to the non-assignable REO situation I am aware of, but I have heard of one or two more unusual ways I am not so familiar with.

Originally posted by @Joe Villeneuve :

Whenever I teach, or do any Wholesaling, I always start with my buyers.  To me it makes no sense starting with the sellers since having a property, researching a property, analyzing a property all take time.  If the property doesn't match my buyer's needs, then I wasted my time...and my (your) time is too valuable.  You can always get your money back, you can never get your time back.

If I know what my buyer's criteria is, then I just have to fill orders.  The key, is to find a number of buyers that are actually players...not just tire kickers.  Once you do, Wholesaling can be very profitable.  Depending on your market, it can fund your own properties using all cash.

Joe Villeneuve
REcapSystem
A2REIC

 Hi Joe, Im learning much from BP,but I'm not clear on how transactional funds work and the purpose of them can you explain please.

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