The use of pulling comps, ARV's and double closings

2 Replies

As a wholesaler, once I have a motivated seller, are these two steps needed before I contact a cash buyer? Also double closing, Is it the best way to go. And in most situations are the cash buyers ok with our fee that we receive?

Originally posted by @Kenneth Bradford :

As a wholesaler, once I have a motivated seller, are these two steps needed before I contact a cash buyer? Also double closing, Is it the best way to go. And in most situations are the cash buyers ok with our fee that we receive?

Hi Kenneth,

I'll share this BP link with you for further reseach. 

http://www.biggerpockets.com/renewsblog/2010/06/10...

Q:As a wholesaler, once I have a motivated seller, are these two steps needed before I contact a cash buyer?  A: I only see one step mentioned here but you can go either way. If you choose to secure the motivated seller first, then you run the numbers to determine if its a deal(good) or dud (no good). Use the Maximum Offer Allowed (MOA) to see what percentage of the ARV it comes out to. Some cashbuyers want 65% of ARV, some want 75% of ARV. You can choose to get the cashbuyers first(bka reverse wholesaling) which will assist you in your property scouting. You secure their criteria and then go look for it, find it, put it under contract then contact your buyer(s).

Q:Also double closing, Is it the best way to go. A:  Its safest so that you don't have to disclose your wholesaler's profit to the motivated seller. You can assign it which will be just as good not having to incur double closing expenses. However the motivated seller will see how much you make and you run the risk of them cancelling the sale altogether(potentially at the final hour). Yin & Yang. Its your choice but either is fine.

Q: And in most situations are the cash buyers ok with our fee that we receive?

A: They know that you are wholesaling it to them so they will be ok with the numbers as long as they are sensible. You really need to be ok with your endbuyer making more profit than you on these wholesale deals. That's often your biggest pitch to the cashbuyer - the net profit to them. As wholesaler you just want to get in and out with profit to you as swiftly as possible. Otherwise you'd be holding the house for rental or to sell retail. 

Kudos,

Mary

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