FSBO Wholesaling

9 Replies

Hello BP community!

I am a wholesaler and I'm thinking about wholesaling FSBOs. Has anyone ever done this? Would a homeowner mind if I put in a purchase agreement to buy within 30 days and then obviously network with investors to flip the FSBO for a profit? Is this something you have experience with? Do you think a homeowner would be angry?

Thanks for any and all feedback!

I wouldn't be concerned about the homeowner being "angry" if you set it up correctly.  Work on selling yourself as the solution... that really makes everything so much easier.  If you ultimately are the guy that gets them a price they can live with, they should be thanking you.

Of course, if you are worried about this, you could always close it in a simultaneous closing.  It won't completely "hide" you did a resale, but at least it does hide the amount you sold it for and probably easier to finesse with the seller.

I would actually be more concerned that "FSBO's" probably aren't the best market to hit up for wholesaling contracts. They tend to want more than full-price and are doing a FSBO to avoid realtor commissions (they want their cake and eat it too). I would rather focus on marketing to distressed sellers.

@Scott Theaman  

I have never done it but it is possible. However, being that you are are asking the owner to finance the deal (even if it is 30 days), you will have to make it worth the owners while. Which in most instances means you will pay more than a wholesaler who is willing to "pay cash". With small margins as it is it might be tough for you accomplish this.

Good luck!

I know of a few people in my neck of the woods who target FSBOs with mild to moderate success.  I have approached a few and the only trouble is that most of them are either flat out stupid or greedy.  they think that because THEY lived in the house it's worth more than what the market will bare.  however, i have heard of some luck in targeting non owner-occupied FSBOs, but they aren't too common.  

let's face it, most FSBOs are cheap and overvalue their property.  

Originally posted by @Daniel Francis :

I would actually be more concerned that "FSBO's" probably aren't the best market to hit up for wholesaling contracts. They tend to want more than full-price and are doing a FSBO to avoid realtor commissions (they want their cake and eat it too). I would rather focus on marketing to distressed sellers.

Daniel, I believe it was @Brandon Turner who was telling in one of the podcasts that he was driving around his area and found an awesome FSBO at the end of the street. The sign was hard to see so not many people contacted the seller, or even saw the sign, and after a while the seller became very motivated. Brandon happened to be there at the right time and took an extra step to contact the seller.

I agree, it is not the most efficient way to look for leads, but nevertheless, there is potential there. You never know what prompted them to go FSBO and you never know how their situation changed while the property was sitting in the market and getting stale.

What is the definition of a distressed sellers? I always thought a distressed seller fell under FSBO..?

So how do you find the distressed seller vs. Standard FSBO?

Originally posted by @Scott Theaman :

Hello BP community!

I am a wholesaler and I'm thinking about wholesaling FSBOs. Has anyone ever done this? Would a homeowner mind if I put in a purchase agreement to buy within 30 days and then obviously network with investors to flip the FSBO for a profit? Is this something you have experience with? Do you think a homeowner would be angry?

Thanks for any and all feedback!

 I am with @Forest Williams , I am not seeing the difference between this and any other wholesale situation?  If they have motivation and equity then it's a wholesale opportunity.

Of course, if they have equity and motivation.  Don't take what I said as hyperbole.  I could also walk up randomly to a house not even for sale and get lucky and find a wholesale opportunity.  One story does not make a pattern.

My point was that it will be very inefficient to look for FSBO's. The more efficient route to bring a lot more GOOD leads is to market for distressed sellers.

@Forest Williams : I consider FSBO's to be those who are actively marketing their property for sale (without an agent). A distressed seller is one with significant motivation who may or may not be marketing their property for sale... often times they don't even know they CAN sell as a solution to the problem. That problem could be the property is in disrepair, they are significantly behind on payments with the lender or have other financial debts/pressures that cash for their house could solve, etc.

You'll find success stories in any strategy and most likely any situation, most stories simply make good copy to advance another agenda.

True, FSBOs are usually overpriced, most often it's because there isn't much equity to pay Relators, but there are those owners who think they can sell and keep more in their pocket. Either way, a FSBO will be tougher to wholesale as equity may not exist or you have a difficult owner to deal with.

A FSBO can become a distressed owner, if there is little equity they may walk away, doesn't mean there is a deal there. If there is equity and the owner sees the light after some time has passed, they may cave in to the best offer with a change in their motivation. Understand that they can also go list it, suffer the 6% and costs, if the property is marketable, so again, wholesaling will be competing in price with the alternative of listing it.

The FSBOs that are more likely to be had by a wholesaler are with properties that are distressed, the poor property condition, some issue to title, some matter effecting marketability that makes selling difficult. Many Realtors won't take distressed properties.

As to empty houses and owner occupied, it's the lack of knowledge and understanding of what a homeowner may do and the constraints they are under in attempting to sell, failing to look at their side of the situation and how they can be damaged by taking a property off the market, giving the impression they have a sale and then having the deal fall through. That is where you can really tick off an owner and a very good way for complaints to be made and suits filed.  These aspects have been beat to death in the forums and address what can and does happen when dealing with an owner occupied and then just going out beating the bushes for a buyer and failing to follow through. Those that think there is little or no liability in dealing with these owners simply doesn't have a clue, there is and it's much greater than dealing with a vacant house.

As to distressed sales, property or owner, look up the legal and accepted definition of market value of real estate, google it, (appraisal institute) if that definition is not met, you have a distressed sale transaction.  A property that is not in good condition that can be offered on the open market will lack marketability and therefore will not have the exposure to most buyers in a market. Time on the market, owner and buyer motivations, knowledge of the parties, knowledge of the parties, the exchange of consideration all influence a transaction in meeting a property sold at it's market value.

The average person can spend about 4 hours a day and in less than 10 days learn the basics of real estate which 90% of wholesalers seem to not understand and all the questions asked here would be understood by applying principles of real estate and understanding of how sellers react in a transaction. You won't find this in any guru course or blog or podcast, you need to go out of your way and apply a bit of effort to learn RE. :) 

Originally posted by @Scott Theaman :

Hello BP community!

I am a wholesaler and I'm thinking about wholesaling FSBOs. Has anyone ever done this? Would a homeowner mind if I put in a purchase agreement to buy within 30 days and then obviously network with investors to flip the FSBO for a profit? Is this something you have experience with? Do you think a homeowner would be angry?

Thanks for any and all feedback!

 Great question!

Yes of course you can!  They are just like any other Seller.  Some are more motivated than others, and some are more experienced than others.  

Be careful to paint with broad brushes entire swaths of demographics as "want too much" or "Generally want to make the most possible". 

The cold hard reality is that for some (not all) people, they are thrust into a situation where they need to sell their home FSBO and do not know what else to do other than put a sign in the yard and run a Craigslist ad.

I've spent 18 years as a Licensed Realtor® and Investor who "wholesales" them, and teaches other agents how to do it.   Trust me when I tell you that not all leads are created equally.  If you spend the time to learn how to talk to them, and approach them in the right way, this can be a "win win" for both of you!

Have A Powerful Sales Day! 

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