How to sell the Purchase Agreement (not the house!)

Question

Wholesalers, remember, you are selling the Purchase Agreement, not the HOUSE! Wholesaling has nothing to do with Real Estate, you own a Pawn Shop. Here is what my team sends out...

I am in possession of an assignable Purchase Agreement that will allow me to purchase a home on NW Breezy Brook Ct in Port St Lucie, FL. After consideration I am no longer interested in purchasing the property myself and I have decided to sell the Purchase Agreement. I am not selling the home and I am not the homeowner, I am selling the Purchase Agreement that will allow you to purchase the home at a discounted price.
If you are interested in buying this Purchase Agreement please contact me.

James Wise · Answer

If I were in the business of selling briefcases filled with drugs instead of selling drugs, am I still a drug dealer?

Bill Gulley · Answer

I understand Steve's position, agree, but, I really don't recall contracting on a property that I didn't really consider buying myself, even if I knew in my mind that "wholesaling" was an option. It's an exit out of a deal.

I don't have an issue with telling a buyer, saying "Max, I have a contract on a property you'd probably be interested in. I decided I don't need it, even at a good price, I can assign this one and I'll do the leg work for you. You can get into it at $XX,XXX and buyers closing costs. It's at 1234 S. Kings here in town. Drive by, take a look, it's not (or is) occupied. I'm 3 days into the contract so I need to know soon if you have any interest. Let me know."

I don't send letters, I call buyers I know. I can leave that on a voice mail!

My buyer knows I'm assigning a contract, what the total price is, if interested at that price, they will call me, in fact, they call me back either way. At that point, they might make an offer for less, we negotiate and I'll tell them the contract price.

You know, I could change my mind again and just buy it!

I value the "service" as any Realtor might, because, regardless of how great I am, the service actually provided has a value that is already established in the market of service providers, a $75K home is not worth $100K just because I walked through it and got a contract on it. On that deal, that service is worth about 5K, period, that is my assignment fee.

That house might sell for more in an open market environment, after some attention and repairs, lipstick, it might sell at $100K, that is an estimated market value, not a market value, can't find that until it sells. If I want to make more, I have to do more, my buyer doing the work and taking the risk needs some meat on the bone too.

My last wholesale deal was a distressed sale, not market value but contracted at a distressed price, not screwing over the owner telling them the place was in need of costly repairs or blowing smoke at them, it was a divorce and they set the price. I told them they might get more if they waited longer to sell.....nope, we want out of here!

I've posted before, I ask a seller if they just want to sell to me or would they sell to anyone at that agreed price. None have ever said "no, just to you Bill"! That opens the door to an assignable contract, providing me another exit if I decide not to take it down myself. I rarely make snap decisions, I know what my options are, I don't have to have a predetermined course of action until I consider all my options, I can do that the next day allowing the deal to sink in.

If I decide to "sell the contract" I'm then ready to move in that direction, everyone involved is fully aware of what is going on, no hidden HUD-1, no partner approval required, no weasel clauses, or flim flam stuff needed.

So, that said, I can see Tom's basic approach and that's not misleading, so much IMO, except saying at a "discount price" that's guru talk, saying "a great deal" or a "very good price" is more accurate. There really aren't "discount prices" like some grocery or hardware store might advertise in real estate, when a price does not meet the definition of market value, it is a distressed sale price.

And, legally, you can't advertise anything as a discounted price unless that item has been sold in an efficient market place at a higher price, you can't get that established in a property.

It may sound nit-picky to some, like an English teacher correcting grammar, but how and what you say in business matters, saying ain't to a guy on the street may not matter, saying it to your accountant, appraiser, attorney, banker, or a sophisticated investor, it might matter as to their impression of you. Professionals know the difference in RE terms, it's just better to communicate professionally with everyone on the same page.

Thanks for your post Tom. :)

Bill Gulley · Answer

Tom, it's going to take awhile to get my BS Meter shut down and reset, rockets blasting off, sirens blaring, buzzers buzzing, even the strobe lights are flashing and red flags are up full staff. And, God bless you too, I think you'll need it more than I will. :)

Bill Gulley · Answer

Mike Watkins

Ignorance of the law is no excuse, neither is being irresponsible or claiming to be stupid.

Who wouldn't know they didn't have enough money to buy a house?

You're right Tom, wholesalers (the way they try it) is selling the contract and not the house!

Wholesalers need to get the sneaky snake mentality out of their minds and learn to be upfront from the very beginning, you'll have less issues being totally honest with both sides.

What is an OG? An Outstanding Guy? :)

Mike Watkins · Answer

You sir are an OG.

Yasmine Bisumber · Answer

This is interesting, thanks for sharing. Do you get any negative feedback or questions asking why you no longer want to buy the house? If so, how do you overcome that?

Mike Watkins · Answer

how bout "I have too many houses under contract, and not enough funds to cover this last one"?

Account Closed

Steve Vaughan · Answer

Is this message sent to a cash buyer's list Account Closed?  Who is the target market? Neighbors?

The phrase  "After consideration I am no longer interested in purchasing the property myself and I have decided to sell the Purchase Agreement."  Sounds deceptive and misleading.  Are we really suppose to believe you/your student accidentally contracted to buy a house with the intent to occupy but then decided not to?  I'd leave it out.

Thanks for attempting to share rather than just sell another coaching package.

Tom Krol · Answer

Yasmine, we do not get any negative feedback on this. Just as want never want to convince the seller to sell us the house, we never want to convince the buyer to buy the purchase agreement. This approach generates tons of interest from our cash buyers and makes it very easy for our buyers to play your rules.

Tom Krol · Answer

Steve, the important take away is to market the PA, not the house.

How to sell the Purchase Agreement (not the house!)

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