What is your take on Reverse Wholesaling?

Question

I have been reading a ton of information on Wholesaling.  Reverse Wholesaling seems smarter than traditionally Wholesaling - buying a property, then finding an investor.

Is there a right way or wrong way to Wholesale?

What are your thoughts?

Erin Kelly

Chris Eaker · Answer

If your goal is to sell the property to someone else, why not have those people lined up first? This idea that there's one way called reverse wholesaling and there's another one that's just called wholesaling seems stupid to me. Reverse wholesaling is really just being smart about your wholesaling strategy.

Adrienne Bryson · Answer

I think you'd be adding unnecessary steps into the process for no real reason.  If you already have a buyer's list, you should have already gotten that information from your buyers.  You should already know not only what types of deals they're looking for (fix & flip, commercial, raw land, etc), but also what areas they prefer to buy in (and which areas they absolutely will NOT buy in), what their price ranges are, what level of rehab they are comfortable with, how they will be financing their purchases, how often they buy, if they're open to seller financing, how much profit they're looking to make per deal, their desired cap rate or ROI, how many units or how many beds/baths, etc etc etc.

You should ask every potential buyer all those things when they first ask to be put on your list.  This is a more efficient strategy than either finding deals and scrambling to find buyers, or adding additional legal red tape which only increases the amount of time it takes for you to get each deal.  The name of the game is efficiency.  Wholesaling is already low yield strategy so the goal is to decrease the time, money, and effort put into each deal.

Go back to your buyers and get all this information FIRST before you do any more shopping for potential deals, so you can avoid wasting any more marketing dollars (and time and effort) on potential deals that will never get bought.

William Allen · Answer

@Erin Kelly  If you have the money to buy the property then find the buyer go ahead, if it is a deal they will be lining up to buy it from you.  If you mean get it under contract and then find the buyer be careful as that can blow up in your face if you don't know who is looking for what and have no contacts.

In my area, people are overpaying for houses all the time thinking they are good investments or will do the work themselves to save money.  All you need is to put an ad in craigslist right now saying handyman special, fixer upper, investor special, etc... and you will sell it.  These times won't last forever so build that buyers list and market with the true buyers in your area.

Good luck!

Matthew Laggis · Answer

@Erin Kelly

Personally, I think having investors set up first will make your life easier in the end. Once you have a potential deal, even before the contract gets signed, you could already have an investor in mind that would LOVE the property. From there it's one phone call away from a quick check. On the other hand, some people say if you have a true deal, the investors will come..which is true. To each his own, but I like to have my list of investors to market to before I have my deal.

Happy Investing!

Adrienne Bryson · Answer

Don't show a property that unless you actually have it under contract.  Don't get a property under contract without having at least a handful of buyers you know are interested in that type of property.  Don't go out finding properties with no rhyme or reason and hope to find buyers later.

And I would bet if a buyer found a property on MLS he is interested in, he would just buy it.  Why would he go to you at all at that point?  They can't steal a deal if you already have it under contract!

Go, right now, and ask your buyers to explain to you what they actually want.  THEN go out and find those types of deals.  If you're only finding deals that your buyers want, you don't have to "test the waters" first to see if they'd be interested...you can go ahead and get it under contract immediately because you already know you'll have someone to buy it.  If it's taking you more than 10 days to find a buyer for your deals either 1) you're buying properties nobody wants or 2) your "deals" aren't actually deals.

Gamal DARWISH · Answer

Thank you for great reply .

rehabbers are smart people and steal the deals if not locked under contract

would you feel secured showing a property that is not locked under contract to cash buyers ? my feeling no.  but what I got lose, the other way would having the property under contract with a deposit and if no end buyer within 10 days of inspection then I would cancel the contract.

However 10 days is too short in many cases to find a buyer.

let us say end buyer would google the address and find out property is listed on MLS, next step I will show it to him and find out what is he willing to pay for it, next step I will try to get it myself under contract for lower price.

The spread would be my fee for my time spent finding the deal and negotiating .

Brent Coombs · Answer

@Gamal DARWISH, you don't trust "your" people much, do you?

I reckon even if they are trustworthy (and your conspiracy theory is therefore unnecessary), what you'll be fed back is: the "good deals right on MLS and other sources" aren't so good after all.

Also, given that you won't even have any under Contract yet, how can you enforce their nodding agreement to pay the amount that they say they're worth to them, later?

In other words, I believe your experiment may help you get a better understanding of what those particular Investors value things at, and why, but, may not help you get the deals done! My 2c...

Gamal DARWISH · Answer

I am thinking loud and please hear :

I have contractors rehabbers and landlords on my buyers list , I also have access to good deals right on MLS and other sources .

I am thinking to show my deals to these prospect buyers before I put these properties under contracts , to find out if there is an interests and how much they are willing to pay for deal(s) then I would go and see if I could tie the property under contract for a lower price.

my fear was : end buyer will steal my deals and go direct to seller or agent, or source .

How would be protected ?

Protection will be accomplished by Non circumvent agreement before releasing the address , description and showing.

Why wouldn't  I tie the property first ?

No time restriction to sell , no deposit to lose, no pressure to sell , no getting out of contract if no end buyer, no need ask someone to reduce price......etc.

PLEASE TELL ME WHAT YOU THINK ?

I am going to experiment this method what I got to lose.  the NCND if implemented and end buyer breach the agreement it will cost him/her a lot of money which will equal to 20% of his price was paid for the deal plus all legal fees.

PLEASE TELL ME WHAT YOU THINK ?

Thank you

Wayne Brooks · Answer

@Chris Eaker Yeah, someone came with a "new innovative twist-reverse wholesaling"....just another name for common sense.

Erin Kelly · Answer

Thank you all for the inputs! these forums are awesome so far! Look forward to so much more and posting our success story very soon.

What is your take on Reverse Wholesaling?

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