WHOLESALING (no buyer wants it...what do you do now?)

Wholesaling
10yFollow

WHOLESALING (no buyer wants it...what do you do now?)

John Morey
Investor · Athens, AL · Member since 2015 · 45 posts · 17 votes

Good morning.... Please play along with this scenario. I surely would like to hear from the seasoned wholesalers. I am certain some of have come across this situation..... please play along and don't read too much into this. It is simple but it more than likely does happen.  Again please just play along and answer (not question) the question at the end.

You have a house under contract that you want to wholesale....you promote to your buyers but no one is interested.... closing is approaching... still nobody want to buy it.... 2 days before closing STILL no buyer....... SOOOOOOOOOOOO....

WHAT DO YOU DO? What is now the back up plan since no buyer wants it?

Thanks for playing along...... your honest answer would be greatly appreciated.

John (ALABAMA)

0Reply
109 views

Most Popular Reply

David Dachtera
Rental Property Investor · Rockford, IL · Member since 2014 · 4k+ posts · 2k+ votes
10y

@John Morey,

Consider these four "levels" of real estate...

1. Wholesaling. Can't find a taker? Then

2. Fix and flip. Can't find a buyer? Then 

3. Buy and hold. Can't find a renter? (not likely, but if so) Then

4. "Be the bank": lease option, or possibly contract for deed.

If you're still "stuck" with it after all that, you REALLY did not "buy" it right and you may need to eat a loss to unload it.

David J Dachtera

13Reply
See this reply in the discussion

39 Replies

Jump to latestLatest
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    close on the property and continue to market it.  you don't want to be that buy that ties up property and if they can't move it walks..

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    7Reply
  • Joshua D.
    Investor · Columbus, MT · Member since 2013 · 1k+ posts · 1k+ votes
    10y

    @John Morey

    If it was me I would either renegotiate or just buy it myself.  If it was not a good deal for me to be be buying, then I should not be wholsaling it at that price. 

    7Reply
  • Mike CumbieBusiness Member
    REALTOR® · Brockport, NY · Member since 2015 · 3k+ posts · 4k+ votes
    10y

    Purchase the home per the signed contract

    Thanks

    2Reply
  • Jake Thomas
    Residential Real Estate Agent · Grand Rapids, MI · Member since 2013 · 803 posts · 689 votes
    10y

    Close on it like your contract says you will or give up your EMD and take it as a lesson learned. If you have a property under contract and it is truly a deal this shouldn't ever become an issue, there are more buyers than deals in this market. If this situation happens you over paid.

    2Reply
  • Joe Cantanzriti
    Rental Property Investor · Chicago, IL · Member since 2014 · 132 posts · 74 votes
    10y
    As previously stated, closing on it would make sense though I'm going to assume you can't financially close so you need another plan. I guess I would really sit down for a minute and come up with a plan to massively market this thing in your short 48 window. Post a flyer for the property on every possible street corner. . Put up bandit signs everywhere (these tend to attract as many buyers or other wholesalers as actual sellers) . . Walk in to every real estate brokerage in your area and talk to every realtor, they all have some investors they work with, offer them a handsome fee for the deal. . . Market harder and more creative than you have been I suppose would be the answer. Or negotiate seller financing with the seller if that's an option. Or find a hard money lender and close, then assess from there.
    1Reply
  • Ryan Billingsley
    Investor/Realtor · Wentzville, MO · Member since 2014 · 846 posts · 431 votes
    10y

    @John Morey

    Typically, if you can not move a property it is because you are priced to high.  I would ask for feedback from the buyers you are marketing the property to and see why they are not interested.  

    Buying right is the most important part of wholesaling.  You have to account for profit/repairs/holding cost when you negotiate the deal.  

    If you agreed to a price that is to high and you are 2 days away from closing with no outs, shame on you because you should not have waited until 2 days before closing to figure out what to do.  

    Have outs in the contract, know your worst case scenario when you make the offer, and be proactive.  When I find a deal, I will market it to buyers I trust before I even get the contract signed.  Typically I will ask my buyers what they will pay.  So I know where I need to be to close the deal.

    2Reply
  • David Dachtera
    Rental Property Investor · Rockford, IL · Member since 2014 · 4k+ posts · 2k+ votes
    10y

    @John Morey,

    Consider these four "levels" of real estate...

    1. Wholesaling. Can't find a taker? Then

    2. Fix and flip. Can't find a buyer? Then 

    3. Buy and hold. Can't find a renter? (not likely, but if so) Then

    4. "Be the bank": lease option, or possibly contract for deed.

    If you're still "stuck" with it after all that, you REALLY did not "buy" it right and you may need to eat a loss to unload it.

    David J Dachtera

    13Reply
  • Brian Gibbons
    Investor · Sherman Oaks, CA · Member since 2008 · 6k+ posts · 3k+ votes
    10y
    • You profit at the purchase.
    • Location better be ok.
    • Price better be ok too.
    • Condition is related to price and location.

    Ex) a busy street sucks for small kids (vs a safe cul de sac).

    @John Morey

    0Reply
  • Tzvi BalsamPro Member
    Investor · Brooklyn, NY · Member since 2016 · 226 posts · 45 votes
    10y

    @John Morey

    If it was a small deposit you have the option of walking away. Before people start tearing me down for this the truth is it's sometimes is the only option.

    0Reply
  • Jeff CopelandBusiness Member
    Real Estate Broker · Tampa Bay/St Petersburg, FL · Member since 2015 · 1k+ posts · 2k+ votes
    10y

    Assuming your inspection period and other contract contingencies have expired:

    1. Close on the house per the contract you signed, or

    2. Cancel the contract and lose your earnest money per the contract you signed.

    Copeland Morgan LLC4.770 Reviews
    WebsiteView Page
    1Reply
  • Robert Lum
    Professional · Brooklyn, NY · Member since 2016 · 20 posts · 19 votes
    10y

    @John Morey

    I agree with all the above. I will further contribute by saying that some wholesalers include an escape clause in the contract which states something along the lines of "closing is subject to approval of my 'partner' in the deal." This "partner" can literally be anyone or thing; even your dog can be your partner! All laughter aside, now, this may or may not be legal in your State, but some States allow such clause. Inquire with an attorney about this. Nonetheless, assuming that your scenario contains a contract with an escape clause written into it, you can walk away from the deal if so you choose. Of course, this is not the best way to conduct business and I do not recommend it since it can greatly damage your reputation.

    0Reply
  • Tim G.
    Rental Property Investor · San Diego, CA · Member since 2011 · 1k+ posts · 1k+ votes
    10y
    Originally posted by @Jay Hinrichs:

    close on the property and continue to market it.  you don't want to be that buy that ties up property and if they can't move it walks..

     Worst advice ever. 

    You don't want to be that person that loses money buying a deal so your ego feels good about not "being that guy". 

    Ask for a price reduction, if no luck. Cancel contract in a timely manner as not to further waste anyone's time. 

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Tim G.  I hear ya... but you do want to preserve your character and business reputation.

    I suspect closing is not an option in this situation as it is not with most wholesalers its throw it up on the wall and see what sticks then duck LOL...

    me personally unless something happens at inspection I buy what I say I am going to buy so the idea of tying something up with the only hope of closing is to resell is counter intuitive to my business practice and or a lenghtly career in real estate.. ergo most wholesalers flame out quite quickly.

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    2Reply
  • Tim G.
    Rental Property Investor · San Diego, CA · Member since 2011 · 1k+ posts · 1k+ votes
    10y

    In a wholesaling forum, in a post requesting wholesalers to answer... perhaps its best to think like a wholesaler when answering. 

    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Tim G.  I think he was getting the same advice from other wholesalers...  just because its quote un quote wholesaling does not mean that contract ethics do not apply  as you stated.. sounds like he fubared himself.

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    1Reply
  • John Morey
    OP
    Investor · Athens, AL · Member since 2015 · 45 posts · 17 votes
    10y

    Thank you all for the insightful responses..... Just to make sure you folks know where I am coming from,  I am not a wholesaler but am looking into that as I am running into deals that I would like to just make the "quick money" as I call it. Looking at what could happen and knowing what to do about is important. To me anyway. I do mostly buy and hold and a couple of rehabs then flip. 

    Like I mentioned in the post... please just play along and give an answer as what you would do in the situation. Not assuming whether it is true or not or assuming I got myself in trouble.  I wanted to see how wholesalers think and respond to an ugly situation.

    So many great answers. I hope that with this discussion others who are thinking of doing some wholesaling will now understand that IF this situation arises (as I am sure it has) folks will now have ideas on how to proceed. 

    Thank you again everyone.

    John

    0Reply
  • Tim G.
    Rental Property Investor · San Diego, CA · Member since 2011 · 1k+ posts · 1k+ votes
    10y

    A "whatever is takes" mindset is very important in this business. That said, succeeding at everything you do likely means you aren't pushing yourself to grow. You can throw hypothetical situations out all day but all the good stuff is learned when you're in the trenches doing it. 

    My fav lame saying around here is "Hypothetical deals have hypothetical checks". Go break some pots.

    1Reply
  • John Morey
    OP
    Investor · Athens, AL · Member since 2015 · 45 posts · 17 votes
    10y

    @Tim G. That is good too... I have my saying.. better safe than sorry. That is why gathering info is important. Shooting from the hip or just jumping in with both feet without any knowledge or info is asking for trouble. Just my way of thinking. I gather then jump in.

    1Reply
  • Tim G.
    Rental Property Investor · San Diego, CA · Member since 2011 · 1k+ posts · 1k+ votes
    10y

    I think that's great for you, but I don't think its the best advice for wholesalers. Perhaps you aren't a big fan of wholesaling and you're entitled to that opinion but we're here to help and if someone wants to know how to wholesale we should help them do that or don't participate. 

    0Reply
  • John Morey
    OP
    Investor · Athens, AL · Member since 2015 · 45 posts · 17 votes
    10y

    @Tim G.  We all learn differently. No right or wrong however a monkey wrench could be thrown in thus the scenario. Don't assume I am not a fan of wholesaling. Never said that all. You have your way of doing things and others do too (read the comments). 

    The comments made are very valuable and I will take each one into consideration if I ever run into that when wholesaling. Good luck to you.

    0Reply
  • Tim G.
    Rental Property Investor · San Diego, CA · Member since 2011 · 1k+ posts · 1k+ votes
    10y
    Originally posted by @John Morey:

    @Tim G.  We all learn differently. No right or wrong however a monkey wrench could be thrown in thus the scenario. Don't assume I am not a fan of wholesaling. Never said that all. You have your way of doing things and others do too (read the comments). 

    The comments made are very valuable and I will take each one into consideration if I ever run into that when wholesaling. Good luck to you.

     I was talking about Jay not being a fan of it. 

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Tim G.   I think the issue with those with a wholesaling slant only is that they feel its perfectly acceptable to contract for property with the only intention of closing if they can assigne or in some other manner move it to another without using any of their money.. and there is not a lot of thought or care or concern for the seller in these deals.. Caveat Emptor.  Where I think some of the comment above and mine included were slanted more towards ( hey you made a contract you need to honor it)..

    Granted some wholesalers say they are up front with their sellers telling them they will try to resell but if they can't they won't be closing.. I get that... but I suspect that's far and few between as your close ratio with sellers would be pretty low if that's your only approach.

    The more common approach is Hey I am going to buy this subject to my partners approval.. little white lie, as there is no partner the wholesaler is alluding to some mystery person when in fact if they can't resell or assign they just say their partner nixed the deal..   We see folks on BP all the time tell folks to use this strategy.

    So it really comes down to in my mind contract ethics and what you want to do.. I think the OP got good feed back many think you should not contract if you can't close or the only hope of closing is finding another buyer..   And it sounded like the OP was concerned about his standing in the community as well and got himself caught a little short.. etc etc.

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    0Reply
  • Tim G.
    Rental Property Investor · San Diego, CA · Member since 2011 · 1k+ posts · 1k+ votes
    10y

    I don't think wholesalers are the only individuals using these tactics here. To say they are is unfair and being very forgiving of others. 

    Rehabbers tie up deals then back out if repairs are too high or their money partner situation doesn't work. Agents pitch selling a home at a certain price and often have to admit they were wrong and advise the seller to reduce their price to sell. Landlords take applications from tenants all too well knowing they won't rent to them for fear of discrimination threats. 

    All of these scenarios you have someone hoping to do something knowing that it might not work out. Examples of contract ethics but the focus is still on the lowly wholesaler who many on BP tend to look down upon from their questionable moral high ground. There are uncertainties in business and while many of us have the best intentions heading in it won't always work out. 

    To have this rhetoric specifically towards wholesalers shows a bias towards this field and to me a clear agenda to discourage. If you don't have good guidance on wholesaling here, why post? Suggesting someone close on a deal themselves is bad advice in a wholesaling thread, especially this one. 

    3Reply
  • Joey Hamaoui
    Real Estate Agent · Jacksonville, FL · Member since 2016 · 406 posts · 163 votes
    10y
    John Morey I appreciate the question I'm also looking into this in my area. The way I see it you have a few options. Option 1: JV the deal. Reach out to every wholesaler you can find and offer 50% split if they sell it for you. I would say send the deal to all the agents but at this point it seems you'd have already done that since they're on your "cash buyer" list. Option 2: close on the deal and flip it yourself. Option 3: close on the deal and rent it. Option 4: walk away like Tzvi Balsam said. At the end of the day the earnest money deposit is there for that reason. Ultimately he could sue you for specific performance but that won't happen because it's costly. At most you'll lose the earnest money deposit. Option 5: get your earnest money deposit back and back out. Many contracts have an inspection contingency or due diligence contingency that gives you a free look. In North East Florida our contract allows 15 days inspection period. If you have to, use it. That's what it's for. Hope this helped.
    3Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Tim G.  good counter points.. I have certainly had agents that worked for me that would do the pump and dump to secure listings.. they usually get a very bad rep.. and that's what we were kind of alluding to about getting a bad rep in a smallish industry.  But again the seller is the one who makes the decision to lower price or not.

    And of course rehabbers who contract do so subject to a inspection but its fully disclosed to the seller no hiding behind nebulious contract outs.. if the rehab cost come back to high they can renegotiate or punt.. but seller understands that..

    as for tenants and apps that's apples to oranges .. but I do like the comparison on the agent you mentioned.

    but as others have stated if you can't move your wholesale deal you may have goofed up on what you think its worth and or the rehab..

    And its just a fact that sellers get damaged when wholesalers don't know what they are doing don't disclosure that they really cant close and lead people on.. .its far worse than over pricing a listing.

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free