House under contract with no buyers lined up
Edgewood, MD · Member since 2014 · 283 posts · 59 votes
House under contract with no buyers lined up
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Columbus, OH · Member since 2015 · 117 posts · 175 votes
10yPay no attention to John Thedford. He hates on all the wholesalers but apparently really enjoys hearing himself rant about the guys that "W". His favorite tactic is to call you uneducated and be very condescending. He won't even call you the "W" word because he prefers unlicensed agent or broker. Unlike John, I'll contribute some advice that might actually help you since after all, that's what this site is supposed to be for.
All that being said, what do you have stated in your contract? I have 3 important paragraphs in all of my contracts. 1. Contract is assignable, 2. Marketing: Seller gives buyer permission to market the property to owner occupants, tenants and other investors during escrow. 3. Resell: Seller acknowledges and understands that buyer intends to resell the property for a HUGE PROFIT.
I actually use all caps and bold font when spelling out HUGE PROFIT. (Michael Quarles gets credit for that one)
Next, find out exactly what your state laws are regarding wholesaling, assigning contracts, marketing properties you don't own and receiving compensation from the sale/purchase of a real estate transaction. I personally am a licensed agent and have been for 6 years. For me, it was the right decision and certainly allows me to stay withing the regulations of the Div. Of RE in Ohio. However, I know many others that are unlicensed and are able to operate within the laws for our state. However, you have to start by knowing what those laws are.
Regarding a buyer's list, DM me your email and I'll send you my best tools for building a massive buyers list. It's very basic but will help you begin to establish relationships with the buyers in your area. People buy from people they like so those relationships are key. Good luck and I look forward to hearing from you!
81 Replies
- Investor · Cleveland, OH · Member since 2015 · 6k+ posts · 2k+ votes10y
(Theoretically), by making SURE that their Contract is for an amount much less than market value!
That way, even Bargain Hunters will be suitable for your Buyers List!
If Bargain Hunters won't give you profit on what you're "paying" the Seller - you "paid" too much!
How did you get this far before worrying about this?
Your plan is supposed to be: only Offer the amount that YOU'LL pay if a Buyer doesn't surface!...
- Real Estate Investor · Buffalo, NY · Member since 2013 · 227 posts · 318 votes10y
Hey @Brent Coombs Auctions are by far my favorite way of finding high quality cash buyers. There are two types of auctions that you want to attend. First, are on-site house auctions. Heres how is works. Sellers often hire a auction company, which advertises the property for sale and typically hosts maybe one open house to show off the home. Then the property goes up for sale on auction day. On auction day investors gather at the house, walk through it one more time and then the house is auctioned off to the highest bidder. Now the terms at these auctions are usually $5,000 Deposit in Cash or Certified Funds due the day of auction; balance to 10% due within 5 business days, and Close in 30 days. Everything sold “As Is, Where Is.” No warranty or guarantee is expressed or implied. All sales are final. The reason I want to go over these terms with you is because they give us insight into who the buyers are. One thing we know is that they are cash buyers because that need to have a 5k deposit, the balance or 10% within 5 business days and be able to close within 30 days. In addition to them having money they purchase property “AS IS”. This means that they have the resources and means to complete the repairs and they are experienced enough to determine rehab cost without hundreds other people being involved. The less people you need to take to your wholesale deals the better. This is your ideal buyer. The second type of auctions I want you to attend are building material auctions. These auctions sell everything you can think of related to houses. Doors, hardwood floors, titles, tools, windows, appliances, kitchen cabinets, counter tops, and much more. These auctions are filled with landlords and rehabbers. They are there purchasing materials at wholesale prices so why won’t they want to buy houses at wholesale prices. Hope this helps.
- Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes10y
it sounds like you have put the horse before the cart and my question is why would you sign a contract on something if you cannot purchase it that doesn't make sense
- Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes10y
Do you plan on telling the owner the truth or do you plan on deceiving them which seems the most popular method for uneducated people getting into the business
- 10yMike CumbieBusiness MemberREALTOR® · Brockport, NY · Member since 2015 · 3k+ posts · 4k+ votes
I have to agree with @Jose Flores, Auctions are a great place to find buyers.
However don't start discussing your property until the auction is over. There are many people there bidding on one thing but out of courtesy to the auctioneer and seller who's forum you are using, wait until they are done. Having even the impression that they had a bidder, who you turned off to look at your item is a quick way to get a bad rep and kicked out of future ones. There are plenty of people who hang out afterward and chat with each other.
best of luck.
- 10yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Mike Cumbie I would get approached at the sherrifs auctions often.. there are always ton's of spectators and very few ACTUAL buyers.. they would see me buy a few houses.. then come up an introduce themselves etc etc... Generally wholesalers in my area don't have deals they are far to skinny.
and I don't need them for inventory... but for someone who can't pay cash at an auction and needs time to get a HML or other type of financing a wholesaler at least will give you a little time to get financing arranged.. I simply got tired of looking at all the dud's they send over.. I won't even let them put me on their e mail list anymore.. LOL
- Columbus, OH · Member since 2015 · 117 posts · 175 votes10y
Pay no attention to John Thedford. He hates on all the wholesalers but apparently really enjoys hearing himself rant about the guys that "W". His favorite tactic is to call you uneducated and be very condescending. He won't even call you the "W" word because he prefers unlicensed agent or broker. Unlike John, I'll contribute some advice that might actually help you since after all, that's what this site is supposed to be for.
All that being said, what do you have stated in your contract? I have 3 important paragraphs in all of my contracts. 1. Contract is assignable, 2. Marketing: Seller gives buyer permission to market the property to owner occupants, tenants and other investors during escrow. 3. Resell: Seller acknowledges and understands that buyer intends to resell the property for a HUGE PROFIT.
I actually use all caps and bold font when spelling out HUGE PROFIT. (Michael Quarles gets credit for that one)
Next, find out exactly what your state laws are regarding wholesaling, assigning contracts, marketing properties you don't own and receiving compensation from the sale/purchase of a real estate transaction. I personally am a licensed agent and have been for 6 years. For me, it was the right decision and certainly allows me to stay withing the regulations of the Div. Of RE in Ohio. However, I know many others that are unlicensed and are able to operate within the laws for our state. However, you have to start by knowing what those laws are.
Regarding a buyer's list, DM me your email and I'll send you my best tools for building a massive buyers list. It's very basic but will help you begin to establish relationships with the buyers in your area. People buy from people they like so those relationships are key. Good luck and I look forward to hearing from you!
- Real Estate Investor/Wholesaler · Philadelphia, PA · Member since 2015 · 757 posts · 318 votes10y
It's called networking and marketing along with a being consistent with your efforts. There is NO easy way you just have to start and slowly build it up over time. You should have a link to your buyers list if you don't already and sending it out so people can sign up. It's a process......
If you actually have a "good deal" and numbers make sense most investors will find you if your marketing correctly.
- Homeowner · Edmonton, Alberta · Member since 2013 · 35 posts · 6 votes10y
You know I've been browsing around here lately and although John might have a strong feeling opposed to wholesaling... I can't say I blame him anymore. There seem to be a lot of threads started where people are locking up houses with no actual plan. Of course they come here because they want advice and people will help them which is great.
I originally intended on going out there and finding things and putting them under contract. But upon further reading I think I'd like to take a more laid back approach where if I find a deal, I will not lock it under contract at X price, but instead try and help the potential seller find a buyer. You might be thinking that someone will swoop in and steal the deal but I'm not too worried as I'm just getting started (and people don't wholesale around here). With a proven track record and buyers/partners in the future, I'd be more inclined to lock something up on site.
- 10yMindy JensenPro MemberBiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes
I've seen @John Thedford's comments about wholesalers around the forums, and I tend to agree with his comments, although maybe not his tone.
The problem with Wholesalers who aren't honest with the sellers, is that it gives wholesalers a bad name, which will lead to investors in general getting a bad name if it continues.
The gurus have pitched this idea as a great way to get into real estate with No Money. But when you have inexperienced wholesalers tying up properties at prices that are not deals, they won't be able to sell them. If they are being less than honest with the seller, the seller might think the home is sold, make plans, even move out. It could even ruin the seller financially, because they didn't understand the situation.
@Brian Jordan, if you are telling your sellers that you plan to market the property to someone else and make a profit, that's great. I was at a meetup a while back, and a wholesaler there said he would get properties under contract, with a clause that said "Pending partner approval." He then proceeded to laugh that his partner was his cat.
People like @Karen Rittenhouse and @Shawn Holsapple - both wholesalers who have been featured on the Podcast (Karen Episode 2 and Shawn Episode 136) - always close on properties they get under contract, even if they can't find a buyer.
And yes, they've been doing this a while, have built up a reputation, and have funds available to make it happen.
John's disdain for the wholesale concept is due to his experiences with people who aren't forthcoming and honest with the sellers.
Yes, it is possible to wholesale successfully, but it is NOT as easy as those gurus make it out to be.
- 10yMike CumbieBusiness MemberREALTOR® · Brockport, NY · Member since 2015 · 3k+ posts · 4k+ votes
Hi @Jarrod English,
Not trying to discount your efforts, but you might want to get licensed if you plan on helping people sell a house. Reason being is that in order for the Wholesalers to market the property they have to have Equitable Interest in the property (They have to have an ownership right and the locking it up does that). If you are not locking it up and trying to sell it, you have to be licensed in your state to sell a property you do not own for a profit/commission or fee.
DISCLAIMER: Not legal advice and just ramblings of some dolt on the internet. All information should be ignored by anyone looking to perform activities on the planet Earth. Also this post is in no way meant to advocate any practice or business plan anyone else plans to do.
As always I wish the best in your decisions.
SIDE NOTE: I notice you are in Canada, my information is even less valid than the disclaimer would suggest
- Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes10y
If someone is standing behind their word, that means EVERYTHING in any business.The biggest problem is people being taught and encouraged to operate dishonestly. I recently met with a victim of one of these frauds. Sad...they got taken for a ride. I had a discussion with someone I respect highly and she stated a man bragged to her that his CAT could be his partner. Is this a game or a business?
The other problem is ED! Guys--ED got you down? Ladies--is ED affecting your life? Educational deficiency is quite common. Don't get me wrong! I knew nothing when I started. What I DID know was: I wasn't willing to sign a contract for 25K or 100K with no money. There is something inherently wrong with that approach. As I have said in the past: follow the successful people to learn how to be successful. I have my favorite posters on BP because they offer good advice! Don't be the blind leading the blind. Thanks @Mindy Jensen for clarifying her stance on the subject. - Homeowner · Edmonton, Alberta · Member since 2013 · 35 posts · 6 votes10y
As Brian mentioned above though, a contract stating that the place will be marketed would allow that sort of thing though wouldn't it? I am also thinking about a license anyways. We shall see what the future holds.
- 10yMike CumbieBusiness MemberREALTOR® · Brockport, NY · Member since 2015 · 3k+ posts · 4k+ votes
Yes, however (And I am not sure about Canada at all) Brian still has to have Equitable Interest in the property. For instance he has to have a contract that says "We will sell you the house for XYZ dollars". That allows him to have a claim that he has an ownership interest in the property. You were saying you would not lock it up, but in order to have an "Ownership interest" you have to lock it up.
I hope it makes a little more sense. It is a weird item to get around licensing.
Think of it this way
I have to be licensed to fix brakes on someone's car, however I can fix my own brakes legally.
I don't get licensed but I want to fix your brakes for a fee/cost
You sell me your car for 2 hours and I fix the brakes then I sell it back to you for the cost of the car plus my "fee for getting the brakes done"... Or just don't bother to change the registration and rip up the "contract of sale" once I am done.
Wholesaling is a way around ownership to market a property. Is doing the above with a car illegal? I am not a lawyer or regulator. I personally figured I would get licensed and work within the confines of a license. It is a risk management game and I choose to operate within those confines because the "risk" meets my personal level of risk. Others work within whatever method the "risk" works for them. I generally don't judge others, but I will try and answer the question at hand and leave the rest to the individual business owners bylaws/business practices.
Best of luck!
- Investor · Orlando, FL · Member since 2016 · 1k+ posts · 780 votes10y
My favorite way to find buyers is to get a list of all the cash buyers for the past 5 years in the neighborhood where the property is located. Then once you get the list of properties that were bought with cash go to the assessors website to find out the owners names. Then do a search on the assessors website for that name and when you find their name showing up in multiple properties, there is your list of potential buyers.
- Homeowner · Edmonton, Alberta · Member since 2013 · 35 posts · 6 votes10y
It's a good analogy haha. Thanks for the tips, I will definitely be continuing my education and deciding what path to go down in the future. What if I have a friend that's a commercial realtor, I could partner up with him if I do in fact find a deal through wholesaling tactics right?
I'll stop hijacking the thread now =)
- Columbus, OH · Member since 2015 · 117 posts · 175 votes10y
Originally posted by @Account Closed:
My favorite way to find buyers is to get a list of all the cash buyers for the past 5 years in the neighborhood where the property is located. Then once you get the list of properties that were bought with cash go to the assessors website to find out the owners names. Then do a search on the assessors website for that name and when you find their name showing up in multiple properties, there is your list of potential buyers.
I like where you're heads at but I don't want buyer's on my list if they haven't purchased in 5 years. I want the guys/gals that have purchased multiple properties in the last 6 months. I'll send to buyer's over the last 12 months but instead of spending the time on the Auditor's Site, use a data scrapper to mine the data for you. I use Mozenda and learned from Justin McClellan from hi youtube videos.(https://www.youtube.com/watch?v=OQ5Q7_2AaMk) I'll upload 2,000 property addresses toMozenda, teach it what to look for & run the program when I leave the office. When I come back in the next morning, I have the tax billing address pulled from the county for every cash purchased home that I uplaoded. Now, I can sort the data by tax billing address and find my multiples. These are the people I want to meet!
- Columbus, OH · Member since 2015 · 117 posts · 175 votes10y
Originally posted by @Jarrod English:
It's a good analogy haha. Thanks for the tips, I will definitely be continuing my education and deciding what path to go down in the future. What if I have a friend that's a commercial realtor, I could partner up with him if I do in fact find a deal through wholesaling tactics right?
I'll stop hijacking the thread now =)
Not necessarily, the laws in Ohio state that you cannot be compensated for a real estate transaction if you don't have a license. Learn your laws and decide how best to operate within them.
- Investor · Orlando, FL · Member since 2016 · 1k+ posts · 780 votes10y
There are many ways to do the same thing. Each of us have our own way of doing things.
I love wholesalers in general, but sometimes wholesalers get greedy. If you get a good reputation as a wholesaler, all sorts of investors love you, because you know that you pass on a solid deal. If you try to get market price as a wholesaler, there is little incentive to use a wholesaler.
- Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes10y
Thanks to unlicensed brokers I got a deal....
Thanks to unlicensed brokers grandparents missed the birth of their grandbabyhttps://www.biggerpockets.com/forums/93/topics/354452-got-offered-a-10k-assignment-fee-unsolicited
- Investor · Cleveland, OH · Member since 2015 · 6k+ posts · 2k+ votes10y
@Brian Jordan, it's a sad world where Sellers will let a lot of their property equity be frittered away by your promise of quick cash, even though you've told them in bold letters that you intend on making a HUGE PROFIT out of them, rather than sensibly request that you (having told them that you're also a Licensed Realtor) list it for them for normal commission only! Does that really work?...
- Edgewood, MD · Member since 2014 · 283 posts · 59 votes10y
Originally posted by @John Thedford:
Do you plan on telling the owner the truth or do you plan on deceiving them which seems the most popular method for uneducated people getting into the business
Never once did we lie to the owner lol. I'm not sure where you got that from. The owner knows we're wholesalers and we plan on presenting the house to our investors.
- Edgewood, MD · Member since 2014 · 283 posts · 59 votes10y
Originally posted by @John Thedford:
it sounds like you have put the horse before the cart and my question is why would you sign a contract on something if you cannot purchase it that doesn't make sense
Well I've read that if you find a good deal where the numbers make sense then finding a buyer shouldn't be difficult if you truly have a deal. We ran the numbers (arv's, rehab, etc) and determined we have a good deal for an investor.
- Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes10y
what do you tell your seller do you lead them to believe that you were going to buy the house and do you tell them that if you cannot assign you intend to walk away
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