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
- Flipper/Rehabber · Rochester, NY · Member since 2014 · 1k+ posts · 1k+ votes10y
Originally posted by @John Thedford:
OK..you got advice..but the question never changes. Do you intend to tell the owner you will walk if you cannot assign? This is my main problem with most unlicensed brokers. It causes problems. It can cause financial harm to the seller. It can cause emotional distress. And besides these factors, lies and deceit that are an integral part of any business strategy are wrong. Think about it. Would you want your mother, sister, brother, best friend to be conned by some fast talking unlicensed broker playing these games. There are many dishonest operators promoting that garbage on BP.
Disclosure: I'm neither a wholesaler nor a realtor.
Licensing has often been used by industries to create a cartel, which the National Assiciation of Realtors has pretty much done.
Licensed Realtors are not necessarily any more ethical. Many are but many are not. This is especially true for listing realtors who promise magical results when you use them or are willing to "buy" the listing. That is, they agree with the seller that a house will sell at an unrealistic price because, well, they can do a better job of marketing than the realtor who insisted on a realistic price. They expect the seller to get worn out by lack of traction and eventually come down and the unethical listing realtor walks away with a tidy listing fee.
Furthermore, pocket listings are rampant. When a deal is really good and will sell instantly, why tell the seller to raise the price? The listing agent can get their listing to a cash buyer before it hits the market and get the buyer side of the commission too.
An unethical realtor can be just as bad as an unethical wholesaler.
And an ethical wholesaler can be every bit as legitimate as an ethical realtor, wouldn't you agree John?
- Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes10y
I am 100% for holding agents accountable. Fine them. Suspend or revoke their licenses. Sue them for damages. This is called oversight. Unlicensed brokers have none.
- Wholesaler · Knoxville, TN · Member since 2016 · 247 posts · 76 votes10y
I've seen a lot of videos about creative investing that encourages getting the property under contract and then working on the analysis and exit strategy.
So why is it wrong to do that for a lot of you guys? Why is it lying? As long as the seller knows what the investor is doing, is it lying?
- Agent/Investor · Detroit, MI · Member since 2016 · 66 posts · 46 votes10y
imagine how great the world would be if consumers only bought things that were created through ethical means lol, Only reason wholesalers even have to put things under contract is to protect their interest in a deal that otherwise crooked investors would back door. Also why does everyone assume wholesalers are a bunch of broke unethical cheats trying to swindle home owners. I have meet more smoke blowing investors than wholesalers by far.
i think people try way to hard to get that BP "debate starter badge"
- 10yPaul AmegatcherPro MemberRental Property Investor · Brookville, OH · Member since 2016 · 488 posts · 363 votes
@David White Here are some steps to building a buyers list.
1. Market the property on craigslist. Do not use the address in your marketing. Use key words similar to this example: I'm selling my equitable interest in a 3bd/2bt/2car SFH located in ABC school district. ARV is $100K. Property needs $20K in repairs. Asking price is $50K. This ad on craigslist list will generate enough interest if it is a good deal.
2. Market the property on Biggerpockets market place forum. Use the same key words as the Craigslists ad.
3. Go to fiverr and buy a cash buyers list for the specific zip code. You can get a list of 100 cash buyers for any zipcode for $5. You can also get this info from a realtor if they know how to pull the data.
4. Network with other investors in the area. Call we buy houses, drive thru neighborhoods looking for people rehabbing houses. Ask them if they are looking for more deals.
These four points should get you all the buyers you need. In the real world most wholesalers have a strong buyers list of 2 to 5 buyers. Keep your head up and keep forging on. This business is not easy but the reward is great. Good luck.
Paul Amegatcher
- Investor · Cleveland, OH · Member since 2015 · 6k+ posts · 2k+ votes10y
@Paul Amegatcher, did you get your RE License, or, how are you only selling "equitable interest" when the Ohio Regulators SPECIFICALLY disallow that?
Or is it just that you haven't been "busted" yet?
(Of course, if you take title first, it's not just "equitable interest" that you're selling, is it?) Cheers...
- 10yPaul AmegatcherPro MemberRental Property Investor · Brookville, OH · Member since 2016 · 488 posts · 363 votes
@Brent Coombs I always take title but I'm different.
- Investor · Cleveland, OH · Member since 2015 · 6k+ posts · 2k+ votes10y
Originally posted by @Paul Amegatcher:
@Brent Coombs I always take title but I'm different.
Yep. You're an exception* for sure! (But probably not in Ohio at least).
* Though it's a pity that you still encourage Wholesaler wannabes with the "equitable interest" fuzzy wording that could very well get them into all sorts of strife with those same Regulators...
- Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes10y
If the seller is lead to believe the property is sold and the "buyer" doesn't have the means, then that can cause financial and emotional problems to the seller. That is what is wrong with many of these unlicensed brokers. They simply walk away using one of their BS escape clauses leaving the seller with nothing. See my post about the 10K assignment fee...how the sellers got messed over.
Since you are CLOSING that means you are keeping your word and not misleading sellers. That is how RE is done RIGHT!
Would anyone reading the title of this thread conclude the "buyers" have any means to close? When they signed the contract, weren't THEY the "buyers"? There are many more threads just like it on BP.
- 10yJames MasottiPro MemberRental Property Investor · Washington Township, NJ · Member since 2015 · 1k+ posts · 976 votes
Originally posted by @Jay Hinrichs:
@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
I have yet to come across a wholesaler with a deal! It's sad...but making me try to re-allocate my time and resources so that I can do my own direct marketing more effectively.
- Investor · Salem, OR · Member since 2015 · 26 posts · 5 votes10yHi Brian First let me start your saying congrats on the house , most importantly being honest with you seller , be sure as a wholesaler you always let the seller know you will not be living in the house yourself,. Your contract should say right in it that you will be marketing the property . Now to answer your question use your Craig's list to market the home. If legal make up a hand written sign and post at a few roads . To find investors look on Craig's list they advertise we buy houses call them tell them who you are and ask if they want to be on your buyers list . Also just for the record in Oregon it is NOT illegal to wholesale a house all you are doing is assigning the contract over to someone and your fee is an assignment fee, you are technically only selling the contract most realtors will tell you it's illegal its not they are not aware of the the differences or they will see you as competition . Education.... Vital . Always check with your local REO for input on laws in your area.
- 10yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Barbara Kennedy if you put a house on a website with picture bed bath etc and give the illusion your selling it.. and or put an add in Craigs list again in the homes for sale section that is illegal in Oregon.. assigning contracts is not.. but pretty hard for all but the most established to be able to actually do it without violating the laws.. and one trip to salem to talk to the DRE will cure you of that LOL
- Real Estate Salesperson Licensed · Atlanta, GA · Member since 2016 · 114 posts · 22 votes10y
Foreclosure auctions is a great way to find cash buyers. In my state, it his held early in the morning on the second Tuesday of every month. This can also be a great place to network in general and at least hand out and receive a few business cards.
Another option would be use ListSource to find the individuals who have been cash buyers in your area. Typically these people are investors and narrowing the search to a specific radius around that property will give you good idea on who to start contacting first. You may have to do some further digging and/or social engineering to get in contact with them, or at least send a few postcards to each of their properties.
Goodluck out there!
- Rental Property Investor · Raleigh, NC · Member since 2016 · 396 posts · 995 votes10y
@David White "We told her that we are wholesalers and we intend of marketing the property to investors which isn't a lie."
So basically you told her that you have no interest in buying the property yourself, but would market it and find a buyer that will take it off her hands. Please explain to me how this is not acting as an unlicensed broker?
In any legal proceeding, often times intent means everything.
Example #1: If you buy an FHA house a general requirement is that you live in the home for at least 1 year. So if after 2 months the house gets turned into a rental property did you commit mortgage fraud? The answer is it depends on what your intent was at the time of purchase. If you bought the home with the intent to live there, but suddenly got promoted within your job, and your company is now forcing you to move to a different state, and you had no knowledge of this prior to buying your home then you did not commit fraud.
Specific wording in a contract isn't necessarily going to save you either. Example #2: You find a pretty woman on the street corner who offers to spend some time with you for $1,000 and whatever happens during that time is between two consenting individuals. Here you have a verbal contract for the exchange of her time for your money. Just because sex wasn't mentioned in the contract doesn't mean your not getting busted for prostitution because the intent, regardless of the verbal contract details, was sex for money.
Wholesaling if done correct is perfectly legal, you can most certainly assign your interest in a contract. However before that can happen, you must have first have properly entered into the contract and that is where things tend to fall apart. If things went south, could you legitimately stand before a judge and argue the case that at the time you signed the contract to buy the home, that you actually intended to purchase the home? Or are you using that contract as a convenient way to tie up a property long enough for you to circumnavigate the rules of being a licensed broker? Did you put down a realistic EM deposit? Did you have access to sufficient funds to complete the deal? Did you have an inspector take a look at the property or any of the other steps that are often taken when purchasing a property?
I would argue a large portion of wholesalers operate illegally. The fact that they haven't been caught, or are unaware that what they are doing is wrong does not change the fact. There are many wholesalers that have done 10s, or 100s of deals illegally and have never been caught because the reality is that generally speaking most states don't actively crack down on such cases unless someone files a formal complaint, much like someone driving 5mph over the speed limit. However just because you will probably get away with it doesn't make it right. I admire the ambition, and the dedication to start something and follow through with it, and for your wanting to break into the RE game. But in this case if you are coming to a public forum asking for advice on questionable activities, my only advice would be to stop doing it.
- Edgewood, MD · Member since 2014 · 283 posts · 59 votes10y
Thank you to everyone who answered my original question of how to build a buyers list. I greatly appreciate your responses.
- Investor · Lakewood, NJ · Member since 2016 · 64 posts · 15 votes10y
I'm am looking to for transactional funding for a possible upcoming wholesale deal.... A proof of funds would be a good thing when dealing with realtors... Is there anyone that someone would know to help me?
Plus, I need a private lender... may be several, because northern Jersey(Newark and surrounding areas) are an absolute gold mine...
- Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes10y
Pose your question in a new thread under the lending categories. Hopefully you can get a couple good referrals.
- Investor · Lakewood, NJ · Member since 2016 · 64 posts · 15 votes10y
I certainly do agree with you @Larry Turowski on the ethical principles of realtors and Wholesalers...
- Anaheim, CA · Member since 2016 · 3 posts · 1 vote10y
@David White, there are inexpensive courses online that can instruct you on how to build a buyers list... just do a google search. I'm learning all I can about ethical wholesaling before I even think about getting any properties under contract, and while I'm learning I'm in the process of getting a buyers list in place so I won't end up in a similar position... I don't want to leave anyone hanging. It's tempting to want to jump right in, but I know that if I don't first get everything in place there's a chance someone may be left hurting. No bueno. Good luck to you. Go build that buyers list.
- Investor · Santa Rosa, CA · Member since 2012 · 127 posts · 90 votes10yKat Williams you don't need an online course to teach you how to build a buyers list.. it's called networking your butt off! Find 2-5 guys or gals who really buy houses, and become an asset to them! Learn from them and grow and expand from there. If you have 5 investors that buy 5 house a year, well you have 25 opportunities a year to capitalize. It's about networking and building long term relationships. Look you can go out build a large buyers list if you please, all I am saying is you don't need some online guru crap to teach you how to go out and tell people what your intentions are. To your success!!!!
- Flipper/Rehabber · Seminole, FL · Member since 2010 · 859 posts · 316 votes10y
Agreed that a BIG list is not necessary. Get any size list of really SOLID investors in your area. These can be your new friends, if you are honest and open with them.
Of course you should probably work on getting some other funding sources , in case statists really do regulate wholesaling out of existence (like some are obviously praying for).
- Edgewood, MD · Member since 2014 · 283 posts · 59 votes10y
Originally posted by @Jay Orlauski:
let me address the core root of your question: how to build your buyers list.
REIA groups are a great way to meet local people in your area - try to make it to as many as you can and be very active in the group. Introduce yourself - let the other investors know what you are doing and collect business cards. I really like the auction idea - it couldn't hurt to get yourself in front of some of those investors.
WE BUY HOUSES signs could connect you some some investors who are looking to buy properties. Just be aware that many of them are also beginners who are looking to build their own list too.
Talk to some real estate agents in the area and let them know that you occasionally have 'pocket listings' ( houses that are not on the market or the MLS) for them - they may have buyers who are interested in picking them up from you. Or may call you to see if you have anything when a buyer is looking for something. See if any realtors in your area specialize in investment properties - they will have contacts also.
Keep coming to Bigger Pockets and connecting with others. Keep learning as much as you can about your local market - see who the players are and try to connect with them.
It will take a while to build a buyers list - you are going to have built rapport with many people before you have good list of real buyers.
I've gotten names from title companies who see transactions all the time and know who is doing the deals. They may be helpful to you.
Start up some dialog with a few Hard Money lenders and they may also be able to point you towards some buyers.
you may have to get creative to build your list - there is no one right way to do it - there are many ways to connect with investors. Don't forget to tell everyone you know that this is what you do - and remind them - so they will keep you in mind when the subject comes up - maybe someone at work is complaining about not being able to find a good investment to buy and a friend or family member mentions you to them.
If you stay consistent - followup with everyone who contacts you and stay in touch with your base - you will find that you have suddenly got a buyers list.
Best of luck to you - I hope you find your buyer.
Also - the big question of the day - what are the details of your wholesale opportunity? How much is it under contract for and how much do you plan to wholesale it for? How much time do you have to move it? thanks in advance!
We have a house in the Ashburton area of Baltimore City. The previous owner tore down a wall between 2 bedrooms to make it one bigger bedroom. So technically its a 3 bedroom, 2 bathrooms, and 1522 square foot. The arv is $215k. My partner and a contractor estimated the repairs at $25k. We'll have it under contract for $110k and plan to wholesale it $115k and the seller wants to close in 30 days.
- Edgewood, MD · Member since 2014 · 283 posts · 59 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'm guessing I would need access to the MLS in order to gather that information.
- Edgewood, MD · Member since 2014 · 283 posts · 59 votes10y
Originally posted by @Rick Wang:
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.
Couldn't agree with you anymore then I do. I figured it would be easy to stand out in a crowd of wholesalers if we're not only solving the buyers issue with their house being sold but, also bringing a solid deal to the investor.
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