What to Bring to Seller Appointment - Wholesale Real Estate

132 Replies

I'm getting prepared to go on my first seller appointment with a motivated seller. I'm curious about what papers I should bring.

I found a great thread here about what to bring but I have one question, should I bring two purchase and sale agreements and fill them both out exactly the same that way I have a contract and the seller has a contract? 

Or would it be better to fill out a single purchase and sale agreement and I take it with me and I leave a simple offer sheet with the seller, then when I get back to the office I can scan/email the original P&S agreement over to the seller?

Hope this makes sense, thanks in advance.

Take the P&S contract along with proof of funds if you are a REAL buyer and not a FRAUD AND SCAMMER.

@Brittany Witt You will have to learn to tolerate the jerks here. Not sure why bigger pockets lets them harass and discourage newbies seeking advice...but hey its not my website.

I would take one copy of the contract to your appointment and you can always make them a copy or have your title company email them a copy once theyve receipted it. Also run comps prior to your appointment so you can talk intelligently with your seller about property values in their neighborhood. I find that about 90% of sellers think their property is worth a lot more than it is so you have to educate them with facts about what properties are actually selling for.

Good Luck!

See 475.42 and 475.43. Taking advice from fraud and scammers can get you in trouble with the state. FL laws make it illegal to market properties you do not own. Taking advice from fraud and scammer unlicensed broker cheerleaders can get you in trouble. I report every unlicensed broker and several have gotten cease and desist letters.  Unlicensed brokers are a PUBLIC NUISANCE! 

Also if you need an attorney here is one for you:
https://www.richardhornsby.com/crimes/regulatory/u...

Maybe lydia can start her own website called unlicensed brokers for hire.  Then she can be the head cheerleader LOL! She can teach you how to deceive sellers to believe you are a buyer and not a fraud.

Originally posted by @Lydia T. :

I find that about 90% of sellers think their property is worth a lot more than it is so you have to educate them with facts about what properties are actually selling for.

Good Luck!

Those sellers are correct I am guessing becuase you turn around and make that amount instead of the seller. This is why i dont likethe idea of wholesalers - you are stealing equity from the seller. The seller should list on the open market and get all proceeds (except commission, etc) otherwise they are being done a disservice to 

How would you feel if it was your grandparent, parent etc that was being taken advantage of? 

they are stealing equity while they claim they are providing a service. Greed is the motivating factor.

@Mary Mitchell You have absolutely no clue about me or the types of homes that I buy or the sellers that I deal with. First of all I have had plenty of sellers that I referred to my business partner (who is a licensed agent) and she has listed their homes. And when some of those homes didnt sell after 60 days of being on the market with only low ball investor offers guess who those sellers called? Second the majority of the homes that I wholesale are water damaged, fire damaged, hoarder homes and cat lady homes that smell like cat urine. These are not homes that belong on the MLS. These are homes that sellers would be embarrassed to put on the MLS! I know its difficult to fathom but everyones primary motivation isnt money! Shocker! Even more of a shocker, there are some s***ty agents out there too and not everyone wants to deal with one. I certainly dont see agents telling people they could make the most money if they went FSBO and didnt use an agent at all.

I had a woman who was getting a divorce and she sold her home for next to nothing because she didnt want her ex husband to get half of what the house was worth! I offered her more and she negotiated down!

So I feel sorry for you and @John Thedford because your lives must be really miserable and empty if you spend all your time trolling BP to harass other people who are just trying to learn and ask questions. You guys are like parrots with limited vocabularies because you say EXACTLY the same things. Oh what if it was your grandmother? Thats ridiculous. No where in her question did she say how do I convince Grandma Jo to sell me her house for $20 and some denture cream. I would love to know how you guys make money in real estate, if either of you are actually in real estate, if you are over paying for your properties? Because apparently buying anything at a discount is a scam. Or is it only a scam when a wholesaler does it, but completely fine if an investor does the same thing? I dont know if you are aware of this but if you have ever bought a car, clothing, a cell phone or a piece of gum the company that sold it to you made a profit. Are they also scammers and frauds? It seems that by your logic anyone making a profit by selling something for more than they paid for it is committing fraud.

Out of 4 people I get 1 answer. Unfortunately I expect the negative comments, I don't think I've ever asked a question here without some negative accusatory comments. 

Just doing some gold 'ol wholesaling guys. The sellers are well aware of their decision and options. I actually recommend realtors to homeowners more often than not. I'm not out to profit on ignorance. I'm actually about to offer a seller more than what she asked for. She just wants what she owes on code violations and I want her to walk away with cash. 

Thanks @Lydia T. for the guidance. =) 

@Brittany Witt Thank you Brittany for being an example of an ethical wholesaler! We are not leprechauns, we actually exist! Who knew!

How do I come up with the contracts to do a sell. Are the online or do i get my attorney to make them for me ? I found some good ones online but they are iffy and most are not based on my state GA.  I guess my question is how do I get good contracts to complete my first wholesale deal 

The truth is that wholesalers - for the most part - are taking money that should go to the seller. 

If a property doesnt sell in 60’days they should lower the price! 

Obviously YOU. are able to sell the property for more than you “paid” for it   Also you are not working for the benefit of the seller - only yourself  

The right thing in most instances is to have the house on the open market and lower the price. 

The 10s of thousands of $$ you are making should be going to the seller. 

I am hoping that wholesaling gets made illegal in all states. 

I dont see my posts as negative - just probably what most people think about this part of the REI world.

Using contracts to broker real estate without a license is illegal in FL. No way to whitewash that fact. The word "wholesaler" implies some sort of ethics. Without a license, ethics is not in play. There are lots of LICENSED wholesalers--at least they follow the law. Marketing properties you do not own, unless licensed, is ILLEGAL. Nuff said:) Not licensed and brokering real estate=FRAUDS AND SCAMMERS! If you are not closing and then reselling: FRAUDS AND SCAMMERS. The only way to operate without a license: MISLEAD SELLERS. Another typical M/O of unlicensed brokers. 

Originally posted by @Mary Mitchell :

The truth is that wholesalers - for the most part - are taking money that should go to the seller. 

If a property doesnt sell in 60’days they should lower the price! 

Obviously YOU. are able to sell the property for more than you “paid” for it   Also you are not working for the benefit of the seller - only yourself  

The right thing in most instances is to have the house on the open market and lower the price. 

The 10s of thousands of $$ you are making should be going to the seller. 

I am hoping that wholesaling gets made illegal in all states. 

I dont see my posts as negative - just probably what most people think about this part of the REI world.

 Most are desperate people that will do anything for a buck-including breaking brokerage laws. The good news is most of these PUBLIC NUISANCES are gone in a hurry LOL.  There are only TWO ways to do it LEGAL in FL: Own it and resell OR be LICENSED. Any other way is simply ILLEGAL.

Note the State of FL refers to the "customers" of these unlicensed brokers as VICTIMS. Same thing in CO. Here is what the State of CO has to say:
The Division of Real Estate is seeing an uptick in cases involving two types of cases involving long-term home ownership: Wholesaling/Assigning Transactions and Distressed Rescue Transactions.

Wholesaling/Assigning Transactions

Investors and real estate brokers are targeting people with home ownership of over 20 years. This targeting translates to people over the age of 50 who are close to paying down their mortgage and holding equity in their property. The investor will offer the following:

  • Cash transaction;
  • A quick sale closing with no inspection; and
  • You can leave behind any items you don’t want.

The problems begin when the homeowner is elderly, alone, and doesn’t know the true market value of their property:

  • They may have purchased their property over 20 years ago for $50,000, $100,000, or maybe $200,000.
  • That same property now could have a market value of $300,000, $400,000 or even $500,000.
  • The idea that they purchased the property 20 years ago for $120,000 and are now being offered $220,000 sounds appealing to these homeowners – their mortgage might be paid off and they will make $100,000 – sounds good right?
  • They don’t realize that an investor or real estate broker who knows the true market value of the property may be taking advantage of them by actively misleading the homeowner as to the true market value.

The problems arise when the investor or real estate broker:

  • Drives down the property value in the seller’s mind by showing them comparable properties that aren’t really comparable.
  • Talks to the homeowner about all of the deferred maintenance that the property needs (which may or may not be true).
  • Allows the homeowner to leave items behind (What is that “convenience” worth - the costs of renting a dumpster, hiring two-three workers for a day to unload your house? Is it worth a homeowner giving up $20,000 - $50,000 - $100,000 – or more of their equity?)
  • Fails to tell the homeowner that they are actively marketing the property for market value and that the investor or real estate broker plans to assign their rights in their contract with the homeowner to another investor/buyer.
  • Fails to tell the homeowner that they intend to make a profit by accomplishing an assignment of the contract.
  • Fails to tell the homeowner when the contract is assigned to a different investor/buyer.
Investigated Case Example

Below is an example of a case that we investigated where the broker involved in the deal was referred criminally and her real estate license was revoked.

The victim had the misfortune of being on her front porch when an “investor” and his real estate partner approached her and told her they used to live in the neighborhood and wanted to move back.

They figured out her weaknesses and used them against her.

  • After “working” on her for a few days, the investor and real estate agent had a meeting with her that lasted hours. At the end of the meeting they had talked her into a purchase price of $200,000 for a property she didn’t even plan on selling.
  • At the same time, they had already assigned the contract to a second investor for $300,000 – with the agreement that the second investor would pay a $100,000 assignment fee to the original investor and real estate broker.
  • The second investor sold the property to a third investor for $360,000 two weeks after the closing.
  • Finally, the third investor held the property for eight months and sold it for $520,000.

That wouldn’t happen to any of us right? Think again. This type of thing can happen to anyone – young, old, rich, poor, no education, or highly educated. The reason it works is because people who perpetrate fraud are good at what they do – separating you from your money.

  • Unfortunately, some of our victims became victims because they responded to an unsolicited mailer, phone call, or knock on the door. Once the “investor” makes contact with someone, they start “working” on them. They are professionals at getting close and gaining trust.
  • They are charming and know how to obtain information about you that will help in their dealings with you. In just a few short conversations they will find out private information about you and then use it against you.
Things to Keep In Mind
  • Be wary if someone approaches you about something you weren’t even thinking about doing.
  • If you want to sell your property, you should contact someone you have been referred to by family, friends, or do research on real estate brokers working in your neighborhood.
  • Go to our website and see if the person has a real estate license and if they have any disciplinary history – dora.colorado.gov/dre
  • Go to the City and County of Denver website to check on neighborhood sales – denvergov.org
    • Click Search Property Information, then enter your address and click Search. In the Results link click on your address where there are various tabs and click on Neighborhood Sales.
  • If you have a hard time with technology, you can always ask friends or family members to help you navigate the web to do some research about property values in your area.

If you do find yourself entertaining an offer from an unsolicited investor:

  • Ask to obtain, and keep, a list of the comparable property sales in your neighborhood the investor used to come up with their purchase price offer.
  • Always keep someone else in the loop – your children, good friends, or someone you trust.
  • Always know that you can seek legal advice – in the end, it might be worth the money you spend on a consultation with an attorney.
  • Review the contract closely to see if it is assignable. Inquire into why it is assignable, for instance: to whom it is assigned and why, and how much the new buyer is paying the original buyer - AKA – an assignment fee.
  • Do not sign an assignable contract until you have had the opportunity to investigate the true value of your property and the legal implications with an attorney.
  • Take responsibility for being informed about the value of your property and the contracts that you areconsidering signing.
Distressed Rescue Transactions

Investors and real estate brokers are approaching distressed homeowners (those behind in their payments, facing foreclosure, or experiencing a medical issue). They offer the homeowner an “out” by agreeing to make the mortgage payments for them.

Problems arise when the investor does not explain how this will be accomplished. The unscrupulous investor will:

  • Have the homeowner sign a Quit Claim Deed in which the homeowner signs over their ownership in the property.
  • Fail to explain to the homeowner that they, the homeowner, are still responsible for the mortgage.
  • Fail to warn the homeowner that they could be violating their “due on sale clause” with their lender.

The homeowner is usually elderly or part of an at-risk population (English isn’t their first language, disability of some kind, etc.).

The Division advises the following when it comes to these types of rescue transactions:

  • Don’t sign any documents or a deed to anyone until you have had a chance to talk with your lender and an attorney about your mortgage obligations and your legal rights.
  • Colorado has a Foreclosure Protection Act that affords you certain rights when you are financially distressed.
  • It’s best to take proactive steps when you first start having financial problems, and here are some resources that you can contact:

The irony... 

Attorneys hate real estate agents because "agents are Unauthorized Practitioners of Law."

Real estate agents hate wholesalers because a "wholesaler is an Unlicensed Practitioner of Real Estate."

Advice from the State of CO is good across all 50 states:

  • Do not sign an assignable contract until you have had the opportunity to investigate the true value of your property and the legal implications with an attorney.
Originally posted by @Brett Schoenfelder :

The irony... 

Attorneys hate real estate agents because "agents are Unauthorized Practitioners of Law."

Real estate agents hate wholesalers because a "wholesaler is an Unlicensed Practitioner of Real Estate."

 Some wholesalers are licensed. The rest are unlicensed brokers! I get emails from both. I delete the licensed ones and forward the rest to the state to deal with. They have issued dozens upon dozens of cease and desist orders against those using contracts to broker without a license like the OP appears to be. Maybe she will put me on her "buyers list" LOL. Got a call a few weeks back from an unlicensed character. When I told him I was going to report him he freaked out stating his last go-round with the state for unlicensed brokering cost him 6K. Too funny!

@Doublebe Foster I personally got a contract online, and then had an attorney look over, and make adjustments to comply with my state laws.

This post has been removed.

Proof of funds, credit report, business references. leave the offer price alone or have space for counter offer. Showing your comps.

@Mary Mitchell how many truly distressed properties are you seeing on the MLS? What do you do if you let your home deteriorate, can't afford to rehab it, and need cash? Wholesalers are creating a market where one does not exist in those cases.

Originally posted by @Jon Allen :

@Mary Mitchell how many truly distressed properties are you seeing on the MLS? What do you do if you let your home deteriorate, can't afford to rehab it, and need cash? Wholesalers are creating a market where one does not exist in those cases.

 Put it on the open market.  If a wholesaler can sell it, then there is a market,,,,  so i dont buy this idea that only by being “off market” will these properties sell. 

Sure there are properties that need a lot of help and some that may need to be dealt with by someone who is willing to do the work - but none of that is a reason for the seller to not get the most possible for the house. 

@Jon Allen Great point. I’ve come across so many distressed sellers who spoke with about 3-5 agents and none of them could help them out of their situation. I’m Not knocking agents. I am one myself. As an agent we are trained to get the listing. That’s all. We usually don’t have the tools for anything else.

There are so many back-and-forth discussion threads on BP between wholesalers and licensed agents that it reminds me of the feuds between cattle ranchers and farmers in old west movies from the 50s and 60s.

Rather than risk legal difficulties by trying to wholesale using purchase agreements with various "subject to" escape clauses, why not simply avoid these issues altogether by executing an option agreement with the property owner instead?

Option agreements are specifically designed to achieve what a wholesaler is basically trying to accomplish (i.e. during term of agreement property owner has obligation to sell to option holder at agreed price, but option holder can choose at his/her sole discretion whether to proceed with purchase, sell/assign the option agreement to another buyer, or simply walk away from the deal by letting the option expire without exercising it).

Or am I missing something here?

@Alan Johnson The issue revolves around the fact that for the most part, wholesalers are screwing the seller.  They are buying at a discount that's so large that the wholesaler makes thousands in fees and the end buyer can still get a below-market deal.

Example: I have a listing here in Plymouth right now which is on the MLS - which by definition is the way to get the highest possible price for the sellers.

They came to me as buyers as they were about to sell their home.  I dug a little deeper

HomevXXXXs (name obscured so as not to get sued - but they may or may not use a caveman in their TV and billboard ads) offered the sellers $228,000 for their property.  

I ran the numbers and came up with a minimum of $325K.  It will probably sell at $335K - $340K.  It needs a defunct in ground pool filled in, new carpeting in one room and a backsplash in the kitchen.  Less than $4,000 in work.

This is a young family with a toddler and another baby on the way.  They're not elderly, stupid, desperate or non-English speaking.

They were sold such a bill of goods that they were prepared to accept that $228K offer because after the pitch, they believed that it wasn't worth any more than that.  Their mistake - which almost cost them over $100,000 - was that they trusted the wholesaler.

That's the kind of thing that really tick off those of us in the business.  Watching unlicensed, illegal wholesalers screw people hard.  I get that there are a few exceptions out there, but for the most part, wholesalers are operating illegally and unethically.

@Brittany Witt hello! Have you checked out the local BP meetup? It is held the first Saturday’s of each month, keep and eye on the BP Events page for details. The last meeting we talked a lot about wholesaling (is focused on buy and holds but still learned a lot). Hope to see you there. 

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