I’m really interested in wholesaling
Round Rock, TX · Member since 2018 · 47 posts · 15 votes
I’m new to wholesaling, haven’t made my first deal yet. I’ve been soaking up knowledge on BP, google, and watching YouTube videos.
I’m curious about when it’s time to making a deal and making out a contract, do you necessarily need the money that you are offering the seller?
"When you get a property under contract, you are committing to buy the property."
Not true at all. We are mainly flippers, but because we get too many leads in, obviously we can not buy all the houses we get under contract. So in fact we do it the other way around. We tell them flat out that we have no intention of buying the house ourselves, and that we are going to wholesale it. We then add to this by telling them that we still may buy the house if we are able to, but count on us wholesaling it. 9 out of 10 times, the seller prefers us wholesaling it.
No drama 100% honest and full transparency.
Most wholesalers (if not all) are dishonest deceptive and manipulative. We always flat out tell the seller we will wholesale the house. And again they always rather us wholesale it than anything else. Its all about how you pitch it to them!
Hey @Lance Alotti thanks for responding to my post,
Any idea how it would be possible to work for a wholesaler?
Keep learning. You still need to learn a lot about the process.
When you get a property under contract, you are committing to buy the property. You then, however, sell the contract to your buyer, assigning your rights and responsibilities to that person. Your original contract needs to be written so that you can do this, and your seller should be expecting this. So don't hide anything. As such, you do not need to have the money to purchase the property.
Your contract should also have a due diligence clause to let you out if the deal doesn't work. BUT, you do NOT want to be relying on that. You shouldn't enter into the contract without already having done your homework and being CERTAIN that it's a good deal. If it is, and if you have the right buyers in your pipeline, you will be able to sell the contract.
This is one piece of a much larger puzzle. You need to understand the ENTIRE process before launching in (at least that's how I work). So keep learning. Read/Listen to books. Maybe get training. Watch BP videos. Make sure you understand every step of the process.
@Barry Pekin thank you for your feedback sir, I'm hungry and I'm doing everything I can to learn this process so I can start my career in REI. Again thank you!
If there is any other advice you can give this young buck PLEASE do, like I said I’m hungry for it.
You do not, the buyer will but individually do not. Keep learning, and find REI groups close to you so you can meet other wholesalers that is actually doing it. If you need any help or questions for me just message me.
"When you get a property under contract, you are committing to buy the property."
Not true at all. We are mainly flippers, but because we get too many leads in, obviously we can not buy all the houses we get under contract. So in fact we do it the other way around. We tell them flat out that we have no intention of buying the house ourselves, and that we are going to wholesale it. We then add to this by telling them that we still may buy the house if we are able to, but count on us wholesaling it. 9 out of 10 times, the seller prefers us wholesaling it.
No drama 100% honest and full transparency.
Most wholesalers (if not all) are dishonest deceptive and manipulative. We always flat out tell the seller we will wholesale the house. And again they always rather us wholesale it than anything else. Its all about how you pitch it to them!
@Jerryll Noorden,
I can clarify that statement. The contract is a legal commitment to purchase the property. However, since you’re saying something to the effect of “and/or assignee”, you are extending that to be more of a commitment that you or someone else will be buying it. And, yes, you should make that clear to the seller.
Further (and I may have said it before, but I can’t see it while posting on mobile), you have an escape clause, so you’re also extending that statement to something along the lines of “unless we discover something along the way that prevents us from completing the deal.”
@Jerryll Noorden,
Why does the seller prefer you to wholesale? Is there any difference from their perspective?
@Jerryll Noorden,
I can clarify that statement. The contract is a legal commitment to purchase the property. However, since you’re saying something to the effect of “and/or assignee”, you are extending that to be more of a commitment that you or someone else will be buying it. And, yes, you should make that clear to the seller.
Further (and I may have said it before, but I can’t see it while posting on mobile), you have an escape clause, so you’re also extending that statement to something along the lines of “unless we discover something along the way that prevents us from completing the deal.”
Ahh indeed.You are correct. Indeed the contract is a legal binding paper.Yup if the contract is assignable you are good.
See my new Barry friend... the reason sellers prefer to wholesale is because wholesaling is indeed a better option for them. It is all about how you explain it.
"Hey, I am going to tie up the house underccontract so I can take my time and sell the contract at a profit without knowing for sure if I can sell it, but I don't care anyways".. nope that won't fly.
But tell them that :
"hey we are flippers and as flippers we have a ton of expenses fixing the house up, but there are other kind of investors like buy and hold investors and they are not going to refinish the floors, or put granite or paint etc. etc, they are just putting a tenant in for passive income.. so they have far less expenses and thus can offer you more. in order to sell your house fast for more, a buy and hold investor may be a better deal.. but look at that, what a coinkidink, we have a bunch of buy and hold investors on our list. if you wholesale it through us it will be a great option, but of course you are the boss, you decide"
You know what they ALWAYS tell me?
"OMG Jerryll, you are so smexmie, yummie, you handsome devil you"
True story!
But you know what they also say after that?
"Yeah, I rather wholesale with you"
We are still honest transparent, we don't lie, we leave it up to them to decide. We will still try to buy the house ourselves but we can't buy every house.
And there you have it kids!
@Jamiel Strickland thanks for the response man! I’ll stay connected
@Jerryll Noorden I hear/read that a lot of wholesalers are manipulative and dishonest which sucks because I believe in being honest and being able to gain the trust of The seller or buyer. With that it makes it that much harder to gain rapport with the person your making a deal with.
@Jerryll Noorden I hear/read that a lot of wholesalers are manipulative and dishonest which sucks because I believe in being honest and being able to gain the trust of The seller or buyer. With that it makes it that much harder to gain rapport with the person your making a deal with.
Indeedee my sharply dressed friend. Indeed
@Barry Pekin once you get the property you want and agree on the price, u get the paperwork and all that, how does the seller get the money? Is there a time frame I have to sell the house? I would be taking out a loan to wholesale
@Jerry Maggiore from my understanding you will need no loan, you’re pretty much selling a piece of paper (meaning the contract) to the buyer. Watch Max Maxwell Youtube videos and podcast, they’ve helped me a lot.
@Mark Anthony Alvear Jr
Thanks! I’ll go watch and listen to a few and see what knowledge I gain
@Jerry Maggiore no problem man!
@Mark Anthony Alvear Jr Hi Mark! If you have the right investors behind you, you don't need the funds yourself. I've recently found a great investor and just not the houses or land yet. I'd love to connect with you.
@Mark Anthony Alvear Jr
Take everything step by step, don't rush the process . Also would suggest getting an experienced mentor to guide you along the way.
@Barry Pekin once you get the property you want and agree on the price, u get the paperwork and all that, how does the seller get the money? Is there a time frame I have to sell the house? I would be taking out a loan to wholesale
Jerry, it sounds like everyone already piped in with some good advice.
Correct, you do not have to take out a loan to wholesale. You enter into a binding contract that says you "and/or assignee" will purchase the property. You simply sell/assign the contract to someone else.
Here's the kicker. Make SURE you have good numbers that work with your ultimate buyer. If you don't, then they won't buy, and you'll be left high and dry. You can get out of the contract if done right, but you don't want to get a reputation for doing that, nor do you want to do that to your seller just because you didn't do your homework. They're counting on you.
Your contract will typically state when you are going to close. You can adjust that date with your seller, but they need to agree to that. They're usually ok with moving it up, but there not likely to want to push it back just for you to have more time to find a buyer. Instead, they'll find you in default and keep your earnest money.
Money is traded at closing. This is typically done with a title company or lawyer, or whatever is appropriate for your state. The buyer gives the money to the title company. The title company distributes that money to the seller, you, to pay off things like a previous mortgage, insurance, taxes, closing costs, etc., and of course, they keep some for themselves.
@Mark Anthony Alvear Jr I like the wholesaling Inc. Podcast. Also here on BP you can click the networking tab and then in the search box type in your city or close area. Scroll through and find wholesalers close to you. Offer them a portion of your first deal to mentor you (or a set fee). To be paid only if/when your first deal goes through. Then stick to it and mail them a check when the deal is done. This pay for education is common in RE. It worked for me, but I did know the guy first.
@Mark Anthony Alvear Jr You do not need much money to do wholesaling. When you find a deal, you will need to put earnest money in escrow. Keep it low as you can.
Now depending on how cheap you get the place for and what you can sell it for, you have 2 options.
#1 assignment of contract. You assign the contract to another buyer for what you paid plus your profits. The buyer sees all of this so you usually don't do this for any more than $5K. So if you lock up a deal for $55k and gonna profit $3K. You sell it to your buyer for $58K. You have no closing fees or nothing doing it this way.
#2 double close. Not all real estate attorneys do this and it's better to do a dry double close then a wet. Dry double close is the 2nd transaction funds the first transaction, otherwise you need the money to purchase it or borrow the money. There are companies out there that will lend you the money for a couple grand. Doing a double close hides your profits from the new buyer. So if you got a steal of a deal and are making $20K, you would definitely want to double close. You also have closing costs, lawyer fees and all that extra stuff now though too.
It's not overly complicated. You just need to get the right info and DON'T LIE!! about what you're doing.
@Mark Anthony Alvear Jr Forgot to add. Have a way out of the contract just incase you can't find a buyer. Some people don't agree with this, but it's the same when you use a realtor. You can back out of a deal for any reason you want.(In my area anyways) simple as saying the taxes are to high or it needs lot more work than I initially thought. Lots of different ways out. Protect yourself but don't be a *** either.
@Jamiel Strickland where about can I find REI groups and get wholesalers interested in showing me the ropes? Are there specific things I need to know before coming into contact?
"
"When you get a property under contract, you are committing to buy the property."
Not
true at all. We are mainly flippers, but because we get too many leads
in, obviously we can not buy all the houses we get under contract. So in
fact we do it the other way around. We tell them flat out that we have
no intention of buying the house ourselves, and that we are going to
wholesale it. We then add to this by telling them that we still may buy
the house if we are able to, but count on us wholesaling it. 9 out of 10
times, the seller prefers us wholesaling it.
No drama 100% honest and full transparency.
Most wholesalers (if not all) are dishonest deceptive and manipulative. We always flat out tell the seller we will wholesale the house. And again they always rather us wholesale it than anything else. Its all about how you pitch it to them!
--------------------------------------"
"When you get a property under contract, you are committing to buy the property."
Not
true at all. We are mainly flippers, but because we get too many leads
in, obviously we can not buy all the houses we get under contract. So in
fact we do it the other way around. We tell them flat out that we have
no intention of buying the house ourselves, and that we are going to
wholesale it. We then add to this by telling them that we still may buy
the house if we are able to, but count on us wholesaling it. 9 out of 10
times, the seller prefers us wholesaling it.
No drama 100% honest and full transparency.
Most wholesalers (if not all) are dishonest deceptive and manipulative. We always flat out tell the seller we will wholesale the house. And again they always rather us wholesale it than anything else. Its all about how you pitch it to them!
--------------------------------------Well.
1) you are wrong. And I will explain further down below why exactly.
2) Well, I may be ignorant of the law.. as I am not a lawyer, but I wouldn't be so fast to call other people ignorant (mainly as it is not nice. Shame on you bubbles!)
You have no idea what is in my contracts so I am not sure you are in a spot where you can say these things about my obvious ignorance on the law. I have done my research, and included 5 CT lawyers. But lets ignore that my contracts are lawyer proof.. because lawyers can absolutely be wrong... absolutely!
But a lesson on Yooman interaction...
See bubbles... imagine this:
It is like me saying.. "dude you are so mean and evil and smell a dead smurf ... unless you are nice." See what I am getting at? I mean what is the point of saying that?
"you are committed to purchase it unless the terms and conditions of the contract permit you to not go through with the purchase (e.g., bad inspection, failure to obtain financing after good faith effort to procure financing, etc.). Unless you have a contract provision that permits you to back out if you cannot wholesale the property, then you are committed to buy it. "
duhh?!
Dude, what real estate transaction contract when thousands of dollars are involved does NOT have a contingency? I mean, why use a contract AT ALL without said contingencies?
Now I will explain why (I humbly think) you are wrong.
It is my contract. If I put in my contract that I can cancel the contract at any time for any reason what so ever, I am covered. It is up to me what the contract says, and no one is forcing anyone to sign that contract. That is where I humbly believe your thinking flaw lies.!
Do not think for one minute, however, that because you announce your intention to wholesale that your obligations under the contract magically disappear.
I write my obligations in the contract in MY contract, and no one ever said I was neglecting them?! I really don't understand your point.
If you disagree, I would love to discuss this as I do not want to get in trouble. Just do it nicely dude.
Mmmkay?