Build a Buyers List!!! Really? What about the MLS?

Wholesaling
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Build a Buyers List!!! Really? What about the MLS?

Jerry Kisasonak
Residential Real Estate Agent · Mc Keesport, PA · Member since 2012 · 449 posts · 154 votes

Much of what I hear about wholesaling is to build a buyers list and go find properties to fill those buyer's purchasing criteria. In other words, be sort of an order fulfillment company.

However, 98% of property sales are right off of the MLS, and that includes investment properties. I know of alot of investors that buy all their deals right from the MLS. They get deals automatically emailed to them immediately when they come on the market, they analyze them, and submit offers... LOTS of offers! And, low and behold, they end up finding the sellers that are ready to sell cheap.

As a wholesaler, it seems to me that instead of doing all the work to create your own mini-MLS marketplace by building a buyers list, websites, squeeze pages, etc, it would just be easier to tap into the MLS and list your deals there as a net listing. That way, not only will your hardcore investors see your deal (which they will put an offer in on because that's what they do... make offers all day), you will also get exposure to "John," the guy down the street who is still living at home, has a pile of cash, and wants to get out of his parents home but wants to stay local. He, of course, will be willing to pay more than an investor because he is willing to work for free... putting sweat equity into the property to make it how he wants it. Why not list your deals on the MLS and let all these potential buyers bid your property up?

As a side note, I realize that this is by definition no longer wholesaling. Also, I realize it may be hard to get an agent to list homes under these conditions and timelines. I'm a realtor, so on my end, that will certainly help. I have already spoke with my local MLS, and they are okay with an agent doing deals this way, so long as they are net listings. Also, I'm not going to do these transactions in my name, I have a wholesaling LLC set up.

In any case, I'll like some feedback on this subject. I'm not against building a buyers list, and in fact once I get some deals moving I plan to just call the investors before listing deals on the MLS. By why aren't other wholesalers doing business on the MLS? Why are they complicating things? Sorry I wrote a mini book here : )

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J ScottPro Member
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Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
14y

We list all our wholesales on the MLS and this is how about 50% of them sell. The other 50% sell to investors we have a personal relationship with.

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  • Dale Osborn
    Mobile Home Investor · Spanaway, WA · Member since 2008 · 1k+ posts · 578 votes
    14y

    As a licensed agent you attend continuing education classes that teach you what just passing the real estate exam did not teach. One of the classes will talk about leaving off key info on your flyers forcing anyone interested to have to waste their time calling you to get the key info. The callers are then added to your "buyer's list" as to what they are looking for as far as a home is concerned. What is different??

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  • Will F.
    Investor · Los Angeles County, CA · Member since 2012 · 962 posts · 279 votes
    14y

    Good question. I'd like to know the benefits and reasons why people make buyers lists instead of just marketing to the whole MLS etc?

    What are other benefits of making buyers lists?

    Would this make you a "bird dog" who finds deals for others?

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  • Dale Osborn
    Mobile Home Investor · Spanaway, WA · Member since 2008 · 1k+ posts · 578 votes
    14y

    The benefit would be to have a warm contact in place so when you had something in your inventory available - you can turn it faster. Most agents take a listing and sit back and prays it sells before their next house or car payment comes due. There is not that much of an advantage to sticking it out on the open market and then having to pay for this privilege.

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  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    14y

    We list all our wholesales on the MLS and this is how about 50% of them sell. The other 50% sell to investors we have a personal relationship with.

    Podcast Guest on Show The Truth About Real Estate Investing in 2024 (What Investors NEED to Know)
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  • Spencer I.
    Investor · Houston, TX · Member since 2012 · 102 posts · 13 votes
    14y
    Originally posted by J Scott:
    We list all our wholesales on the MLS and this is how about 50% of them sell. The other 50% sell to investors we have a personal relationship with.

    Are you getting the sellers to sign a listing agreement first?
    I inquired about doing just that once here in Houston, and was told I could not sign the listing agreement until I closed therefore the seller must sign the listing agreement. My buyers list works great, but my deals would sell at least a few days sooner if I could just list them on mls.
    Just curious.

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  • Jerry Kisasonak
    OP
    Residential Real Estate Agent · Mc Keesport, PA · Member since 2012 · 449 posts · 154 votes
    14y

    J Scott

    That's very interesting. You are one of the few people that I've heard of that do that, and if you're selling 50% of your deals on the MLS obviously it works well for you. It just makes total sense to me because that's where almost everyone goes to find deals, including investors.

    Are you listing them as net listings? Can you give me an example of how you write up the paperwork for your deals in terms of the realtors commission and your assignment fee? I was told by a broker that you'd use the standard listing process and paperwork and then attach an addendum spelling out the specifics of the realtors commission and assignment fee. Is that in line with how you handle your deals or is there some other way I should consider? Sorry for all the questions... and thanks for sharing your knowledge. I appreciate it : )

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  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    14y

    Sorry about any confusion, but I actually purchase the property before I relist it on the MLS. The MLS in my area won't allow a property to be listed except by the owner, so having it under contract to purchase doesn't give me the right to relist it on the MLS.

    As for commissions, I pay 3% to the selling broker (the buyer's agent).

    This way of doing things requires that you have the cash to close and that your profit is on top of the commission you pay to the selling broker, but I've found that with some REOs I can literally relist the next day with better pictures and find a buyer very quickly.

    Podcast Guest on Show The Truth About Real Estate Investing in 2024 (What Investors NEED to Know)
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  • Jerry Kisasonak
    OP
    Residential Real Estate Agent · Mc Keesport, PA · Member since 2012 · 449 posts · 154 votes
    14y

    J Scott
    Thanks. I wasn't planning on getting a property under contract that's currently listed on the MLS and then relist it before the original listing closes. I don't think you can do that anywhere, because you essentially would have the same property listed twice on the MLS at the same time. I'm planning on getting deals by other means, like direct mail, bandit signs, craigslist, etc.

    By tying up deals that way (FSBO's), I will be able to immediately list them on the MLS because I have an equitable interest in the property, which grants me the right to market and sell the property if I so choose. I guess to be more specific, if I sell the property I'd do so by double closing, and if I sell the contract I'll just do so by way of assignment.

    If I had the cash on hand, I would just do things the way you are. And I know what you mean about REO being very poorly marketed. The listing agents certainly don't put much thought or time into trying to bring the property's best features to the foreground. Under the "comments" section on the listing they should just put "No comment."

    That's kind of funny that you can just repackage it and resell it for more almost immediately. Kuddos to you : )

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  • Mike Nelson
    Wholesaler · Washington, D.C · Member since 2011 · 449 posts · 94 votes
    14y

    I wholesale in several different markets, each market is different far as wholesaling on the MLS. The way that I'm able to list properties on the MLS that I have under contract is by working with a broker who understands the process. He allows me to get a property under contract and he will flat list it on MLS. For my local market where I will be licensed soon, I work with a realtor who list the properties for me, what I do is contract the property with the seller letting them know that I will purchase their property for X amount then I go list it on MLS for a 20k mark up with 2-5k going to the selling agent and buyers cover all closing cost. It's more working parts to things but in short, it can be done you just have to deal with an investor friendly broker.

    Far as having a buyers list, my buyers list consist of agents that represented cash buyers in a transaction. I have my assistant call all the agents that sold properties around my subject property for cash and I offer them a fee for bringing me a buyer. Works well and plus you can pay agents far less than you would pay a wholesaler for bringing you a buyer.

    2Reply
  • Jerry Kisasonak
    OP
    Residential Real Estate Agent · Mc Keesport, PA · Member since 2012 · 449 posts · 154 votes
    14y

    Mike Nelson

    I like how you are running your business Mike. Thanks for sharing, and congrats on your success. I am an agent with Keller Williams and they are very investor friendly so I don't think I'll have any problems with listing properties that I get under contract.

    Great idea on contacting agents who sold properties for cash in the area where you have a deal. I was thinking of finding the cash sales in the area of my deal and getting the property's address, then putting that address into our tax assessors website to see where the tax bills are being sent to. Then I can just send a flyer of my deal to those addresses and within a few days the local cash buyer will be alerted of my deal. Your way has much less legwork, but there's more of an expense attached to it too. I guess which way is best would depend on how busy you are, how liquid you are financially, etc.

    A quick question... what is working for you to find motivated sellers? I'm going to guess direct mail since you're working in multiple markets. If so, do you do post cards, yellow letters???

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  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    14y
    Originally posted by Jerry Kisasonak:

    By tying up deals that way (FSBO's), I will be able to immediately list them on the MLS because I have an equitable interest in the property, which grants me the right to market and sell the property if I so choose.

    It depends on your MLS rules. Legally, yes, you may be allowed to market a property if you have equitable interest (this will depend on local laws), but in my area, the MLS will not allow a listing unless you're the OWNER of the property (i.e., you're on title). It's not a legal thing, it's an MLS rule.

    So, you may want to check with your local MLS or an agent that knows the MLS rules. Again, in my area, I have to purchase it before putting it back on the MLS.

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  • Ryan Webber
    Wholesaler · Amarillo, TX · Member since 2008 · 1k+ posts · 659 votes
    14y

    As a professional wholesaler with a very well established buyers list, I sell the majority of my deals with a handful of phone calls. There would be no point in listing most of them.

    Now I have at different times listed wholesale deals on the MLS and what I've found is I hate it. I end up getting investors that whine like retail style buyers. They want this and that fixed or tested and 30 day closings and option periods and inspections and contingencies and blah, blah, blah.

    With my own mini-mls, as you put it, Jerry Kisasonak, I dictate the terms.

    I want you to close in a week or less.
    There are NO contingencies. No financing addendums. No option periods.
    I get the earnest money directly and it is non-refundable.
    I pick the title agent.
    If you want an inspection, do it before you bring me a contract.
    I will fix nothing in the house.
    I will not pick up the piles of trash in the front yard, or the piles of clothes in the kitchen, or kill the cockroaches infesting the house. I will not replace the roof, the sewer line, or the heating and air, and I will look at you like you are stupid if you even ask me to. That is obviously why I'm selling it so cheap.
    Here's the price. Take it or leave it. If you don't buy it, someone else will or I will fix it up myself. I don't really care which it is.

    When I try to dictate these types of things with a realtor, they usually freak out and look at me like I am stupid.

    Wholesaling professionally is about building strong relationships with strong cash buyers, and the MLS is not needed for that, and neither are realtors. Realtors usually get in the way and complicate things. And really, why waste the time or the money anyway? Just pick up the phone and call the investor directly. It saves precious time and makes you more money. Why pay a realtor thousands of dollars to wait to see your listing, research it enough to pass it on, set up an appointment, show it, write up a bloated contract, blah blah blah. Do the work yourself. Build the relationship with the investor directly and make thousands of dollars more on every transaction. That seems like a no-brainer to me.

    Now when you are actively building your buyers list, I can see the advantage of doing any and every type of marketing to buyers that you can, including the MLS. But thinking that any one marketing strategy is the end all, golden path to riches and enlightenment, is really a short walk to a small bank account.

    My best buyers rarely buy anything off of the MLS. If I was utilizling the MLS as my main marketing tool to buyers, my business would suck. Obviously each market is different, but my best advice is to consistently and persistently build and work multiple systems of finding deals and of finding buyers. Sure, use the MLS, along with everything else you can think of to find buyers (websites, squeeze pages, ads, networking, research, etc).

    4Reply
  • Account Closed
    Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
    14y

    Ryan Webber I'm guessing your market/farm in TX is similar to mine in CA's Central Valley. So, I'm curious if you've looked into using the MLS more recently. There tons of cash buyers out there right now for properties with low entry prices (especially under $50K) and low inventory. When listing the props, I'm having none of the issues with agents and buyers that you mention. The agents are bringing experienced investor buyers who expect to buy as-is, with none of those crazy retail demands. Granted, they don't write the offer with a no financing contingency and a non-refundable deposit. I counter with that, and it's deal breaker if they say no. These buyers pay more than my buyer's list. Way more.

    My buyer's list has many local buy and hold guys who stop playing when the prices don't allow great cash flow from the get-go. But there are hundreds of other buyers that have different requirements when buying. They have buyer's agents and the way to reach them is the MLS. I can't help but think your market is the same.

    I closed on a property last week. In the hood, with abandoned auto, and known squatter with entitlement issues. And full of junk. An agent brought me an offer from a buyer to take that property totally as-is, with squatter, junk and auto. I usually clear properties of junk and do evictions because I think I get a better price with an empty property. It's also necessary to clear title as abatement liens aren't released until the property passes a re-inspection. I'd say these are different times when an agent brings a buyer to a deal like this.

    2Reply
  • Account Closed
    Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
    14y

    One more thing. The difference in profit between offering the above property to my buyer's list versus the MLS is the difference between $5K and $20K.

    0Reply
  • Ryan Webber
    Wholesaler · Amarillo, TX · Member since 2008 · 1k+ posts · 659 votes
    14y

    K. Marie Poe, I really love how you wrap this giant stick of unarguable reason with soft velvet and then smack me upside the head with it. That's the power of a smart woman.

    Well, no, actually I have not tried it recently, but now I will. I have the perfect one for it. Thanks for the suggestion.

    I keep a pretty close look out on local serious buyers by tracking the sales data, but I do miss some of them, and having multiple systems of connecting with them is always a good idea.

    1Reply
  • Account Closed
    Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
    14y

    Ryan Webber No such thing as unarguable reason. You can argue with anything, or least I can.

    After all that I said above about selling as-is, I have an email this morning from the buyer. He has come up with some lame hearsay information about the sewer line and is requesting a seller concession of $1K. The answer is no. (If it really was sewer line issue, the number wouldn't be $1K). But I can stand to be a little annoyed for an extra $15K.

    Just try listing one and see what happens. Can't wait to hear how it goes.

    2Reply
  • Account Closed
    Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
    14y

    Jerry Kisasonak Be careful about your assumption that a contract that gives you "equitable interest" allows you to list on the MLS. Technically, you can only sell your contract since you don't own the property. The MLS isn't set up to sell contracts. There may be some allowance in the commercial section, where businesses are bought and sold. That equitable interest thing is a legal argument in contract law. It doesn't necessarily give you any rights.

    There is the issue of transparency as well. Most buyers unless they understand assignments or double closes, are going to be confused when the title report comes back with someone else as the owner. It opens up the deal to doubts and concerns by the buyer. And as J Scott says, your local MLS rules may prohibit it. I know people who list props they don't own in my farms, but I'm not sure they are in compliance with the MLS rules. Flat fee listing services are often subscribers to many different MLS. Hard to say if they are following the rules for each region.

    You'll definitely hear people say that it's done and can be done. I've yet to see it outlined where it's actually allowed. Just something to think about.

    1Reply
  • ED Russo
    ft Lauderdale, FL · Member since 2010 · 68 posts · 4 votes
    14y

    Marie Poe your 100% on the money. Michale Quarles preaches the same thing. More pool of AS IS Cash Buyers on mls. I rather make $20k then $5k. My question is do you close n the deals if so how does the hard money work on the deal?

    0Reply
  • Jerry Kisasonak
    OP
    Residential Real Estate Agent · Mc Keesport, PA · Member since 2012 · 449 posts · 154 votes
    14y

    K. Marie Poe I am interested in knowing the same thing Ed Russo asked. What are you doing on the financing end of your deals? And by the way, that's for the great input.

    ED Russo Ed, I know Michael Quarles does some of his deals Sub2, then turns them in the MLS. Short-term Sub2's is certainly an easier pitch to a seller. I don't know what other strategies he's using to do his deals. I'll have to ask him. I'm going to get some yellow letters sent out through him soon so I'll be talking to him.

    0Reply
  • Jerry Kisasonak
    OP
    Residential Real Estate Agent · Mc Keesport, PA · Member since 2012 · 449 posts · 154 votes
    14y

    K. Marie Poe Sorry... meant to type "thanks" for the great input.

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  • Account Closed
    Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
    14y

    Jerry Kisasonak I close on what I buy before I offer it for sale, and have for serveral years. I have my own funds and I have private money funds. I've also used hard money lenders many times. It works just like any other loan. Borrow the money, use the property as collateral. Sell the property, pay off the lender. I've used hard money as little as 5 days.

    There are some interesting threads here on BP that discuss/debate what wholesaling really means. Many investors, especially newbies, think it means getting a property under contract and assigning your contract or double closing, thereby using none of your own funds. Others think that you are a wholesaler if you aren't the end user of the property. (But is a rehabber the end user?) Ryan Webber holds that wholesaling means selling for a wholesale price, regardless of how the property is purchased and re-sold.

    I call some of the deals I do wholesaling in order to differentiate them from rehab resales. But I'm not a wholesaler. I don't for a second think I owe rehabbers or landlord buyers any particular discount or price points or potential profit. I do my best to sell everything for what the market will bear. Doesn't matter if it's a pretty house or a major fixer. Doesn't matter what I paid for it. It's up to the buyer to negotiate and buy for a price that makes sense for their purposes.

    2Reply
  • Jerry Kisasonak
    OP
    Residential Real Estate Agent · Mc Keesport, PA · Member since 2012 · 449 posts · 154 votes
    14y

    K. Marie Poe Very nicely explained! I like the approach you have. It seems to me that you aren't really boxing yourself in and affixing a label to that box, just buying low and selling high by whatever means you need to do so. I will likely go the hard money route, but I'm also looking into Sub2 and owner financed deals. Any experience with this? Of course, these would be short-term agreements until the property gets resold.

    0Reply
  • Will Sifert
    Investor · Covington, LA · Member since 2012 · 517 posts · 317 votes
    14y
    Originally posted by Will F.:
    Good question. I'd like to know the benefits and reasons why people make buyers lists instead of just marketing to the whole MLS etc?

    What are other benefits of making buyers lists?

    Would this make you a "bird dog" who finds deals for others?

    Not having to pay a commission perhaps is one big reason. From my understanding a 100K wholesale deal typically make the wholesaler 4-5K (on average from what i've been told). So if you now have to pay an agent 4-6% to list it, there goes all of your profit!

    Even if you are a licensed agent, if another agent sells it you still have to give up to 2-3% commission to the buyer's agent.

    If your deal is good, why not deal with a list of investors that you know has cash and can close today vs any guy off the street that may or may not have financing and worst, may get your house under contract, tie it up for 30 day then have financing problems and have to back out.

    I just don't see the benefit, am I missing something ?

    0Reply
  • Will Sifert
    Investor · Covington, LA · Member since 2012 · 517 posts · 317 votes
    14y
    Originally posted by K. Marie Poe:
    Jerry Kisasonak I close on what I buy before I offer it for sale, and have for serveral years. I have my own funds and I have private money funds. I've also used hard money lenders many times. It works just like any other loan. Borrow the money, use the property as collateral. Sell the property, pay off the lender. I've used hard money as little as 5 days.

    There are some interesting threads here on BP that discuss/debate what wholesaling really means. Many investors, especially newbies, think it means getting a property under contract and assigning your contract or double closing, thereby using none of your own funds. Others think that you are a wholesaler if you aren't the end user of the property. (But is a rehabber the end user?) Ryan Webber holds that wholesaling means selling for a wholesale price, regardless of how the property is purchased and re-sold.

    I call some of the deals I do wholesaling in order to differentiate them from rehab resales. But I'm not a wholesaler. I don't for a second think I owe rehabbers or landlord buyers any particular discount or price points or potential profit. I do my best to sell everything for what the market will bear. Doesn't matter if it's a pretty house or a major fixer. Doesn't matter what I paid for it. It's up to the buyer to negotiate and buy for a price that makes sense for their purposes.

    I'm still new to this but my take on it is that a wholesaler is someone who finds the seller, negotiates the deal and then assigns it to an investor who buys it.

    If you buy the house then sell it, you just flipping.

    If you buy a house and fix it up and sell it you rehabbing/flipping.

    If you make a lot of money doing any of the above, you doing really good! ;)

    1Reply
  • Will Sifert
    Investor · Covington, LA · Member since 2012 · 517 posts · 317 votes
    14y
    Originally posted by J Scott:
    Sorry about any confusion, but I actually purchase the property before I relist it on the MLS. The MLS in my area won't allow a property to be listed except by the owner, so having it under contract to purchase doesn't give me the right to relist it on the MLS.

    As for commissions, I pay 3% to the selling broker (the buyer's agent).

    This way of doing things requires that you have the cash to close and that your profit is on top of the commission you pay to the selling broker, but I've found that with some REOs I can literally relist the next day with better pictures and find a buyer very quickly.

    Why chew up a lot of your profit by having to pay commissions vs having investors ready to buy from you. Now if you can get a higher price selling to the public in the MLS then to an investor then that could off set the commission costs and still make your more money. But it could cause you a lot more problems too and in the end you might end up making less. Besides dealing with anyone off the street that might tie you up and the deal falls apart, and that you have to pay a commission, what if the property sits and doesn't sell right away on the MLS because it's not getting as much exposure as you had hoped for? The more you tie up your money, especially if you have a loan the more profit you eating up.

    It just seems like getting a good list of buyers a head of time and doing a quick deal with no commission costs will benefit you the best in most cases. And if "doing all the work to get a buyers list" is the only thing stopping you from getting one then I have no problem doing more work if it's going make me more money.

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