How do I verify buyers for wholesaling?

Wholesaling
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How do I verify buyers for wholesaling?

David Johnson
Wholesaler · Austin, TX · Member since 2015 · 30 posts · 6 votes

I posted an ad on Craigslist and I had an investor reach out to me and tell me that he is looking for wholesale deals in the area that I live.

Upon further inspection via White Pages and LinkedIn it seems that he is legit and in my area but how do I know for sure? Are there any questions that fellow wholesalers on here ask potential buyers before working with them to screen them?

Thanks!

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Mitch Messer
Lender · Playa del Carmen, México · Member since 2014 · 2k+ posts · 1k+ votes
6y

Hi @David Johnson! The question I always ask is: "When can you send me proof-of-funds?" Then, I pay very close attention to what they say and also what they do.

If they hem and haw and question why I need one, I immediately know they are not for real. Serious cash buyers have no problem providing POF.

Then, if they send me some BS generic POF letter they pulled off the Internet, I immediately know they are not for real. If, instead, they send me an actual recent bank statement showing sufficient funds to invest in my deals, we've got ourselves a winner! 

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  • David Johnson
    OP
    Wholesaler · Austin, TX · Member since 2015 · 30 posts · 6 votes
    6y

    @John Thedford you sure are a hater.

    2Reply
  • David Johnson
    OP
    Wholesaler · Austin, TX · Member since 2015 · 30 posts · 6 votes
    6y

    @Will Barnard definitely! Quality is so much better than quantity.

    0Reply
  • David Johnson
    OP
    Wholesaler · Austin, TX · Member since 2015 · 30 posts · 6 votes
    6y

    @Joel S. I just want to make sure I have a legitimate investor before I talk to a particular seller since it would be a land deal and this investor supposedly specializes in that.

    1Reply
  • Alex KhanPro Member
    Specialist · Southeast Michigan · Member since 2015 · 300 posts · 244 votes
    6y
    Originally posted by @David Johnson:

    I posted an ad on Craigslist and I had an investor reach out to me and tell me that he is looking for wholesale deals in the area that I live.

    Upon further inspection via White Pages and LinkedIn it seems that he is legit and in my area but how do I know for sure? Are there any questions that fellow wholesalers on here ask potential buyers before working with them to screen them?

    Thanks!

     Experience will teach you most of these things better than anything on here. 

    I would focus more on deals and properties and if it’s a great deal it should sell itself. 

    248-979-8119
    1Reply
  • David Johnson
    OP
    Wholesaler · Austin, TX · Member since 2015 · 30 posts · 6 votes
    6y

    @Alex K. I couldn’t agree more! As soon as this week is over and people are back in the groove I am going to be taking massive action to find some great deals where everyone wins.

    0Reply
  • Justin Russell
    Member since 2019 · 1 post · 0 votes
    6y

    @David Johnson what does POF stand for?

    0Reply
  • Syed H.
    Developer · NY/NJ/PA · Member since 2018 · 758 posts · 935 votes
    6y

    Sure you can ask for POF immediately.

    But you are also a new wholesaler. How do buyers verify that you can deliver? It's a 2 way street here that takes time to develop trust. Most new wholesalers can't deliver anything with numbers pulled out of thin air. 

    2Reply
  • David Johnson
    OP
    Wholesaler · Austin, TX · Member since 2015 · 30 posts · 6 votes
    6y

    @Justin Russell proof of funds.

    0Reply
  • David Johnson
    OP
    Wholesaler · Austin, TX · Member since 2015 · 30 posts · 6 votes
    6y

    @Syed H. that’s true! Thank you for pointing that out. I’ll be cognizant if that when I talk to buyers.

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    6y
    Originally posted by @David Johnson:

    @Joel S. I just want to make sure I have a legitimate investor before I talk to a particular seller since it would be a land deal and this investor supposedly specializes in that. 

    Ok this changes things 99% of the responses figure you were just trying to wholesale a house .. land is a whole nother animal. 

    and if its development ground your buyers are going to be far more sophisticated than you are in how to go about utilizing said land.

    Unless of course your just talking about a single lot for building a home on..  Since I am a land buyer I do accept newbie wholesalers sending me stuff .. but its just to get an address.. they offer nothing else of value other than the contact.. and its rare I would buy from a wholesaler simply because they have no clue as to whats involved with land use and development and they just waste all their time chasing a unicorn deal that has no chance of going anywhere.. land owners with for real development ground most of the time are going to flush out someone with no capacity and no knowledge of how to push these deals through entitlements.. 

    There are companies that specialize in this  of course they are either licensed or they take title before marketing them.. a developer will go around you in a heart beat.. if you don't have the money to close.. 

    last year I bought a 5.5 million dollar piece of dirt from a middle man.. but he spent two years and a lot of money getting the project through master plan environmental etc.. I paid him 125k for the assignment.. and reimbursed him another 100k for entitlement work.. but its a 50 million dollar deal at build out.. so there was value.. keep that in mind if your going for bigger land deals. 

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    3Reply
  • David Johnson
    OP
    Wholesaler · Austin, TX · Member since 2015 · 30 posts · 6 votes
    6y
    Originally posted by @Jay Hinrichs:
    Originally posted by @David Johnson:

    @Joel S. I just want to make sure I have a legitimate investor before I talk to a particular seller since it would be a land deal and this investor supposedly specializes in that. 

    Ok this changes things 99% of the responses figure you were just trying to wholesale a house .. land is a whole nother animal. 

    and if its development ground your buyers are going to be far more sophisticated than you are in how to go about utilizing said land.

    Unless of course your just talking about a single lot for building a home on..  Since I am a land buyer I do accept newbie wholesalers sending me stuff .. but its just to get an address.. they offer nothing else of value other than the contact.. and its rare I would buy from a wholesaler simply because they have no clue as to whats involved with land use and development and they just waste all their time chasing a unicorn deal that has no chance of going anywhere.. land owners with for real development ground most of the time are going to flush out someone with no capacity and no knowledge of how to push these deals through entitlements.. 

    There are companies that specialize in this  of course they are either licensed or they take title before marketing them.. a developer will go around you in a heart beat.. if you don't have the money to close.. 

    last year I bought a 5.5 million dollar piece of dirt from a middle man.. but he spent two years and a lot of money getting the project through master plan environmental etc.. I paid him 125k for the assignment.. and reimbursed him another 100k for entitlement work.. but its a 50 million dollar deal at build out.. so there was value.. keep that in mind if your going for bigger land deals. 

    I figured that land would land would be a whole different animal. The deals that I have lined up are all residential so I'm sure that makes things easier since the lots range from about $62,000 - 150,000.

    It just seems like land owners of SF lots seem to be more motivated than home owners but I could be wrong.

    Congrats on that $50 million land deal! Was that in Vegas or Oregon?

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    6y
    Originally posted by @David Johnson:
    Originally posted by @Jay Hinrichs:
    Originally posted by @David Johnson:

    @Joel S. I just want to make sure I have a legitimate investor before I talk to a particular seller since it would be a land deal and this investor supposedly specializes in that. 

    Ok this changes things 99% of the responses figure you were just trying to wholesale a house .. land is a whole nother animal. 

    and if its development ground your buyers are going to be far more sophisticated than you are in how to go about utilizing said land.

    Unless of course your just talking about a single lot for building a home on..  Since I am a land buyer I do accept newbie wholesalers sending me stuff .. but its just to get an address.. they offer nothing else of value other than the contact.. and its rare I would buy from a wholesaler simply because they have no clue as to whats involved with land use and development and they just waste all their time chasing a unicorn deal that has no chance of going anywhere.. land owners with for real development ground most of the time are going to flush out someone with no capacity and no knowledge of how to push these deals through entitlements.. 

    There are companies that specialize in this  of course they are either licensed or they take title before marketing them.. a developer will go around you in a heart beat.. if you don't have the money to close.. 

    last year I bought a 5.5 million dollar piece of dirt from a middle man.. but he spent two years and a lot of money getting the project through master plan environmental etc.. I paid him 125k for the assignment.. and reimbursed him another 100k for entitlement work.. but its a 50 million dollar deal at build out.. so there was value.. keep that in mind if your going for bigger land deals. 

    I figured that land would land would be a whole different animal. The deals that I have lined up are all residential so I'm sure that makes things easier since the lots range from about $62,000 - 150,000.

    It just seems like land owners of SF lots seem to be more motivated than home owners but I could be wrong.

    Congrats on that $50 million land deal! Was that in Vegas or Oregon?

    I agree land folks either want to sell or don't.. I grew up in the land business.. its a great business.. and owner financing is much more common so as to not break the law of brokering properties you don't own in NV.. you can get into title via owner contract then resell them. 

    your buyers are 97% going to be builders.. so don't waste your time with others.. put a data base together of all your smaller builder contractors in your area and only market to them.. just like people do to me in the areas I buy lots  IE Portland Charleston and INdy.. 

    Also for advanced knowledge you need to be able to understand if there are underlying plats .. plus get in tune with what it takes to get permits etc.. so you can back into the numbers.. many landowners simply don't understand the margins builders need to make and will price their dirt way to high.. that's why they never sell.. 

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  • David Johnson
    OP
    Wholesaler · Austin, TX · Member since 2015 · 30 posts · 6 votes
    6y

    @Jay Hinrichs thanks for all the info! I think that I definitely need to do a lot more research before I dive into the world of land deals.

    I’m glad you mentioned builders being the buyers because I was thinking the same thing where I look up small builders in my area, then talk to them.

    Thanks again and Merry Christmas!

    0Reply
  • Mindy JensenPro Member
    BiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes
    6y
    Originally posted by @Justin Russell:

    @David Johnson what does POF stand for?

     Hi Justin.

    POF stands for Proof of Funds. If you look closely, the POF is underlined, which means there is a definition if you hover your mouse over the initials.

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    0Reply
  • Jerryll Noorden
    Flipper/Rehabber · Wilton, CT · Member since 2015 · 4k+ posts · 4k+ votes
    6y
    Originally posted by @Mindy Jensen:
    Originally posted by @Justin Russell:

    @David Johnson what does POF stand for?

     Hi Justin.

    POF stands for Proof of Funds. If you look closely, the POF is underlined, which means there is a definition if you hover your mouse over the initials.

     I want to underline MSOOTKAUG!!

    0Reply
  • Mindy JensenPro Member
    BiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes
    6y
    Originally posted by @Jerryll Noorden:
    Originally posted by @Mindy Jensen:
    Originally posted by @Justin Russell:

    @David Johnson what does POF stand for?

     Hi Justin.

    POF stands for Proof of Funds. If you look closely, the POF is underlined, which means there is a definition if you hover your mouse over the initials.

     I want to underline MSOOTKAUG!!

    What does it stand for? (Will I regret asking this?) 

    [email protected]Podcast Guest on Show #261
    BiggerPockets
    0Reply
  • Jerryll Noorden
    Flipper/Rehabber · Wilton, CT · Member since 2015 · 4k+ posts · 4k+ votes
    6y
    Originally posted by @Mindy Jensen:
    Originally posted by @Jerryll Noorden:
    Originally posted by @Mindy Jensen:
    Originally posted by @Justin Russell:

    @David Johnson what does POF stand for?

     Hi Justin.

    POF stands for Proof of Funds. If you look closely, the POF is underlined, which means there is a definition if you hover your mouse over the initials.

     I want to underline MSOOTKAUG!!

    What does it stand for? (Will I regret asking this?) 

     Thought you'd never ask!

    And shame on you... not knowing the birth name of your monkey friend!

    MSOOTKAUG = My Supreme Overlord Of The Known And Unknown Galaxy

    That's what people call me. It's not my fault ...

    0Reply
  • Mindy JensenPro Member
    BiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes
    6y

    Too long for an abbreviation, @Jerryll Noorden. I tried...

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    0Reply
  • Jerryll Noorden
    Flipper/Rehabber · Wilton, CT · Member since 2015 · 4k+ posts · 4k+ votes
    6y
    Originally posted by @Mindy Jensen:

    Too long for an abbreviation, @Jerryll Noorden. I tried...

     ha ha ha did you really? ♥

    0Reply
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