What happens if I can’t find a buyer?
Lincoln, NE · Member since 2020 · 3 posts · 2 votes
I’m trying to break the barrier of doing my first deal. There’s several things I’m worried about, when I get a house under Contract what if I can’t find a cash buyer? Also, how do I learn more about my market?
Easy...YOU BUY IT. Isn't that what you represented to the seller? If you play games and screw over sellers I truly hope you get sued. This is NOT a game to screw over people and their most important asset.
Easy...YOU BUY IT. Isn't that what you represented to the seller? If you play games and screw over sellers I truly hope you get sued. This is NOT a game to screw over people and their most important asset.
I’m trying to break the barrier of doing my first deal. There’s several things I’m worried about, when I get a house under Contract what if I can’t find a cash buyer? Also, how do I learn more about my market?
You start by finding cash buyers first educating yourself on the market but asking them questions. I wrote a blog post about how to wholesale the right way you can read it here https://www.biggerpockets.com/...
Greg: if they fail to find a buyer then what? Weasel clauses OR do the ethical thing and close? IMO anyone advocating walking away is promoting harm to the unsuspecting public. Last, fake buyers CAN be sued for fraud. Personally I would like to see that happen more often to put an end to these game players representing themselves as "buyers". Most are penniless fakes.
@John Thedford I can’t tell if your throwing shade my way or not lol. I haven’t even done my first deal yet, relax. I’m just learning
I didn't see @Greg Dickerson's post, but that guy knows his stuff. Trust him.
Getting a strong cash buyers list takes a little time, but may very well be the easiest part of the job. Attend local REI meetings and start networking. I attended one recently that was packed! I stood up, introduced myself and where I was in my wholesaling career (beginner, but actively marketing) and told them to text me or see me after the meeting. I made about 8 contacts. The next day, I called all of them and had some great conversations. Some of them are very busy rehabbers. They told me exactly what they were looking for, where they were looking, how many deals they can do, how fast they can close, and what type of money they use. They told me price ranges, levels of rehab, and what numbers worked for them. They ranged in that last point more than I expected. Anywhere from 70% to 85% (or a little more, even) using the standard wholesaler formula. I got to know them and they me. I know when I bring them a deal I will have their attention.
I didn't see @Greg Dickerson's post, but that guy knows his stuff. Trust him.
Getting a strong cash buyers list takes a little time, but may very well be the easiest part of the job. Attend local REI meetings and start networking. I attended one recently that was packed! I stood up, introduced myself and where I was in my wholesaling career (beginner, but actively marketing) and told them to text me or see me after the meeting. I made about 8 contacts. The next day, I called all of them and had some great conversations. Some of them are very busy rehabbers. They told me exactly what they were looking for, where they were looking, how many deals they can do, how fast they can close, and what type of money they use. They told me price ranges, levels of rehab, and what numbers worked for them. They ranged in that last point more than I expected. Anywhere from 70% to 85% (or a little more, even) using the standard wholesaler formula. I got to know them and they me. I know when I bring them a deal I will have their attention.
Barry- thank you for the kind words.
I always recommend starting out with cash buyers that have proof of funds and a track record of closing. This way you know for sure when you are talking with a seller that you can get the deal closed.
I always advise everyone to operate legally and ethically and to be honest with the sellers and tell them exactly what you are doing. If you intend to buy and resell tell them. If you are assigning the contract to an investor tell them the truth that you find deals for investors and you are going to assign the contract to them for a fee. You have to explain that clause with them in the purchase agreement anyway.
I have never had any negative consequences by being honest and forthright in all my business dealings whether commercial or residential.
I’m trying to break the barrier of doing my first deal. There’s several things I’m worried about, when I get a house under Contract what if I can’t find a cash buyer? Also, how do I learn more about my market?
Keep in mind, if you aren’t an agent listing a home for sale, you are signing a contract to “buy” their house. If you can’t find a buyer, that seller could go after you for specific performance. If you can’t prove or show that you had intentions of actually buying it (attempting to get a loan, etc) I’m not sure what would happen, but I would not want to be in that position.
Whatever you end up choosing to do, keep in mind the sellers are often times struggling, or in distress and if you “can’t find a buyer” you could be putting them in a much worse position in life then they already are.
@Brian Pulaski has an excellent point when saying that you can leave the seller in a more difficult position if you tie up their property and then don't perform. Take that into consideration.
Now, also take into consideration that finding buyers is easy. Let me reiterate... finding buyers is REALLY, REALLY easy. There are so many rehabbers and landlords looking for good deals that you can't even count them. Go to your local REI meetings and look for people who are looking for deals on properties. There are going to be a lot. Consider how many meetings are available in your area. There are probably a lot. Consider how many people don't go to those meetings. There are a lot! So, build your buyers list. Greg's post here on BP talks about ways to do that. There are a lot! (I hope I'm not repeating myself.)
Now, if you want your buyers to buy, then you need to make sure you have a good deal to present to them. Understand what they're looking for. Make sure the numbers work. Don't try to force a deal by over-estimating the ARV or under-estimating the repair costs. Don't try to beef up your fee by stripping them of a good profit.
If you have a good deal in hand and a lot of vetted buyers, your concern about not being able to assign your contract will quickly vanish. And, should you mess up on the numbers, with lots of buyers, you will find that out very quickly. At that point, just as any investor would do after their due diligence period, you would go back to the seller and try to renegotiate or cancel the contract - assuming you have a fair clause for doing so in the contract.