What makes a great wholesaler?

13 Replies

@Anibal Mijangos

Simple, the quality of the deals you submit to investors for consideration. If every deal submitted (1) fits the criteria set forth by your buyer (2) is priced at actual wholesale and not some inflated fantasy number and (3) is priced to reflect the amount of work necessary to rehab the property to neighborhood standards, then you are the rare small percentage of wholesalers that know what their doing.

I would like to think we are awesome wholesalers, and this is how we do it:

Buyer's side:

  1. Submit a comprehensive list of interior pictures, exterior pictures
  2. Submit pictures of all the things wrong, that needs fixing, or updating, with a description of what is wrong
  3. Submit 2 to 3 properties you have comped to arrive at the numbers, and then make sure they know it is their responsibility to verify
  4. Create a clear, easy to absorb standardized cheat sheet that summarizes all the numbers, including cost of repairs, ARV, estimated profits condition of the house
  5. Create a list where you describe the age and condition of the furnace, boiler, water heater, oil tank and all other mechanicals.
  6. Describe heating source, gas, oil electrical.
  7. Make sure they know your rules, deposit, protocol for visiting the house etc.
  8. Let the seller know you are going to put a lockbox on the house and have this written and stipulated in the contract, to make it easier for buyers to visit (in case the house is vacant).
  9. Be careful not to do the unnecessary, like figuring out if there is a buried oil tank. It is the buyers responsibility to do the research. Don't spoil the buyer so much they they will count and expect you to do their work. There is a balance.

Seller's Side:

  1. Let the seller know you are going to wholesale it.
  2. Explain in full detail what wholesaling is, how it works, what the benefits, the risks, and the expectations are and let THEM choose if they want to go that route.
  3. Explain to the seller why the offer is the way it is and be prepared to show the numbers (some people we show the numbers, other people we explain in language. Depends on the person).
  4. The seller is always the priority, then the buyer, then you.
  5. Be in constant contact with the seller and update them of progress always.
  6. Show understanding and respect to the seller, be friendly, firm, but never bend over backwards.
  7. Explain the contracts and stipulations so they understand what they are getting into
Originally posted by @Jerryll Noorden :

I would like to think we are awesome wholesalers, and this is how we do it:

Buyer's side:

  1. Submit a comprehensive list of interior pictures, exterior pictures
  2. Submit pictures of all the things wrong, that needs fixing, or updating, with a description of what is wrong
  3. Submit 2 to 3 properties you have comped to arrive at the numbers, and then make sure they know it is their responsibility to verify
  4. Create a clear, easy to absorb standardized cheat sheet that summarizes all the numbers, including cost of repairs, ARV, estimated profits condition of the house
  5. Create a list where you describe the age and condition of the furnace, boiler, water heater, oil tank and all other mechanicals.
  6. Describe heating source, gas, oil electrical.
  7. Make sure they know your rules, deposit, protocol for visiting the house etc.
  8. Let the seller know you are going to put a lockbox on the house and have this written and stipulated in the contract, to make it easier for buyers to visit (in case the house is vacant).
  9. Be careful not to do the unnecessary, like figuring out if there is a buried oil tank. It is the buyers responsibility to do the research. Don't spoil the buyer so much they they will count and expect you to do their work. There is a balance.

Seller's Side:

  1. Let the seller know you are going to wholesale it.
  2. Explain in full detail what wholesaling is, how it works, what the benefits, the risks, and the expectations are and let THEM choose if they want to go that route.
  3. Explain to the seller why the offer is the way it is and be prepared to show the numbers (some people we show the numbers, other people we explain in language. Depends on the person).
  4. The seller is always the priority, then the buyer, then you.
  5. Be in constant contact with the seller and update them of progress always.
  6. Show understanding and respect to the seller, be friendly, firm, but never bend over backwards.
  7. Explain the contracts and stipulations so they understand what they are getting into

 Gold! Wow, thank you for the very clear explanation @Jerryll Noorden! I like that you stay honest with the seller. I've seen too many stories where wholesalers are deceptive about what their intentions are, creating unnecessary trust issues in the deal. 

Originally posted by @Don Konipol :

@Anibal Mijangos

Simple, the quality of the deals you submit to investors for consideration. If every deal submitted (1) fits the criteria set forth by your buyer (2) is priced at actual wholesale and not some inflated fantasy number and (3) is priced to reflect the amount of work necessary to rehab the property to neighborhood standards, then you are the rare small percentage of wholesalers that know what their doing.

Thank you for the response! 

Some signs of a good wholesaler:

  1. has realistic numbers. Arv has to be close. And boy am I sick of the "oh it needs 35k to flip" when the electrical, roof, hvac and plumbing will be 35k alone. Guess again!
  2. thus, has deals at reasonable prices. I don't even hope for good deals anymore.
  3. does their own due diligence on the front end to present to buyer. Like zoning if it's land, when tenant's lease ends etc
Originally posted by @Anibal Mijangos :
Originally posted by @Jerryll Noorden:

I would like to think we are awesome wholesalers, and this is how we do it:

Buyer's side:

  1. Submit a comprehensive list of interior pictures, exterior pictures
  2. Submit pictures of all the things wrong, that needs fixing, or updating, with a description of what is wrong
  3. Submit 2 to 3 properties you have comped to arrive at the numbers, and then make sure they know it is their responsibility to verify
  4. Create a clear, easy to absorb standardized cheat sheet that summarizes all the numbers, including cost of repairs, ARV, estimated profits condition of the house
  5. Create a list where you describe the age and condition of the furnace, boiler, water heater, oil tank and all other mechanicals.
  6. Describe heating source, gas, oil electrical.
  7. Make sure they know your rules, deposit, protocol for visiting the house etc.
  8. Let the seller know you are going to put a lockbox on the house and have this written and stipulated in the contract, to make it easier for buyers to visit (in case the house is vacant).
  9. Be careful not to do the unnecessary, like figuring out if there is a buried oil tank. It is the buyers responsibility to do the research. Don't spoil the buyer so much they they will count and expect you to do their work. There is a balance.

Seller's Side:

  1. Let the seller know you are going to wholesale it.
  2. Explain in full detail what wholesaling is, how it works, what the benefits, the risks, and the expectations are and let THEM choose if they want to go that route.
  3. Explain to the seller why the offer is the way it is and be prepared to show the numbers (some people we show the numbers, other people we explain in language. Depends on the person).
  4. The seller is always the priority, then the buyer, then you.
  5. Be in constant contact with the seller and update them of progress always.
  6. Show understanding and respect to the seller, be friendly, firm, but never bend over backwards.
  7. Explain the contracts and stipulations so they understand what they are getting into

 Gold! Wow, thank you for the very clear explanation @Jerryll Noorden! I like that you stay honest with the seller. I've seen too many stories where wholesalers are deceptive about what their intentions are, creating unnecessary trust issues in the deal. 

 Very welcome brother! And yeah often people see the honesty as a drag... they don't realize it is because of that honesty we close the deals!

Being transparent with all parties.  If you are starting out, you are not going to know everything, but being open and honest is key.  To many times wholesalers seem sketchy.  You can tell right away that the numbers seem off or too good to be true.  

From what I see a lot of times, a typical bad wholesaler will get a property under contract at too high of a price. Then they will try to tack on $25k for themselves. They will over inflate the ARV and underestimate the repairs. The seller will think that the wholesaler is buying the property and will be confused as to why so many people have to inspect it. Nobody will buy it and they will be forced to cancel the deal with a very anger seller. They do this in hopes of finding that one sucker who will buy the property at their crazy inflated price.

If you are transparent, the seller knows exactly what is going on and you give potential buyers as much information as possible.  Also, don't always look for a homerun. I have done wholesale deals where I only made $1000.  I wouldn't recommend doing all of them that low, but that is what it took to get a deal for everyone involved.  

Get good at determining ARV and estimating repairs. When you get a deal under contract and you have investors take a look at it, try to get feedback from them if they don't like it. Most investors are brutally honest and will let you know if the deal is crap. Ask them why. This will help you learn. Maybe you can take there feedback and figure out how to salvage your current deal, but at the very least, you will learn how to do better on the next one.

Originally posted by @Eric Janson :

Being transparent with all parties.  If you are starting out, you are not going to know everything, but being open and honest is key.  To many times wholesalers seem sketchy.  You can tell right away that the numbers seem off or too good to be true.  

From what I see a lot of times, a typical bad wholesaler will get a property under contract at too high of a price. Then they will try to tack on $25k for themselves. They will over inflate the ARV and underestimate the repairs. The seller will think that the wholesaler is buying the property and will be confused as to why so many people have to inspect it. Nobody will buy it and they will be forced to cancel the deal with a very anger seller. They do this in hopes of finding that one sucker who will buy the property at their crazy inflated price.

If you are transparent, the seller knows exactly what is going on and you give potential buyers as much information as possible.  Also, don't always look for a homerun. I have done wholesale deals where I only made $1000.  I wouldn't recommend doing all of them that low, but that is what it took to get a deal for everyone involved.  

Get good at determining ARV and estimating repairs. When you get a deal under contract and you have investors take a look at it, try to get feedback from them if they don't like it. Most investors are brutally honest and will let you know if the deal is crap. Ask them why. This will help you learn. Maybe you can take there feedback and figure out how to salvage your current deal, but at the very least, you will learn how to do better on the next one.

$1000 is better than nothing. Especially to save a deal and make sure all parties are happy. Great tips!