Good tips, and I will answer from the buyer side, because that is who you need to convince. I buy single-family BRRRR houses in Memphis under $100K, rehab to an ARV of $180K-$265K, and I never put earnest money down. If a wholesaler asks me for EMD, I pass. That is my rule, and it protects me when a deal falls apart.
What keeps me coming back to a wholesaler is simple: real numbers, no fluff. Show me purchase price, rehab scope, ARV with comps, and rent - in my case Section 8 rents of $1,395-$1,950 for 3BR+. If the math works at the 1% rule, I can move fast. If it only works with perfect rent and perfect rehab, I cannot.
Build a small list of buyers who actually close, learn their buy box, and only bring them deals that fit it. One deal that closes beats ten that get shopped around.
Good tips, and I will answer from the buyer side, because that is who you need to convince. I buy single-family BRRRR houses in Memphis under $100K, rehab to an ARV of $180K-$265K, and I never put earnest money down. If a wholesaler asks me for EMD, I pass. That is my rule, and it protects me when a deal falls apart.
What keeps me coming back to a wholesaler is simple: real numbers, no fluff. Show me purchase price, rehab scope, ARV with comps, and rent - in my case Section 8 rents of $1,395-$1,950 for 3BR+. If the math works at the 1% rule, I can move fast. If it only works with perfect rent and perfect rehab, I cannot.
Build a small list of buyers who actually close, learn their buy box, and only bring them deals that fit it. One deal that closes beats ten that get shopped around.
Yes, having a small group of SOLID cash buyers you can sell deals to, changes the game! I have a buyers in markete where my deals are sold as soon as I get it under contract.
However, I would not recommend any wholesaler allow a cash buyer to get into a deal without skin in the game.
Unless it's a vetted buyer you already have an established relationship with and they have proven again and again that they deliver come closing day.
Even then, that's on a case by case basis.
Skin in the game is key thorough real estate, not just wholesaling.
Good tip on matching the EMD. I'd add one on the seller side: confirm that everyone on the deed can actually sign before you market the deal. Heirs, an ex-spouse who's still on title, or a lien bigger than the equity will kill a closing no matter how solid your buyer is, and a few minutes with the county deed and court records usually spots it. Opening title the day you go under contract, not after you find a buyer, saves a lot of awkward phone calls.
I've been doing this for years, and I agree that protecting your earnest money is important. But I wouldn't make matching deposits a hard rule for every buyer.
I've worked with buyers who have closed multiple deals with me, and that relationship and track record mean a lot more to me than the size of their deposit.
For newer buyers, absolutely, I want to see some commitment. But I think the bigger lesson for new wholesalers is to know who you're doing business with, verify they can actually close, and make sure you're bringing them a good deal.
A deposit is helpful, but it doesn't automatically make someone a good buyer.