All Forum Posts by: Steven Leigh

I suppose it would work, but I would probably just sign a JV (joint-venture) agreement with the other wholesaler. It's a much easier way to operate. You basically just agree to split the profit from the deal. It can be a percentage, or "person A gets $1,000 and person B gets the rest of the profit" or just about any scenario you can write out.

This way one wholesaler can bring the buyer or whatever the value is but you don't have to add extra purchase agreements to the mix.

@Anthony Thompson is correct that double closings are pretty hard to find anymore. I can't speak to Rhode Island specifically, but just wanted to add that if a typical assignment deal doesn't work for some reason and you're considering a double closing, you may want to look into transactional funding for your deals.

Basically, transactional funding is where a lender lends you the money to close the deal yourself for about 15 minutes until the end buyer closes it. You pay about 1-4% for transactional funding typically. It can be worth it as long as your spread is large enough.

I'm not clear on what is being offered here. He's offering YOU to make a $10k finders fee if you bring a buyer for his property? Please explain a bit more.

If that's the case, make sure he really has the property under contract. You need to see a copy of it. At that point, you could probably sign a JV (joint venture) agreement outlining who gets paid what. If he has it under contract, I probably wouldn't put it under contract yourself and then ALSO re-assign it to the end buyer. That would just get messy.

@Christopher Phillips hit it on the head. The trick is timing. You need your mail to be on their table or in their mailbox the day they decide to do something about the house.

How do you do that? Well, there's no way to predict it. So the trick is to be consistent, and mail the same list as many as 6-8 times. This at least ensures you are hitting as many chances as possible. And some sellers really like the consistency, saying things like, "All the other guys stopped mailing me, but you kept going, so I knew you were serious." :)

Okay, one last response because I'm not going to keep participating in hijacking every wholesaling thread with off-topic legal discussion.

@Jay Hinrichs If you think the legality issue is so important, why not start a separate thread for it? If it's as hot a topic as you think, it will stay at the top. Heck, it might even become a sticky. Then you don't have to keep hijacking every thread and disrespecting the OP in the process.

Free legal advice on the internet is worth what you pay for it. It's great that you think wholesaling is illegal in Ohio. You're entitled to your opinion. But are you licensed to give legal advice in Ohio? Isn't that a little like acting as an unlicensed broker to give unqualified, unlicensed legal advice in a state where you don't even live?

I pay my real estate attorney to provide me legal advice, and he stakes his reputation on it, and also opens himself up to legal action if he is wrong. That's how paid legal advice works. Are you willing to make that guarantee? You've gotten misinformation about wholesaling laws in Ohio, as many have, which is fine. The laws were put in place to stop specific scammers who were actively posing as realtors and brokers, and had nothing to do with wholesaling. The two got permanently tied together in people's minds, but good qualified lawyers are willing to cut through the misinformation.

I know that won't convince you, but I would at least recommend you stop spreading unqualified legal advice, especially when you are hijacking threads with off-topic comments in order to do so.

Now, back to the original topic.....

Ralph R. If a rehabber buys a property for less than its unrepaired value and makes money from the rehabbed sale, shouldn't they give the profit to the original seller? What if they make more than they thought they would? Now they DEFINITELY should give that to the seller, right? If a landlord buys a property for less than its worth and ends up making more rent than expected, they should give that to the original seller each month, right? Otherwise, it's unethical. No one makes these arguments for anything but wholesaling. The reality is that the sellers I work with get 100% of the value they want from their property, or else they wouldn't sign the contract. And this is AFTER I explain to them several times (3 times as a rule) that they would make more money if the took the time to list it with a realtor or kept it as a rental. The end buyer pays 100% of the value they are willing to pay for the property. Otherwise, they wouldn't buy it. You can convince yourself all you want that wholesaling is unethical. The reality is that I'm dealing with smart, capable adults who are capable of making rational decisions. Both sides are happy with the transactions. I've had buyers in tears hugging me at the closing table because I took care of a major life problem for them very quickly and much easier than they ever imagined possible. I assure you, I don't own a gun, so it's not even possible for me to hold a gun to anyone's head. In fact, I'm more than happy if sellers take my advice and decide to go with a realtor. I have several I recommend them. Sometimes they come back when they realize they would rather have a quick cash sale and not have to do any repairs, etc. So to answer your question, no, I don't feel it's unethical. When a bunch of adults with all the cards on the table and aware of all the possible options choose to enter business transactions at a certain price, how is that unethical? I understand you and others have convinced yourself that all wholesalers operate in a totally shady way, but none of that is based on fact, and that's not how honest, ethical wholesalers behave. I also realize there is virtually no chance this will change your views in the slightest, but it's worth addressing this for others to see at least.

Originally posted by @Ralph R.:

@Steven Leigh   @John Thedford which is more Steven 6% (the usual commission charged in my area) for a full priced MLS sale or 10% of a greatly reduced price sale?? even the most motivated seller would have to think twice about paying more in commission to get a lower price wouldn't he?? Or maybe he didn't know that in the first place?? Hence the reason for a double closing me thinks. RR

I was talking about 10% of ARV. So yes, 10% is higher. ;)

Originally posted by @Ralph R.:

@John Thedford  just seems funny to me somebody would work around the laws for 1/2 a commission when they could get a license and get the whole commission RR

You think wholesalers make "half a commission" on properties? As in 3% of the sale price?

Oh man, you think you're upset about wholesalers now, wait until you find out that the average good wholesaler is making about 10% plus! Yikes.

Originally posted by @Ryan Dressel:

While I have not tried yellow letters in those areas, I'd be skeptical about the success rate just based on the type of homeowners who live there.  Relative to surrounding areas, there are substantially fewer distressed owners, landlords, elderly couples, etc. who are motivated to sell.  There are some very small areas of Paoli near the train tracks, that would be your best bet.  Elsewhere along the mainline you are looking at wealthy families who are taking advantage of the excellent schools.  

If you pursue this area with yellow letters, please post about your experience!

Best,

Ryan

 I don't know this area, so I can't speak to it specifically. I will say that you shouldn't make assumptions about sellers and their motivation ahead of time, and especially just based on areas. It's not just the run-down parts of town that have motivated sellers. People inherit houses in A areas every day and don't know what to do with them. People lose their jobs or need to move out of state ASAP or any number of reasons to need to sell their house quickly and at a discount. Don't just assume because people "have money" or whatever your assumption is that they can't be motivated sellers.

Realistically, wholesaling is possible in any market and in any area of the market. The difference is that in some areas you may be selling more to landlords and the A areas you may be selling to rehabbers who will be selling it for a very high price and making a great profit, etc. Just be careful that you don't make a bunch of assumptions about the areas or the potential sellers. Make sure you are really listening for their motivations and not just filling in the blanks for yourself as well.

95% of sellers want full market value and they will list with a realtor and get close to it. You are looking for the other 5%. People who value selling FAST and not having to do any repairs or other motivations more than they value getting full market value. 

Some people think these motivated sellers don't exist. Please keep believing that, as it makes things so much easier for me. :)