What Comes First for Wholesalers: The Buyers List or the Deal?

by | BiggerPockets.com

Which is more important to have a property or a buyers list? In wholesaling, this is the classic tale of what comes first, the chicken or the egg? I’ve decided to bring up this topic because I’ve been asked this question hundreds of times when speaking with newbies during my 30-minute free consultation. So I would like to explore the pros and cons of both, and you can make your own determination.

So lets look at the position of building your buyers list first…

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Finding the Buyers First

We can all agree that a buyers list is important. Now, how big you should build the list is a conversation for another day. Building a buyers list can afford you the ease and comfort of thinking you will always have a buyer for your deal(s). The concern with believing in this philosophy is that a buyers metrics can change. One month people may buy in a certain area, or buy a certain property type, or certain price points — and the next month it can all change due to market volatility.

Related: The Dirty Little Secret About a Buyer’s Lists

Having a buyers list can help you be super targeted on your property search. If you truly evaluate your buyer before adding him or her to your list, you’ll know what they want, where they want it, how much they are willing pay, and how much risk (rehab) they’re willing to take. By knowing this, you can target your marketing to those buying criteria.

Getting the buyers can be difficult because they are very limited with their time. They do not like to waste their time, and many newbies waste prospective buyers’ time. So they may not be as eager to talk with you.

Buyers are pitched too often by newbies. Someone called me the other day asking me commonly asked questions:

Are you still buying?

If so, what area are you buying in?

What exactly are you looking for?

I asked him, “Are you truly going to look for what I want or are you just trying to add me to your list?” He stumbled and stammered, answering the question knowing he was just trying to build a list. That is fine we all had to do it but make sure you’re truly looking for properties and not building a list you will do nothing with.

I would suggest that until you build your buyers list, work with a seasoned wholesaler who will do the disposition for you if you find a property.

Related: How to Reach the #1 Spot on Your Wholesaler’s Buyers List (& Score the BEST Deals)

Finding the Deal First

Now, let’s take a different approach to the same scenario I spoke of above: What if the newbie called and asked me if I was buying, and then said, “I have a property that you may be interested in.” I would then be all ears to see if the deal fit my criteria. A different approach, but you will reach the same results. Here are the results:

I would assume this person is out trying to hunt for deals, and if the current deal didn’t work, I would gladly give him what I’m looking for.

In markets everywhere, finding the deal maybe a lot harder than finding the buyers. Since it’s a sellers market across the nation, buyers are scrambling to be the first to a good deal.

I know, I know, finding the deal first is a little scarier. What if you don’t find a buyer? So what if you don’t find a buyer. Guess what you did find?

You found out how to have a conversation with a motivated seller.

You found out how to build your team (i.e. attorney or title company).

You found out how to write a contract.

Don’t just look at what you don’t have, you have to look at what you learned in the process.

Finding deals is more challenging, so it depends on what you want to do first. So what’s hard first (finding deals). or do what’s a little more easy (finding buyers). Either way, you gain something from both.

Why Not Both?

Everyone always says, Find the buyer first or the property. Here’s my suggestion now: Find both. While you’re working on finding the property, why not talk with sellers and try and find them simultaneously? It does not have to be either/or. By doing only one, you put self-imposed limitations on what you want to do. Our brains can handle the capacity of looking for both. So do both.

Although there are benefits to building a list and finding the deal independently, there’s a bigger upside if you work on doing both to speed up the process and help you build momentum.

I would really like to hear your thoughts; especially if you are just getting started.

What are some of the things that are stopping you from doing either/or or both?

Share below!

 

About Author

Marcus Maloney

Marcus Maloney G+ is the Executive Officer of Equity Realty & Investments as well as 3rd Generation Management & Holding LLC, both are family owned and operated real estate investment firms. The firms’ goal is to provide affordable solutions in real estate while providing exceptional opportunities for community redevelopment for the residents of Phoenix, Arizona and Chicago, Illinois. You can follow Marcus on Twitter

17 Comments

  1. Heath Ryans

    Marcus,

    Great article. Im a new wholesaler, still hunting down my first deal but this is my experience so far. I started out without any buyers. I just started up a direct mail campaign with really the intention of buying and flipping myself. As people at my REI group saw my marketing getting hits, they became interested and i really just started marketing for one buyer in particular. From there, more people saw or heard about my campaign gaining traction and that i was actually out there doing it. Not just talking it up. Im more or less getting a new buyer per week.

    Basically, through the direct effort of starting a marketing campaign and just getting dirty, people decided to reach out.

    I don’t typically refer to quotes but i was sitting in an Air Force PACE Leadership course and our speaker gave us this one and its really stuck with me:

    “People buy into the leader before they buy into the vision.” -John Maxwell

    You have to do more than talk a good game if you want people to follow. Get down and dirty. People see effort.

  2. Kurt Michaelson

    I recently read the book, “If You Can’t Wholesale After This: I’ve Got Nothing For You by Todd M. Fleming and one quote I highlighted said, “I am looking for properties for buyers, not looking for buyers for properties.”

    We can obtain lists of properties from various sources and even create our own direct mail campaign, but it helps tremendously to have a list of buyers first and to communicate clearly to them that your interest is to find properties that fit their criteria.

    It just doesn’t make sense to have a list of 500 people who are in either foreclosure, absentee-owner, or who are delinquent on their taxes and then only have 1 or 2 buyers. I’d rather have a list of 25 or more buyers where you know specifically what they’re looking for, so that it makes your search as a wholesaler more efficient and productive, while giving yourself a greater opportunity of a successful sale and assignment of contract.

    To help me with knowing a buyer’s criteria better, I created a Buyer-Investor Profile form using Google Forms – https://goo.gl/forms/AsOzpgkIXVPoJzTF3

    • Marcus Maloney

      Kurt,

      Good stuff man I love it when we have multiple perspectives. Either way is correct as long as you’re taking action. Remember this is the ultimate which comes first the chicken/egg conversation, so either way is correct. I love it I will have to check that book out.

      Hey man thanks again for reading and your input.

  3. Marilyn H.

    Thanks for the article. It is scary to have a deal without the buyer first. My first deal I had the buyer and seller pretty much simultaneously bc I worked with a real estate agent who found a buyer quickly and I knew what he was willing to pay.
    My second deal, the buyer fell through at the last minute. I posted the property on our local investors website and it was gone in a few hours. Plus, I got several investors who called bc of the post and now they’re on my buyers list.
    Now I have a third contract and it’s in a city about 90 miles away where my son lives. I didn’t have a buyers list at all, so I posted on BP and received about a half dozen interested investors. My direct mail marketing to local buyers went nowhere.
    So I’m hoping to find a buyer for this third property quickly. I have a couple more properties that are close to contracts, I hope. I market continuously. About 200 – 400 pieces a week. So far I’m not getting the response I would like, even though I’m following the advice of several pros and trying different techniques for different audiences. I know I’ll get better, but I wish I were there now. And I’m still marketing to buyers as well.
    Anyway, my goal is to close 3 – 4 properties a month by this time next year. I hope that’s not unreasonable.

    • Marcus Maloney

      Marilyn,

      That’s awesome you’re gaining some traction with your marketing and deal flow. Yes having that property first is a little frightening but as you have experienced due to it being a sellers market investors are looking for deals.

      Keep going and great things will continue to happen.

      “Enjoying the Journey”

    • Heath Ryans

      From reading your profile, it sounds like you already have a foot in the investing door from your previous experience. Find someone in your network who knows a wholesaler. Or who knows and investor who knows a wholesaler. Work your network. Once you’ve found them. Ask what you can do for them. Don’t be weird and ask “will you be my mentor?” As a wholesaler, i am absolutely certain they have some data entry or marketing tasks they would love to pass on to someone. Ask about
      that. If you do that in exchange for someone just kind of showing you the ropes, im sure they would be happy to do so. Provide some sort of value to them and they will likely reciprocate.

  4. Roseanne Tataipu

    Aloha Marcus!

    I appreciate this article a lot. I am brand new to real estate investing. I do have a network of cash buyers. I’m struggling with where I should search for deals. I saw Kurt M.’s comment, so I’ll look into the book he mentioned and create a Google Form to see what my network of cash buyers want. Heath’s comment about getting a mentor gave me an idea on how I can bring something to the table. My current situation is that I’m a stay-at-home mom with 3 kids. I know real estate investing is the vehicle that I want to use to provide for my family and being able to remain at home. Being home for a few years, I wasn’t sure what I could offer someone to mentor me. My investment niche and strategy is to wholesale single family residence. My next step is to find where I will find deals. Any suggestions or questions that you go through when trying to pick an area to find deals?

  5. Hermeen Speller

    Loving the Buyer-Investor Profile, Kurt. I am a newbie and hungry for success in REI and I plan to do that by way of wholesaling. I am currently reading the book by Todd Fleming “If you can’t wholesale after this…” I have found it to be helpful. But I’m ready to implement my marketing strategies, not sure but was looking at purchasing lists. Any suggestions on the best place to purchase buyer & and seller lists?

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