A few questions about wholesaling...

So I’ve been eying real estate from afar for some time now, and I think I want to take the leap. Considering I’m in college, have no money, and no established credit, I thought maybe wholesaling would be a good place to start. I’m a bit uncertain about the actual contract process though; specifically what do I need in order to tie a property up in a sales contract? Do I need any kind of deposit, credit, etc? Basically, what qualifications are there for the sales contract?

Also, as I research and try to determine what knowledge I need to move forward, I feel most uncertain about finding the market value (or ARV) of a given property, and once able to do that, where to find the deals (50-70% of ARV). I get the basic idea of finding motivated sellers, foreclosures, tax liens, etc. but I’m guessing I’m in a crowded market (Boston + Philadelphia, and surrounding suburbs), and I know there are a lot of people (people like you!!) two steps ahead of me.

Currently I’m browsing several sites to try and get an idea of valuation. I’m searching sites like fsbo.com, government auction sites, what I can get from free foreclosure listing sites (Are these worth paying for btw?), and comparing them to each other, and using sites like trulia.com (and their past home sales records).

From what I’ve read, the consensus among seasoned wholesalers is to establish a buyers list first, and then find deals, and I’ve also noticed the newbie tendency is to search for deals first, then try and find a buyer. I have uncertainties about figuring both of these out, but it’s pretty obvious I need deal-o-vision before I need to find a buyer.

Now about finding buyers…I’ve read that advertisements, local REI clubs, as well as a few others are all viable sources, but I’ve hear very little about using agents. Do any wholesalers go this route, and why or why not? As far as I can see (not far at this point), using a real estate agent would be like paying for a buyers list right? I don’t know how much it would cut into my bottom line, or if it would at all. It seems like it would be a mutually beneficial relationship, and I could establish a buyers list using the agent as a Rolodex. I’m sure there are agents nearby that specialize in investors too, so all the better.

I think that covers all of the questions I can think of right now, but I’m sure there are more to come. Some additional info: While I personally don’t have any money or credit to work with, my family is very involved in REI, although they choose not to share any information with me, and it is all managed by people in suits in high-rises. On that note, if I had a legitimate deal to work with I’m fairly certain I would be able to get the proper legal services, and possibly a small loan when the time comes. At this point, my family doesn’t really think I’m responsible, trustworthy, or capable of succeeding as an independent entrepreneur, but proving my critics wrong is what drives me [/family rant]. I’m a hardcore dreamer and thinker, and I spend my days coming up with brilliant ideas (says the overly-optimistic entrepreneur), but I have a hard time taking action and implementing my ideas. I’m looking for your opinions, advice, suggestions, additional resources, and any other help you can offer, all of which are greatly appreciated.

So in a more organized form:

  • How to determine the market value, or ARV of a property
  • Where to spot the deals, and get to them before the other guy or girl
  • What are the qualifications and requirements for the sales contract(for both assiging, and closing, double closing, back-back closing or whatever.)
  • Real estate agent as a buyers list? Yay or Nay?

Thank you xelkwonx, for all of the very useful information. I will have to reconsider my plans accordingly. Quick follow up about the realtor’s: What if I just used them to sell my properties? the realtor’s incentive still works in my favor right?

I decided to post an ad on craigslist, looking for investors, rehabbers, or flippers interested in purchasing, just to see what my responses would be like. Of course my first response turned out to be something I know almost nothing about - so I thought I’d bring it here for dissection. The woman that contacted me was looking for 30 properties, at a 50% LTV or lower. She also specified she wanted a bulk REO package from the bank.

First, this can’t work as a quick assign-the-contract deal because it’s an REO right? Therefore it would need to be a double close; and I’ve noticed ads for people selling REO packages, they require POF from buyers, which I certainly don’t have. If I wanted to pursue this, would my best course of action be a finders-fee like deal? If so, how do I create terms with the client? I probably won’t pursue it, because I’m guessing I should stay away from the multi-million dollar deals until I know what’s going on, although I am curious about how someone might go about it.