A few wholesaling questions from a beginner

Bird Dogs, Wholesaling
1

For the past few days Ive become very interested real estate wholesaling, and I came up with a list of steps I have to take to close a deal. Im not sure whether or not this list is remotely correct, but Id like to get some feedback on it. I also have a few questions.

Heres the list:

  1. Find a Motivated Seller by putting out bandit signs and searching online classifieds.
    2.Make an Offer based on my inspection of the home and on the value of homes in the neighborhood.
    3.Have the Seller Sign an Affidavit which I turn in to the title company.
    4.Find a Motivated Cash Buyer by putting out bandit signs and searching online classifieds.
    5.Show the buyer the home.
    6.Double Closing

Please give me some feedback on whats right and wrong about this list. Im a beginner so Im not really sure about the ins and outs of wholesaling. I also have a few questions…

How do I make a deal with the buyer without the seller finding out that Im just a middle man?

When a house is being sold, several contracts are signed between the buyer and seller. Does the wholesaler sign those contracts on closing day, or is the end buyer signing them? Is the wholesaling contract the only contract the wholesaler signs on closing day?

2

eeleye,

You’ve got the gist of the basics, but the devil’s in the details.

What kind of affidavit or you talking about here?

If it’s a ‘memorandum of interest’ or ‘notice of agreement’, this is not the same thing as a purchase agreement. Meantime the affidavit is recorded by you (after notarizing your signature) at the County Recorders Office, not given to the title company.

Unless you’re lying to the seller about your intentions to live in the house, there’s no issue about whether you’re the middle man, or not. If there is, the seller probably isn’t that motivated, and you won’t get the price you need to begin with.

Let me be really frank with you… You need some ‘paid’ training here. If you don’t have a few hundred to learn the business, you won’t be successful ‘at’ the business. Why? Because it costs money to find deals. And if you don’t know how to find deals the fast way, you’re gonna blow through what money you have, and find yourself high-centered on false expectations.

I highly recommend you look over at least these two wholesaler’s information. The first one is nolimitsrealestateinvesting.com with Todd Toback, or wholesalingceo.com with Rob Swanson. There are other good sources for wholesaling training, but these two offer comprehensive training at a reasonable cost.

P.S. You don’t use double closings unless you’re wholesaling bank owned property. You don’t find REO deals by putting out bandit signs. Just saying. That’s a whole different prospecting strategy.

Meantime, in a double closing wholesale transaction, you are going to sign a purchase agreement with the seller, open escrow, and then sign a purchase agreement with the buyer in another escrow.

On a normal wholesale contract, you just need to add the suffix “et al” to your name, and it automatically makes the purchase contract assignable. You don’t need any other purchase agreements.

Go get some paid training so you can make more money, more faster, and more elegantly. :beer

3

One more thing eeleye,

You need to collect your fee somehow.

You need to make it non-refundable. This sifts out the knuckleheads.

There’s a couple way to structure the payment process:

One way is to place an invoice in escrow for your assignment fee, which is payable upon closing.

Another way is to trade your contract, outside of escrow, for your non-refundable assignment fee.

Either way, your fee is always non-refundable.

This of course means that Buyers who haven’t bought from you a couple of times already, will be doing their due diligence before they give you any money.

That said, if your Buyer finds something you didn’t, that really kills the deal for you, or anyone else, then you either renegotiate the price with the original Seller, adjust your assignment fee, or refund the assignment fee. That last option is reserved for those situations when you can’t get the OS to adjust his sale price.

Hope that helps.

4

'm a newbie in wholesaling and I feel like I made a mistake. I actually have three sellers under contract now and have NO! buyers and don’t know where else to go, I did craigslist and now i’m filling -out every we buy ugly houses site. Help!

5

Wow, you’re in a great position…!

One of the things you can do is Google the wholesalers in your area, and offer to split your assignment fee in return for marketing to their buyer pool.

Another thing you can do, is to find out who’s buying property for cash in your farm area, and contact them about buying your houses.

A title company can help you find the cash sales, or the MLS, if you have access. Or you can visit the County Recorders Office and look up all the cash sales. Then look up the buyers, and call them. This can take some work, but it could be worth thousands if you find a winner. It also automatically creates a cash buyer list… Who knew?

Another thing you MUST do, is put out 20, or more, bandit signs, near the houses under contract, where ‘everyone’ will see them, and mention say something along the line of…
3/2 For Sale $40K Discount
Must Have Cash - Close Quickly
Call mrenice at 555-555-5555
Before It’s Gone

Then start answering the phone.

Meantime, make sure your online ads mention the discount and ‘benefit’ of buying today, just like the bandit signs do.

You want to qualify your buyers with whatever sifting you need. Do you need an all cash buyer? Do you need to close in 30-days, or less? What? Mention those things. Be sure to post a picture of the house, too, along with an address.

You should be recording a memorandum of interest, or notice of agreement against each of these properties, so that you can feel “free” to send your prospective buyers by these houses, without worrying about them attempting to go around you to the seller himself.

As an aside, normally, you would want to send buyers to an outgoing message with the information on each specific house using a unique extension number, so that you’re not answering the same basic questions every time somebody calls.

Back at the ranch, I suggest advertising a “steal price” on all your initial advertising, to attract the cash buyers you actually want.

Hope that helps.

6

Thank you javipa! I’ll make sure to take one of the trainings you suggested

7

You have the process down, but it’s not quite as easy as it sounds. It can be done with persistence. Do not get discouraged after no deals right away. You will learn the finer details along the way.