Back in the wholesale game

Bird Dogs, Wholesaling
1

Hey everyone, I am getting back into the wholesaling game after being away for about a year. My last few deals were over a year ago but have to say they were very lucrative. I live in FL where the housing market has started to tank. I am starting to get some calls on ugly vacant houses which is my speciality.

I am on several email lists for other wholesalers so I am seeing the deals that other wholesalers are getting out there. Unfortunately I am seeing the same emails over and over again for the same houses discounted and then discounted some more etc etc. The houses that these wholesalers are getting are not selling to the end buyer or rehabber.

It makes me intimidated a bit to go full force into getting motivated sellers because I fear that if I get the first contract on these houses that in the end I won’t be able to follow through.

Any words of success or encouragement in the face of this obstacle would be a huge help.

Terry

2

The best thing you can do is develop a good list of buyers first, then go after selelrs that fit their needs. My impression are alot of these wholesalers are finding sellers first, then trying to get an investor to flip them to.

3

First and foremost you have to STEAL these homes, especially in Florida.
The problem down there is taxes went thru the roof, insurance is sky high, and sprinkle a housing bust on top and things are sure to get worse.

I’ve had a lot success with a 12% realtor commission if sold within 30 days. I am NOT a realtor, but I know a lot of them are hurting right now. If you double their commission and price the house very aggressively you will move it. If they can’t get it done in 30 days their commission drops down to 6%. It’s worked everytime for me. Think about it…If your a realtor which house are you showing your clients first? My 12% house or everyone elses 5-6%'s. This also benefits the buyers agents because they now split 12% instead of 6%.

Wholesale lists aren’t getting it done now a days because even these guy’s are running scared to some extent. Your NEW end buyer is actually a retail buyer who is ready to pounce on a great deal when it comes along. (Pre-approved, bank letter in hand, and a good deposit) by listing to those people you will sell homes. This all assumes you bought it at a HUGE discount to begin with.

I never sign anything longer than a 60 day listing agreement with a realtor. They don’t like that, but I’m not doing this to make friends.

4

fdjake has some great ideas if you intend to close on the home.

If you do not intend to close on the home then just get your buyers list ready ahead of time even if it’s the end user retail buyer. Once you have a decent buyers list in place, then go to work. You don’t necessarily need to have a home under contract to show it to buyers I have had clients of mine run their buyers through homes prior to putting the home under contract, if the buyer shows interest, then they put the home under contract and assign that contract to the buyer.

5

Hi Eric. Forgive me, but how would one get away with this without an “equitable interest” in the property and no license? Thanks

Tim

6

fdjake does not have good ideas because as a licensed Real estate agent what he is suggesting is HIGHLY unethical. It may be practical and realistic but extremely unethical. As for Florida, I’m having my BEST year EVER in Real Estate, by far too. I only deal with investors though and I am picking up all the builder/developer inventories at low LTV’s and my investors are snatching them up left and right. Jake, what you are saying is realistic, but if ever caught we here in Florida would lose our license in a heart beat.

7

I don’t have a license to lose first of all, I am NOT a realtor, I’m an INVESTOR! Secondly, There is not a thing wrong with putting a better commission deal on a home as an incentive. Now…having said that, IF you were under the IMPRESSION that… I… was a realtor and was suggesting this method, then I agree 100% with you. It would be unethical to tell a seller you’d do a better job if they gave you more money. I AM NOT, and NEVER have been a realtor in any state, at any time, in my life. Considering that…

What you are telling people here does not make any sense at all. We all know it’s perfectly fine for me to write a listing agreement were the realtor gets only a 3% commission. If it’s OK to offer a lower than “standard” (6%) commission then there is absolutely NOTHING wrong with offering a BETTER one.

Just so you guys know this…I have done this OPENLY and IN WRITING in, Massachusetts, Rhode Island, and Virginia. I… not the REALTOR, writes this into the listing agreement. It is my choice. The extra commission is usually split between the buyers agent and my (sellers) agent. I use 12% but if you usually pay a 5% commission you could accomplish the same thing by doing a 10% rate. IT’S UP TO YOU. No one is holding a gun to my head.

I do this to stimulate activity for the listing. My attorney, numerous realtors, and other investors have used this method and there is nothing wrong in doing so. Has anyone ever heard of a realtor putting IN part of their commission towards a price reduction on a home? I guess THAT would be unethical also, based on your logic.

Having said all of that, if you offer a 50% commission and property is not priced correctly, it still will not sell.

Your comment is suggestive of some type of illegal activity. Your wrong. The increased commission is listed right on the MLS sheet. Again this is my choice as a seller. The realtor has not solicited this in anyway, shape, or form. My agent splits the increase with the buyers agent. EVERYBODY WINS! Would my homes sell without it?? Probably? But I don’t DO probably’s in this market. I want in and out FAST!!!

I pay for performance. I get what I pay for plain and simple. All my properties are AGGRESSIVELY priced and I continue to use this method because IT WORKS FOR ME.

There is absolutley NO WAY a realtor is going to lose their license accepting a written agreement that I WROTE with a higher commission based on an IF, and THAT is the BIG WORD here…IF…they sell that home in 30 days. They know that, I now that, and anyone reading the listing knows that. I’ve sold over a dozen homes in the last 2 years (since the market slowed) using this method and have had transactions in 3 states with 12 different realtors. NEVER A PROBLEM, never even a question about this.

Remember where your closings take place??? Usually at an Attorneys office. That closing attorney does the payouts to the parties involved, the 12% is right there in writting, nothing hidden, nothing underhanded, IT’S AN INCENTIVE!!! 12 attorneys have paid this money out on over 13 different occasions. If it was illegal, they. by law, could not complete the transactions.

Sorry, your wrong on this one.

8

Hi Terry,

What part of FL are you in?

I am in Tampa, and can tell you there is a lot of opportunity here. Yes, you have to get properties pretty cheap, and you may have to market them a little bit harder (just blasting out an email doesn’t really cut it anymore), but investors are still buying GOOD DEALS.

Like another poster mentioned, it is helpful to have buyers already lined up and to know what they are looking for. Having a hard money lender ready to go is also a bonus.

Good luck,
Steph

9

To affirm what TDJAKE said - offering a higher commission is not illegal in any way, and can be a great business practice. When I was a licensed real estate agent (no longer) many agents would always show the ones with the higher commission rate first. So offering a higher commission in a slow market is one way to get more attention. Especially linking the high commission with a short listing period is a guarantee that agent will bust their but for you.

That said, doubling the commission to 12% I think is too much. If the normal commission in your area is 7% - increasing it to 9% will get the same effect - especially if you tell your agent you want it widely publicised to all agents. From 6%-8% the same.

Or you could structure a commission agreement where you pay 10% if sold in 30 days, or 8% if sold within 60. There are many ways to play with this idea. the main thing is if you have 20 properties like yours on the market - and only 10 buyers - you need to make yours stand out. You can schnazz it up and make it a BHG special, or drop the price, or offer a commission that makes the agents wet their pants. All of these techniques makes it more likely you will sell fast

10

How is it unethical? If anything it follows perfectly with the nature of how the Sherman Antitrust law relates to real estate commissions. By LAW there is no set commission price and listing contracts generally have a big note that commission is NEGOTIABLE. This is there to fight claims that real estate agents practice price fixing. If he wants to give away 6% of his take it’s up to him. It’s not unethical, illegal or a surefire way to end up in hell. As long as it is spelled out in writing in the listing agreement there’s nothing wrong with it.

11

I’m still new to this whole thing, but I’m having the hardest time finding where this is unethical. I liken it to a waitress in a restaurant that you frequent. If you tip her above the usual $2 tip she gets, when you come in, I am quite sure she will do every thing possible to make sure you are a happy and returning customer. Matter of fact, this same thought can be applied to anyone who services you.

Please show me where this is unethical as I may have overlooked something.

Great idea! I plan to use this, unless of course it’s unethical.

12

I think the trick is to find the sellers before anyone else has, get the deal at such a low price you can just make a quick 10k and be done with it. I think one problem with the “lists” is they are trying for a home run and in this market you really need to buy and flip at 65% or less. depending on condition and area. We run TV commercials and infomercials and we end up getting great deals, then we put them out there and have almost no trouble getting deals closed.