Can someone help me with a wholesale conundrum?

Bird Dogs, Wholesaling
1

So I am hopefully putting my first house under contract this Thursday.

The price the seller has verbally agreed to is almost half of what the comps are for the area. Its situation right across the street from a nice urban park area. And the housing prices in the area are climbing due to the cities efforts.

This is my first time, and I would like to if possible sell my contract on the property to another wholesaler rather than deal with doing the escrow and closing myself. Honestly I dont feel ready for that yet, not without more education.

Are there people that buy these contracts for a portion of the spread?

So for instance if I have a 40k house under contract for 30k, would someone buy it from me for say 50% that already has a buyers list?

2

Jeremiah
Dont be afraid. You have already done the scariest part, and thats getting a property under contract. Call up 10 title companies (or attorneys if used in your area) , and ask them if they have ever done an assignment. Explain to them that you have a property under contract, but may be interested in assigning it to another person who has cash funds. (not bank financing).

Of the ones you are friendly and sound experienced, go ahead and ask them this too:
“assuming they are bringing in cash at closing, what if I do not want to assign my contract, but instead double close? how would you recommend closing it?” The goal here is to see if they will use your buyers funds to fund your side of the transaction. (You do it this way if your profit is greater than what a normal assignment fee might be)

While you are finding a good closing agent, you can also do this:

Contact all the other wholesalers in your market and tell them that you have a great deal, and that you would be willing to leverage their buyers’ lists and split the deal. make sure to use a flex option contract, or a joint venture contract between you and them so you can keep it legitimate. If you find a cool person to work with, they may show you the process.

You got this man! Dont be afraid or worry about it! make some $$$

3

Hi,

I build my buyers list of both wholesale investors and retail owner occupied buyers first because if a realtor with the ability to market properties through the MLS system to hundreds or thousands of agents and brokers with thousands or tens of thousands of buyers can not sell a property in 10 to 14 days, you can't either!

Every single wholesale real estate investor out there has limits, there is no one on this earth who can buy an unlimited number of properties as no one has unlimited cash, even Bill Gates runs out of money at $50b and his maximum ability to purchase is roughly $250b.

In all markets wholesalers look for properties there buyers want, we don’t buy multi-million dollar homes if 95% of our buyers are predominately working class and looking for homes in the $75k to $200k range, nor do we buy 1 bedroom / 1 bath or 2 bedroom / 1 bath homes when most buyers seek 3 bedroom 1 3/4 bath or 4 bedroom 2 bath homes.

There are very few escrow companies anywhere in the US who will do a double closing using your end buyers cash, those days have been regulated out by state and federal laws dealing with closing requirements for HUD 1’s!

Back in 2003, 04, 05 and 06 I would agree most wholesalers would split a deal with no problem and work to sell it, today properties are a dime a dozen, and most wholesalers have more inventory than they can sell in a day, a week or a month.

I wholesale but I make 100% on my deals while it takes to much time and effort for me to work to sell your 3 or 4 bedroom 2 bath when I have my own 3 and 4 bedroom properties to move and sell. Most of the country is soft markets right now and homes are more abundant because of foreclosures.

You need to buy pristine move in ready updated homes for 30 to 35% below FMV to sell to other investors, you may be able to buy at as little as 25% to sell to an owner occupied end buyer.

If the home needs work like rehab, remodel, updating, etc. then you must subtract fair market construction costs from your 30 to 35% below FMV purchase price.

Finding a title / escrow company who handles assignments is easy as most big name title / escrow companies handle assignments provided you have an assignment form, it’s filled out and properly signed and you bring your assignee in to the title / escrow company office to make introductions and provide loan / financing information.

Don’t start into wholesaling thinking you don’t need a buyers list and that you can sell a home with your limited connections faster than a real estate agent or broker, and always buy what your end buyers want. I pass up properties every day because my buyers don’t want that home, in that neighborhood, in that area or in that school district.

Good luck,

             GR
4

First off Gold River has some great advice.

Next, and maybe I’m waaaay off… but it seems your asking if you can wholesale a house to another wholesaler… and YES, by all means you can.

HOWEVER, it’s gotta be a REAL deal… not one of these “I zillowed it and comps are showing double” type things. That’s the fast track to belly up.

Like Gold River Said, these days so-called bargain properties are a dime a dozen… but if you’ve truly got a property under contract that’s worth 50% of it CURRENT market value then it shouldn’t be an issue to get rid of it to another wholesaler or anyone for that matter.

There’s an important distinction when you’re talking about what’s a “Deal” and what’s NOT A DEAL.

Let’s say you go to Walmart today and a gallon of milk is $4.00. Most people would jump at the chance to buy that milk 50% off, for $2.00 ($2.00 is a DEAL when everyone, everywhere else is paying $4.00)

Let’s say milk prices plummet and a month later milk is $2.00, is $2.00 still a bargain of a lifetime? Not a chance. However most people would jump at the chance to buy that milk 50% off, for $1.00. (at this point a $1.00 is a DEAL because everyone, everywhere else is still paying $2.00)

The mistake I keep seeing rookie investors make is believing that just because milk was $4.00 a month ago and now they can get it for $2.00, that they’ve got a deal. It’s not a deal. It’s not a deal because $2.00 is what EVERYONE, EVERYWHERE is paying. It’s only a deal when it’s 50% off what everyone else is willing to pay.

Duhhhhh, right?

The problem is websites like Zillow or whatever are showing prices based on when milk was $4.00, NOT when Milk is $2.00. Make sense?

In a nutshell, 1/2 off property is ALWAYS a deal (that typically will sell) if it’s 1/2 off what people are ACTUALLY paying for other similar properties.

5

Yes, there are people who buy contracts all of the time. The best place that I have found to shop a contract is at an Investor meeting in your area or if there is a local investment blog. I would make up a handout with pictures of the house and all of the information that you want to share. Bring 50 copies to the group meeting. They usually have a table where other investors leave their properties, too. When the formal meeting is over, stand by the table and I am sure you will get interest.