Do you need to explain the financing when wholesaling?

Bird Dogs, Wholesaling
1

Basically, do you need to give the sellers options when getting a home under a contract? I want to meet with sellers but I dont know what to say about this…I am very confused.

If I were to meet up with a seller, what if they asked if they can get some cash?

What do I say if I dont know if the actual buyer would be willing to give cash, because I wouldnt have a buyer at the time of them signing the agreement.

Do you typically discuss any finances other than the purchase price of the home? This is really frustrating because I am lost when it comes to this.

Thanks for your help! :slight_smile:

2

When you are wholesaling, you would have come to an agreement with the seller about the price. The investor who buys the contract from you will have to agree to the terms of the contract and honor it or walk away.

So to answer your question, don’t worry about it. If the seller has enough equity he would get some cash at closing otherwise, he is out of luck.

3

Missjen

STOP!!! :shocked You are not ready to talk to a seller!!!

If you are a wholesaller or investor - yes, you need to find deals, but it is impossible to find a deal that will work unless you know who your buyer is going to be.

Now I don’t mean you have to have name, address, telephone and social security account number (although that would help) you need to have an idea of what kind of end buyer you are going to work towards.

Are you wholesaling to rehabbers or flippers? Then they will be buying with cash or Hard Money Loans so financing is not a worry. Just make a cash offer with as long of a closing as you can get, but make sure the deal is structured to be attractive to such a buyer.

Are you going to sell to a landlord? Then you knwo you will need to sell with a tenant and commercial financing - so structure it that way.

Are you going to market it retail (hardest of all, right now) then you have to figure out how you’ll do it to make a profit (Sub2-LTO sandwhich?)

Many people just try to go out and buy. If you can buy on your own, fine. But if you are turning around to wholesale, then you have to have a very solid idea in your mind as to who your buyers are going to be, what kind of deals they want, and then pick up those types of deals. Otherwise, you get into deal you have no hope to wholesale out. You’ll PO your seller :guns and get a horrid reputation in your market :anon and waste lots of time on deals that have no chance to make you money :banghead

Without a solid end strategy you are setting yourself up for failure. Do more homework. If you want - you can post more specific information about the property here and more experienced people will be more than willing to give you specific advice. :beer

Good luck

4

Thank you both for your time in answering.

I do not currently have a property for sale.

The problem is that I already have placed three, two-week ads in the local newspapers, advertising that I want to buy homes. I received many calls, but NONE of them were interested in being placed on a ‘buyers’ list, they just wanted to see what properties I had currently. So, out of the approx 55-60 calls, I dont have a buyer. Most of them wanted to get off the phone quickly.

So, I decided to go a different course and find a home first…what I have wanted to do for a good 4 months now. My plan is to get a home under contract, then assign it to a rehabber or a flipper, I dont care. I have no idea what they will be buying with, and this brings me back to my OP…

When I get a home under contract, who discusses the finance options? Me and the seller, or the investor which wants my assignment contract and the seller? Do I determine what the seller gets (not the price for the house, what they get as in $$ cash at closing, or whatever ‘bonuses’ there may be), or does the other investor say what the seller gets?

For instance, do I say, “well, there are several different options for you to choose from. I can get you $5000 cash on closing, and this and that”, or do I just say “another person will contact you and explain how the financing is gonna go down”?

5

You don’t want to discuss any potential agreement with your wholesaling end buyer.

Basically, just cut a deal with the seller as if you are going to be the end buyer. Have the contract name as “MY name and/or assigns”. If the ask about that, tell them that you are an investor. You might well buy the house yourself but you have some other people who you often take in as partners to share the costs. So it is possible that the names on the buyers line could change before you close, depending on if you buy or have partners.

You really shouldn’t tell the seller about $5000 fees or anything else, you’ll confuse him and likely lose the sale.

When you find a buyer, then, you agree on a fee and do the assignment. Then it is a good idea to contact your seller, let them know that you are, indeed, bringing in a “business partner - their name is XXXXXXXX” but don’t worry, the paperwork will all be taken care of by the escrow people, you don’t have to do anything, everything will close fine.

That said - don’t abandon getting buyers. Having a good buyer’s list is incredibly important. the reason is, if you don’t have a buyer’s list, then when you get a property you will have to spend days and days trying to find a buyer and your entire deal is an iffy thing. Don’t just do adds, but visit REI clubs, call landlords (for rent signs) and bandit signs and tell them you are a wholesaler - ask them if they would be interested in seeing deals good deals on properties. Then ask them details about the types of properties they like to buy. Don’t get discouraged.

But I guarantee you, your success as a wholesaler will be defined much more by how good a buyer’s list you have, then how good a deal you find. You have to do both. In the market of 12 months ago you could just worry about getting deals because it would be easy to get a buyer if you found a deal. now however, there are lots more motivated sellers right now and lots more deals - but a lot fewer good buyers.

No Buyers - NO DEAL :flush
No Sellers - NO DEAL :flush

Seller+Buyer = DEAL!!! :beer

6

Thank you again for your amazing help! :beer

I appreciate the explanation! Im still reading A LOT and trying to make all of this new knowledge make sense.