Newbie questions

Ok, I’m a newbie wholesaler and naturally I have a few questions. I want to make sure I know the ins and outs before I actually go out and get a house under contract. If an issue arises that I have no idea how to solve, I don’t want to end up looking like an idiot.

  1. How can a wholesaler use a realtor for leads? I’m very unclear on how realtors get paid and if they charge anything for certain services. For example, if I called a realtor to get general information about the area such as home values and such, is there a charge for this information? I know realors are a good source for getting to know the area, just not sure how.

  2. How do I find out whether certain states require certain contracts? I’m in PA and I’ve gotten several different contracts to use from ebooks and such, but how do I know if I can use them legally in my state? Is there a certain state form that I have to use or will a generic one suffice?

  3. What is the best way to know whether you have a deal? I know that we’re looking for homes that are around 40-60% of their ARV (correct me if I’m wrong). Once I have the asking price, the ARV, and the estimated cost of repairs, what do I do with these numbers to make sure there’s still enough room for my buyers to profit? Do I need more information?

If someone could help me out, I’d greatly appreciate it. :help

Don’t worry too much about how others perceive you… If an issue arises that you have no idea how to solve you go ask some people with more experience than you. If you try to know everything there is to know before you get started you will never get started. I am pretty sure even the most experienced investors come across things they have no idea how to solve… :O)

Realtors typically get paid when you close on a property. They typically receive a commission of the transaction. My suggestion is that you find a realtor that understands your goals and have the experience to help you. Please note that you need to be upfront and honest with him - explain your goals, objectives and ask how he can help you? Ask also how he expects to be paid? Typically you can get the realtor to work for you for awhile with the promise that you will use him when you find what you want. Most realtors will accept this arrangement. However if they feel you are not serious they may stop helping you.

This is an excellent question for your realtor… In my state (AZ) we have a “standard” purchase contract that most people use. However it is not mandatory. You can still use your own contract. My suggestion is that if you decide to use one that is not widely used in your state that you review it with a real estate lawyer first.

For this one I am going out of my comfort zone… I hope someone else with more experience will share his/her knowledge on this one…

My take is that if you want to wholesale you first need to find a buyer and ask him what he wants. He will tell you the criteria he is looking for. If you find a house within the parameters he told you, than you know you have a deal. For example, I am in the market to buy my first rental property. I know the area I am looking for, the type of house I am looking for, the condition of the house, the maximum price I am willing to pay, and how quick I can close. If I tell this to a wholesaler than he will be able to tell if he has a deal that would interest me or not.

I hope this helps.

Good luck!