I am about to do my first deal by wholesaling a property. But a question came about from a friend of mine that I could not quite give a clear answer to. My question is: Say I’ll have a property for $100,000 and the market value for it is $120,000. When I try to sell it to another investor for say $105,000 and he knows the FMV is $120,000, if he asks me why I would want to sell him this property for a price under FMV with $15,000 equity in it, what should my reply be?
Should I tell him because I don’t have the credit to buy it outright? I mean I would think that he would see if I don’t close on the deal and try and pick it up himself for $100,000 instead of $105,000. Or do I tell him what I do, which is wholesale properties? I am just a little confused as to what I should say to this guy.
Thanks for you guy’s help,
You tell him you are a real-estate investor who buys 4-5 properties a month. Tell him you don’t like to deal with contractors and real-estate agents and would rather ‘wholesale’. Also, when you present a wholesale deal, dont tell your wholesale buyers what you paid for it until they commit to buying it. It should not matter. If you offer me a property for $120k worth $180k and I can make some profit, who cares if you paid $20k for it!
ALso, you example the spread is too tight. You need to ‘wholesale’ your properties to your wholesale buyers with at least $30k equity…
Now stop asking what-if’s what-if’s get out there and do some deals!
Thanks for the advice Jeff, it helped a lot. You’re right it is time to go take action and stop asking what-ifs, but I wanted to TRY and cover as many bases as I can before I venture out to conclude my first deal. Again thank you for all the advice. And I will be letting everyone how my first deal goes.
Richard C. Wright