As a new whole sale investor, can someone be kind enough to give me an outline step-by-step scenario on the process?
My plan is to purchase reo properties and resell them back to either retail or whole sale buyers by doing double closings.
Also, is there anything important I should be aware of?
Thank you very much in advance.
PS. I’m in NJ
All banks and agents are going to require a proof of funds letter with any offer.
That’s why it’s best to work with FSBO’s…unless you have the funds to show.
If you plan on doing a lot of this you probably need to find a lender (most likely hard money) who can supply funding as well as the POF letter you’ll need for the bank. This is one of the first things you need to do to start your investing.
If you plan on buying property through a MLS find yourself a good agent. Interview a bunch of them until you find one that will work with you instead of just writing offers. Make sure they understand what you’re trying to. Using the same one all the time will help you especially if you plan on listing your properties.
Check on my sig below for a couple of things that could help you.
Good luck,
donrock
This is a very basic outline of the steps to wholesaling a home.
1st Build a buyer’s list-A strong buyers list will one of the most important aspects of your success as a real estate wholesaler. Be sure to build your buyers list before tying up any home under contract.
2nd Find Homes that meet your buyers needs- Once you have your buyers list in place it is time to start looking for great deals on homes that fit your buyers criteria.
3rd Put the home under contract with an easy out clause- Once you have located a home that meets the criteria for your buyers, you will need to put the home under contract. Include an easy out clause in the contract in case your buyers decide that they do not like the home.
4th Get your buyers through the home- Bring all of your buyers through the home to see if it meets their needs.
5th Assign the contract to you buyers or sell them the home-If the home meets their needs then you will need to establish a price that you are willing to sell them the contract for, or a price that you are willing to sell them the home for. If you are unable to assign the home then you could use a back-back closing instead. If do put the home under contract with your buyer’s then be sure to get a deposit from your buyers that is at least equal to the amount that you could lose if your buyers decide to back out of the deal.
6th Use your easy out clause- If your buyers do not like the home for one reason or another use your easy out escape clause to terminate the contract. The process ends here if your buyers do not like the home.
7th Set up a closing and get paid-If you are assigning the contract you may have already sold your position to your buyer, in this case you may have gotten paid already. If you did not get paid for selling your position already then you will be waiting for your buyer to set up a closing, and at the closing you will be collecting your fee.
Keep in mind that every person who currently wholesales homes started out not knowing a thing about the business. The forums are a great place to learn, but be sure your learning from people who “do” wholesaling, rather than people who “read about” wholesaling.
You can pick up some inexpensive wholesaling courses on ebay. I buy alot of courses there
I’m feeling generous…Send me a PM and I’ll send you my course for FR’EE. It will be my good deed for the day.
Excellent advice Eric top notch.
By the way do you use any weasel clauses in your contracts Eric?
Thanx eric, but due to the fact that I’ll be using transaction lenders and buying reos I have to use a standard contract which as you know is never in the investor’s favor.
So with that said, what else would you suggest?
As a newbie wholesaler I think most of the advice is somewhat good, Its certainly not complete and very detailed at times but hey we are all smart people right?
Here is a question that begs an answer. As a 15 year mortgage banker, and considering the flipping guidelines / prohibitions within FHA, Fannie and Freddie, that say no approval / insurance coverage on a house that was previously sold within the last 90 days, and anything sold in the last 90-365 days requires 2 appraisals and full receipted justification of why the sales price is so much higher now than before. Also you can must be on title to be a seller of the home and there are no assignments of the sales contract and no sales of the contracts to the buyer?
Please explain how as a wholesaler all of you plan on getting around this as the traditional buyers seems to mostly fall in the FHA, VA, Fannie and Freddie categories??? I would love to know? I have several idea’s myself for getting around it, but as of yet none seem totally excepable to all parties.
Rastusracing,
You are not wholesaling to end buyers, you are wholesaling to other investors. You need to make sure anyone on your buyer list has access to funds directly.
Good buyers usually have private money or hard money lined up, so the regulations do not apply. After they fix the house, they go back and put it on the market.
These investors have their own way of selling too.