What keeps the buyer from going around you?

Bird Dogs, Wholesaling
1

More newbie questions from your truly! :anon

Are purchase options needed in the contract for this, or does the simple act of tying it up in escrow keep others from buying?

I’m asking because, as a wholesaler, I’d be expected to show the end buyer a property before the sale.

Thanks!
-EricM

2

Hi Eric,

       Let me help you out a little bit, first unless you have millions of dollars like some of the big wholesalers I know, you have to work smarter not harder!

I build my buyers list and what my buyers are looking for first, then I shop for properties that would meet my buyers needs and fit the buyers criteria. So when Mr. and Mrs. Smith call on my 3 bdrm - 2 bath ad and I start out asking for there name and number just in case we get disconnected, then I tell them that this property is no longer available, but since I invest in real estate can I call them if I find another property?

Then I ask so your looking for a 3 bdrm - 2 bath in the Tall Pines community? We’ll we would really like a 4 bdrm - 2 1/2 bath in either in Tall Pines or over in Deep Snow! Oh, have you been approved for a mortgage yet? If they answer NO, I put these folks together with my mortgage lender right away to get a “Loan Approval” for $XXX,XXX Amount! If they say were approved for up to $250k
I start asking house details! Do you like Brick, Stucco or Wood Siding Exteriors? How many square feet are you looking for? What size lot would you like to have? Do you want a open floor plan? Would you like formal living and dining rooms? Do you want a kitchen island? What appliance finishes would you prefer? Would you like a single story or two story or split level? Do you want a basement? ETC, ETC, ETC, ETC.

Now if I had to get this buyer with my mortgage guy, I wait until there approved and know what they can afford before I ask area and these questions?

Now I go out and work my resources and understanding of the market, I tap my wholesalers, my “Other Investors”, pocket listings, REO list’s and any auctions and I find what my buyer wants!!! Now I send interior photo’s, a rough drawing of the floor plan and a written summary of lot size, house size, general area, etc.

If the buyer likes what they see, I tell them what they will need to pay to own the property, if there ok I tell them I will prepare a contract and meet you to sign it and we can go walk the property!

In the mean time I already know what I have to pay to contract the property and I generally try to ad value to the buyer (As in equity) Now I put my contract in place, then my buyers!

I don’t go buy property just to buy it and sit on it, I want to buy to fulfill a need!!!

               GR
3

I would get a earnest money deposit from the buyer first ($500 to $1,000), if you’re concerned about the buyer(s) circumventing around you. Or, you could get them to sign an NCND agreement to sign between you two. It works that way for bulk reo deals. :biggrin

4

I like Idhomebuyer’s recommendation for an NCND both paper or if you have an online site an electronic one would do.

Also clouding the title by having the seller and you sign and notarize an affidavit and memorandum agreement then record it at the county clerks office. This is good only if you are in the area that you are wholesaling for out of state the NCND would work best.

5

Or, you could get the buyer to notarize the assignment fee agreement with the NCND. :deal

Thanks, Mr. Investor. :cool

6

Thinking in that way you already off on the wrong foot. The buyer is not going to go around you. Never Happen to me, and if you are starting your deal right, only dealing with people you want to work with you, it won’t happen to you either. You can go into this business thinking that everyone you deal with is out to get you. Yes we all have those crazy people out there but, focused on getting what you want out of the deal. If you’re screening your buyers and your sellers right it usually won’t run into this problem.

7

I haven’t run into this problem, but I am just barely starting out, too. I was used to the bulk reo world for 1/2 a year, but nothing ever closed. So, I am back to square 1.

Delondon has a point, though. :beer

8

We all have had them moments. Just pick up where you left off and stay motivated. Stop thinking about all the bad that can happen, focus on the checks. :biggrin

9

an ncnd is just a sheet of paper and unless you have the funds available to work the legal system to enforce it…

the best way to keep control is to gain an understanding of how the processes work and keep yourself in the middle of the deal. never have the buyer and seller meet, you manage all the details of the transaction from property selection to contracting to closing

10

Did I forget to add,… market your but off until you get a deal? lol. We have no more excuses people. With all of this information on this website, how can you fail?

11

So is a standard purchase agreement so is an assignment contract so is an option contract every contract is a piece of paper so what? It still gives you legal protection and just like all contracts if one is breached you still would have to go through legal hoops but it all depends on how much is at stake. At least an NCND gives you a piece of mind.

The problem is that you can’t 100% keep the buyer from contacting the seller. The buyer has all of the information he needs to contact the seller including the address of the property. There is nothing stopping a buyer going to said address and circumventing around you hence the ways to protect your interest.

12

The buyer won’t go around you. I have had buyers know that I am not the owner of the home. But I have a contract that does not expire until x amount of days. All I tell the buyer if they even ask “I am selling the house for the owner.” A few times the buyer even knows that I am making a profit. But who cares, the home is dirt cheap! And they know it! :biggrin

13

GR - quick question for you. From what advertising are you building your buyers’ list from? Are you just putting feeler ads on craigslist for some areas and having people contact you? I guess this system kinda works like an agent making commission right? You can get a contract with a motivated seller who needs to seller, assign the contract and markup the price with the motivated buyer to make the spread?