Sorry for the newb question, but I can’t understand how you make an offer buying enough time to get your buyers without using your own money in the meantime.
And if you are to find buyers before how do you market the property to potential buyers so that the buyer buys from you and not from the original seller…
Well, first, one of the best things that you can do for yourself is find yourself some buyers. Network at the local REI club, call the “I Buy Houses Signs”, check out who the landlords and rehabbers are and find out what kind of proeprties, and waht kind of terms thay would like to see in a deal. The best way for a new person to make it as a wholesaler in this business is develop a solid list of potential buyers. That is when you can contract a property and wholesale it in a few hours. With the right network, you can.
If you have no buyers, then you are just hoping. Generally what you do is put up as small of an Earnest money deposit as you can, $100, say, then you make the contract contingent on your approval of the title search and inspection by your contractor, within XX days. Make the time limit as long as you can get away with it. You have that much time to market the proeprty and get a solid buyer. If the time limit comes, you have found the buyer but you are a couple days from closing, the seller will normally be willing to extend the closing deadline a few days. If the time limit comes and you have no selling prospects, you have to decide if you are going to close on your own, or cancel the contract since you will “disapprove” the contractor’s report.
Again, the best way to do it by far is to network and find good active buyers first, find out the types of properties they want to buy, then find properties to sell to them.
Realtors such as Remax, Centurey 21, etc usually require much more than $100 as earnest money though correct?
The real estate office has nothing to do with the earnest money amount.
You offer whatever you want to give as earnest money and the seller either accepts it or they don’t.
Can you explain then what is earnest money? I know that when I work with a realtor and I want to make an offer they usually request a $1000 as a good will deposit.
An earnest money is paid to show that you are serious about buying a certain property and can be used as a down payment when you finally buy the property. It depends on who you are buying from.
I really wouldn’t recommend wasting your time and reputation running around “writing checks that your a$$ can’t cash”, It is possible to find buyers after a contract is in place but I would not recommend doing it that way because:
word will get around quick to other investors in the area that you write offers and then don’t follow through and once you have a bad reputation it is hard to overcome.
you are at a very weak spot for negotiation on the buyer end.
As far as earnest money goes, many banks and reo depts will require you to deposit at least $1000 to make an offer on one of there homes and they don’t typically budge.
Private sellers can be negotiated though.
If you do find a buyer always try to get a non refundable deposit from them equal to or greater than the amount that you stand to lose if they fail to follow through on their contract.
I usually deal with motivated sellers directly without a Realtor. Then the earnest $ is what I put in the contract & they don’t care.
I also have a buyer’s list lined up. Some buyers email me periodically asking if I have properties under contract. When I get a property under contract, I send an email blast. (Actually, I contact those 1st that I’ve flipped to in the past).
I agree with Eric concerning a non-refundable deposit.
So you deal with homes that are for sale by owner mostly correct?
A lot of the properties I’ve found are from “driving for $”. I actively look for vacant houses that don’t have any “for sale signs” on them.
The number goal is to find “motivated sellers.” I’ve found people without “for sale by owner” or any for sale signs that were way more motivated than anyone with a “for sale” sign.
For example, a vacant run-down house with a handwritten “for rent” sign can be a motivated seller.
Landlords that just evicted someone (you’d have to find the list) could also be a motivated seller.
i have never ever ever ever ever presented an earnest check with an offer before its been accepted. neeeevvvveeeer!
i have been asked to present a COPY of the earnest check which i don’t have a problem with. The VA and a few banks will ask for this but not many others…
many asset managers and the like will give you a 7 day inspection period that you can use to walk from the deal given that the repairs don’t exceed a certain dollar figure you determine and write into the offer you present. always go low on you repair contingency and don’t be afraid to walk from a deal if the numbers don’t work becuase you found rotted sills or whatever. if you cna’t get an inspection period, don’t offer, period…
if you get good with your numbers, offer realistically and contract right, you shouldn’t have any trouble flipping that deal in a matter of a few days if you have the investors already lined up. many times, i’ll get the investor to write the earnest check directly to the closing attorney for me because i’ve usually pimped that deal in 24 to 48 hours because the NUMBERS WORK! 24 to 48 hours isn’t enough time for the seller to recognize that you haven’t produced the earnest check after contract acceptance and will ususally be none the wiser.
you’ll get a bad reputation if you tie up deals because you offered to high and then can’t ultimately produce because you don’t know what you’re doing…