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Five Things to Know When Putting Together a Wholesale Deal

Five Things to Know When Putting Together a Wholesale Deal

When you start your wholesaling business, or whatever real estate niche you are in, having buyers wll be your blood line. Most of the time wholesaling is quick, easy, and full of dancing clowns on unicycles, but sometimes if you are working solo and eager to get started, there are a few things you need to know. While wholesaling is fun and rewarding, please take time to do your homework and sharpen your sales skills. If you have not experienced a seller or buyer walking away from a deal, or having attorneys belittle you, just wait because it will happen. Most of the time the facts, contacts, and information you gather will do the talking for you. The following are just some small tips you should print out and put in a binder with your course.

  • Have your buyer(s) lined up. You want to make sure that your have an exit strategy before you put it under contract so that you don’t waste time once you get come to an agreement with a seller. There really isn’t a trick here because it’s a matter of honesty. Most of the times you can have a signed LOI, letter of intent, from the seller stating that you have begun negotiations with the home owner in order to purchase the house. Use this LOI to start giving the address to your buyers and get an idea whether they want that property or not.
  • Get the seller to sign an agreement upon reaching a verbal commitment. Nothing can kill a deal faster than a seller who keeps making demands and raising their price after verbally committing to a set amount. Sellers will say one thing to you when negotiating and once you leave, they will talk it over with everyone they know and they will be told to ask for more. We want the seller to feel like he got a deal so don’t agree right away, say that you will think about it and just have him sign an agreement or LOI at that moment. The best way to do so is to just pull your purchase and sale contract out and make the agreement subject to the approval of whomever they want i.e. attorney, friend, lover, etc…
  • Get your numbers right the first time around. When we say numbers, we mean repair estimate and ARV, which is the after repair value. The ARV is estimated by recent sales within a half mile area from property. If you don’t know much about repairs, just decide whether it’s a small, medium, or large repair job. Multiply the square footage by 10, 15, or 25 with respects to the type of rehab. If you have a 1,000 square foot home and it needs a large job done, just multiply 1,000 by 25, and you will have a rough estimate for the amount needed. This is a good start, but the best way is to constantly talk to contractors and rehabbers.
  • Under-promise and over-deliver. When people begin to wholesale real estate, they will want to get a deal done so bad that they just say whatever in order to have a seller agree to a price. Unfortunately many make the mistake of misrepresenting themselves or what it is they do. It does not hurt to tell them you will wholesale the deal. They should understand that if not for you, investors would not have houses to flip. Also, do a title search and hand your buyer a copy so there are no surprises regarding closing costs. Finally, do not commit to close in 14 days if have not done so already with your buyer. You can imply that you will close in 14 days, but still write up a 30 day agreement because it is standard procedure. Say less and do more!
  • Control communication at all times. Once your seller and buyer agree to your contract and terms, make sure to get in touch with their respective attorneys immediately. You will want to say who you are and that you will be wholesaling this property. If they tell you that you need to be a realtor, ignore them. Most attorneys have some weird ego about them and hate being told what to do or be bothered, do it anyways. If the attorney needs to fax something, make sure it gets done and ask for a confirmation from the receiving attorney. This may bother them, but if you want to get paid on the wholesale, you will be involved every step of the way.

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Becoming a Wholesaler: 90 Day Update

Well, it looks like Jae is coming up in the wholesaling world. He has learned what he needs to do and is very honest about it. He is setting his sights on getting deals done and reaching out to the connections he’s made. The journey is what matters and it looks like Jae has a great head on his shoulders and there is NO doubt that he can achieve his goals no matter what business he is in.

Let us know what you think about Jae and his journey so far!! Comment below!