How to make an offer to wholesaler

Question

Hi everyone! I'm a new investor to the Houston, TX area. I've been analyzing some of the deals that I get via wholesalers that I've met at real estate investor events. I usually do my due diligence by doing several comps through zillow, the local MLS database, and property tax records. Then I would add up what I my rehab cost, finance cost, etc would be and come to a purchase price. The purchase price that I arrived at is almost all the time lower than what's advertise on most of the wholesale deals I've seen. So my questions is, how do you make an offer to the wholesalers without offending them? (PS. Most of the purchase price that I came to after adding my acquisition cost is about 15-20% discount from what I've seen being advertised)

Charlie Fitzgerald · Answer

You make your offer based in your fundamentals and financial analysis fit what is s makes sense deal for you .  If the wholesaler is insulted, they can decline your offer.  Please do not fall into the trap if adjusting your fundamentals to cover anyone else's .  When you do, you abandon your plan and are now just working theit plan...at your expense .

John Vo · Answer

@David Bokman & @Michael Nicholson, I appreciate the advice! It might just be the case that I'm not dealing with the right wholesaler. I will stick to my fundamentals.

Travis Thornton · Answer

Hey John! Just thought I'd quickly share the experience I had when dealing with the wholesalers I bought my properties from. Now, we're talking only 2 properties here, I'm no professional by any means. They were both really easy going and the dialog back forth felt just like any basic price negotiating situation. The first one was up for sale for 15k (rough area, lots of abandoned houses). It was a really cool house with a lot of potential. 1725sqf built in 1925. Needed a total gut job. After creating some rapport, I offered half the asking price. 7.5k. My limit was 10k. That's exactly what he came back with and I agreed and that was that. I was happy, he was happy. The second was in the same area. It came up for sale for 19.9k.. I kept my eye on it as it was also a cool house, about the same size and also built in 1925. This had a totally different style to it, I liked it. It set for a month then the price went down by a thousand.. Set a little longer and it dropped again. By this time I was getting the itch.. I called and set up a time to check it out. When I went to see it there was another potential buyer there as well. I wasn't deterred, it seemed she was thinking it needed to much work. By this time the asking price was 17k. Again, created rapport and came in with a 9k offer. They came back 14.5k, I offered 12k and they agreed. And again, everything was good and both parties were happy. Now, I'm sure high dollar deals can be far more stressful and complicated. But these were just my own two personal experiences. I was also concerned about offending with what may come off as a low ball offer. So one line that I used both times was "I know you're asking (x) and that's not a bad price at all, I'm sure it could sell for that eventually, but I can definitely offer (x) right now and we could close as soon as you'd like".   Hope that helps in some way, good luck and happy investing!Travis.

John Vo · Answer

Thanks for the advice Charlie and Hung! I try not to second guess myself, but it gets the better of me sometimes. I'll stick with my fundamentals.

Hung Trieu · Answer

wholesale in Houston they try to maximize there profit, you have to very careful with there ARV number , never right .Alway  higher with the CMA from MLS , they try to get higher comps so they can sell to investor , most of the time they left for investor 10%-15% ARV , sometimes less than 10% . If you don't know how to get the best CMA , don't try to buy from wholesaler , direct mail is the way to go.

Hope it help

David Bokman · Answer

Theres already some great advice above....I'll just add that not every wholesaler is created equal nor are there "deals". The way you make your offer should never really change regardless who your buying from. Anyone will tell you that the real profits and wealth come from how you buy. I would just make an offer based on your due diligence and go from there.

How to make an offer to wholesaler

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