Somewhere Between Wholesale and Retail??

Question

Hi there BP,

I was negotiating with a stubborn seller today. There are many times I'm not able to get a price that makes a viable wholesale deal. So I developed a fall back position based on rental comps: if the property will cash flow at their asking price, I'll go ahead and sign them up. But in this case, we're beyond that to.

Ordinarily, I would just say "Next!", but this house is gorgeous, in a great area, and the asking price would be a great discount for a retail buyer. So tell me, would this work:

Get the property under contract, and call all the local RE agents asking them if they have interested buyers in that area for that price. How does this work when there is no listing? Who pays the commission (if any)? Or should I simply offer a referral fee?

This is new territory for me, but if there's a way to make it happen, it's another tool in the box- another exit strategy. So tell me, is this doable? Anyone done it who would like to share? Thanx

Bill Gulley · Answer

Edward, this is close to what I just did, except no agent was involved. If you get an option that's the easiest way to cut a deal.

You don't sell the property you sell the option. It would be easier for you to build the RE commission in the purchase price above what your option would be, in other words, you pay it.

Again, saying above wholesale and below retial really is not the propoer way to describe this to anyone other than "investors" who use the lingo. You are looking at a sale price, a strike price for the deal, forget wholesale and market or retail. I'm not going into all that again, but the point being is that the price you offer the property for could be attractive to a wholesaler or a homebuyer, who cares what your buyer does with it, you just want it gone and find a price that works to accomplish that.

You could go directly to your known investors or flippers, as I did, you can go to agents and pay the commission at the sale or upon the sale of the option and you can find a homeowner wanting a great deal too. I'll sell a house to anyone who can buy!

Sounds like you are getting bored and want to break out and do something different, I felt that way many times. Problem is, IMO, that when you try to "work" systems or follow a specific investor strategy, most people will get tied up in a system rather than just keeping it simple and offering it to anyone at a set price.

I have sold properties that really were not advertised (or options) I was motivated because I didn't want them and had better deals burning my time, whatever, point is my price was, under those circumstances, never the market value, it was a market price or strike price. Set your market price and tell everyone you know and everyone you meet. You don't have to work out the method of the sale or transaction until after you have met with the guy who wants it. At that point you can devise any method you can to accomplsih the goal. Much easier, IMO, good luck.

Sharon Vornholt · Answer

If you can close on the property, then I would "wholetale it" it the condition is not too bad. Wholetaling is somewhere between wholesale and retail. I had good luck doing this previously.

I had a house with an ARV of about 120K. It needed kitchen cabinets (which had been removed) and it needed to be updated. The bathroom was original but it was in perfect condition. The hardwood was also in good condition

The hosue needed paint, some trees removed and some landscaping. Most everything except the cabinets and appliances could be done at a later date. They buyers moved into the house after putting the cabinets in.

I paid 50K and wholetailed it for 80K. I made a great profit and they got a great deal also. I sold it the first day I put it out there to my REIA club.

Jerry Puckett · Answer

I bow to the wisdom of the elder BP members.

I ran a report that gave me the names and email addresses of all the agents who had listed or sold a house within a half mile of the one I wanted to sell. Plugged them into my auto responder and sent out an email blast. Well, a puff anyway, there were only about 30. I got one reply :roll:

Not a complete waste of time though. The one who did reply is also an investor who signed up for my buyer's list and expressed an interest in a property I just got. I think I spent about 30 minutes on this, and even though I didn't accomplish my goal, I'm pleased with the results.

Thanks to all who replied. I will listen a little more closely next time. :lol:

Justin S. · Answer

What is stopping you from marketing it on the mls yourself?

Rob Gillespie · Answer

If It is hard in the beginning, it does not get easier! Only work with motivated folks, there are too many deals out there!

Account Closed · Answer

Edward,  it seems to me that you are making it work.  Nothing wrong with getting creative and looking at additional ways to capitalize on leads.  May not be as profitable, but if it puts money in your pocket and leads to more buyers and leads seems like a good strategy.

J Scott · Answer

You can certainly call agents in your area to find out if they have clients, but that can be a very tedious process.  Additionally, unless you actually have the property under contract, most agents won't even consider bringing their buyers, as it's the seller who will have to pay the commission, and you wouldn't be the seller in that case.

Additionally, most buyers who are represented by an agent will be getting financing, and it's unlikely you'll be able to push through a financed purchase as the back-end of a wholesale deal.

Now, the other option is to get the house under contract and assign the contract, but that would only work if the seller were willing to pay the buyer's agent a commission, which the seller may or may not be willing to do.

Steve Babiak · Answer

Edward - try it again, it loaded fine for me.  Search was for "wholetale" (not a typo).

Jerry Puckett · Answer

How right you are sir, and normally I would do just that. However in this case, I want to try something different, which isn't exactly wholesaling.

Some of my wholesaling buddies thought that trying to sell at a not good enough for wholesale discount to buy and hold investors was a waste of time too...until I did it.

The way I see it, if I can make a few bucks from making some phone calls, it's no waste of time. Wouldn't you like to make use of a higher percentage of your leads? Then again, I haven't been at this near as long as you.

@Steve- thanks for the help. I'm not able to get the page to load from the link you posted. What were your search terms?

Tony Kawaguchi · Answer

Indeed, some deals just are not worth the headache. I guess it depends on how high your tolerance is for hassle  :lol:

Somewhere Between Wholesale and Retail??

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