The "And/or Nominee" Catch-22

[Chuck Prime]

I'm a wholesaler in AZ. I'm new multi-family, but have wholesaled SFRs for over 5 years. I write purchase contracts, I assign them in escrow, and I show up on the HUD. I'm careful. The vast majority of my stuff closes, and always has.

So far I've recently worked my first 2 commercial deals and brought successful buyers for both. But I've found an underlying problem.

Most sellers of multiplexes won't sign a purchase contract where the buyer is "[my LLC] and/or Nominee". And some agents with high-DOM listings actually advise their high-DOM 'sellers' against it. These people don't believe in wholesaling, so I'm left with no protection against being ripped off.

Commercial sellers say, "Bring me a buyer BEFORE I sign with you. I won't cut you out."

Commercial buyers say, "Give me the property address BEFORE you have a contract. I won't go around you."

The sheer gall is astonishing.

I won't trust people who are unwilling to let me protect myself. So I'm missing out on a 62-plex I'm confident I can get done if the due diligence checks out. (The CAP looks to be just under 12% at 10% vacancy - still trying to verify.)

Currently I'm withholding the address from all potential buyers until they make a good-faith and temporarily refundable deposit. (Yes, the title co will do it.) I already gave them all I have (pics, numbers, etc) except parcel# and address. If they make the deposit, I get my contract, it goes to title, the buyer gets the address, and all goes normally from there.

Except they won't do it, and my seller won't sign WITHOUT them doing it. And even if either side eventually plays along, this reticence seems to be the norm.

I need a secured position or something with the same net effect that sellers and/or buyers will actually go along with. When that happens, some of you will benefit from the deals I can throw your way. Until then... !

Many thanks for whatever y'all can tell me. Really.

[Don Konipol]

Commercial investors are a lot more sophisticated that homeowners. When dealing with a homeowner you are dealing with a product consumer, when dealing with a commercial property investor you are dealing with a business person.

Most commercial owners (or their brokers) will recognize your offer for what it is - a free option for you to try to find a buyer at a higher price, that will only close if you can find the ultimate buyer, with no intention on your part to close on the purchase yourself (and from what you said probably not having the financial means to close yourself anyway).

For any seller the strongest offer is an all cash, no financing offer with no contingencies. Offers get progressively weaker once contingencies and/or credit are added to the equation. An offer from a wholesaler dependent on finding a buyer at a higher price is the weakest offer of all, and usually made at a bargain price to boot!

Interesting, IMO, wholesalers exist to fill a market function that many real estate brokers are too lazy or inexperienced to fill. Many brokers do not have buyers lists, further many merely stick the listing on an MLS and let another broker do the heavy lifting. This opens a market gap where a wholesaler can be of value by direct marketing the property to prescreened investors. Of course this is not the best option for the seller; the best option for the seller is to hire a broker that will market to and does maintain a buyers list. This way the seller will not have to pay the additional payment (thru a lower price) to a wholesaler for services he is already paying a broker for.