I am just starting to get into wholesaling properties. I want to use the MLS to send letters of intent for properties that have a high number of DOM, are estates, or where the listing description includes that the seller is motivated. I have found a realtor that I like and who understands what I am doing however he just informed me that in order for the letter of intent to be taken seriously, I also need to include proof of funding. He also stated that if he sends too many LOI's that I can't make good on, he could be subject to scrutiny by the board of realtors. Can anyone confirm if this is true? My understanding is that the LOI is simply a starting place to determine if a seller is truly motivated. I would appreciate any insight.
If your Realtor is worried about the Board then just tell him your willing to sit down with him and fill out the 15-20 page offer agreement on the 20 properties you will be making offers on in the next month.
Once you understand what's in there, and don't have to read the contract every time, it just takes a few minutes to fill out a contract. Its all the addendums on REO's that are a pain. Writing 10 offers, with real contracts, should be a matter of under half an hour.
I'd tend to agree with your Realtor that the LOIs aren't going to get much respect.
So you think it's better to write a formal offer than to write up a LOI? If your not dealing with a Realtor do you still use their form or do you use a LOI?
I do think a formal purchase contract is better, just because 1) its a serious, binding legal agreement, and 2) its what the agents are used to seeing.
LOIs have no binding status. So, even if the seller says "yes", the buyer can still just walk away.
That said, I've heard people (well, OK, guru's) talk about faxing out massive amounts of LOIs directly to the listing office, hoping to get a bite.
Thanks for the info. Just to clarify, it sounds like sending LOI's are not the way to go. Purchase agreements are taken more seriously and if I am correct then I would also need to include proof of financing...so I guess I need to explore other avenues aside from MLS listed properties.
Are there any recommendations for how to get good deals on MLS properties that would make a good wholesale deal?
If you have good credit to prove proof of financing all you have to do is go to your local banker and fill out the residential loan application, give them your last two years 1040's and your last two months of pay stubs and your on your way. If they approve you ask them for a pre-approval letter, then you can just take that and show it to your Realtor.
You don't NEED to provide proof of financing. It's just the Realtors way of determining how serious you are. It helps them to determine if they are wasting their time with you or not.
If you show up at a different Realtors office in professional attire and ask them to show you properties they most likely won't even think about asking for proof of financing.