Am I Missing Something? Deals worth wholesaling

[Alex Harris]

Hi BP Fam,

I have been getting deals under contract virtually in my area and other states and am starting to do many Joint Venture deals with other wholesalers. I am starting to come across other "wholesalers" with "deals" that don't seem to leave enough meat on the bone for the end buyers. I didn't think much of it the first time, thinking that is what just a new wholesaler who didn't go low enough with the seller. Now I am seeing numerous wholesalers with these "deals". It's also not just 1 property but multiple deals under contract like this. A couple are wholesaling REO properties (putting deposits down) and have atleast 3-5 deals in certain areas (the person I'm talking about in particular is from CA but wholesaling in FL). I remember the properties he had needed very little repairs and I was wondering if he was wholesaling to investors who were buy-and-holding properties and renting them out. At first I thought he was just an investor who was rehabbing the properties and was trying to sell them to me. He ensured me these were "banked owned wholesale deals under contract". My entire mindframe in this business is make it a win-win solution for everybody (seller, end buyer, and myself). In saying this, the numbers must work for the end buyer and it must be a deal. That's how they "win" in my eyes.

My question is - it seems like they are getting deals under contract and have been for a while and are spending money with earnest money deposits (which I don't do since I work with motivated sellers) to close BUT their properties just don't seem like DEALS to me. Is there something I am missing? I shoot for 65%-70% discount not including repairs on properties. They seem to be closer to 80%-90% or are only taking $10k-$20k off each property.

THE MAIN REASON I need to know this is I am constantly archiving LEADS (not throwing away) where I can't get the seller to go low enough. Is there another strategy that I'm missing so that these leads don't go to waste?

[Account Closed]

Alex: I think I understand your question. It sounds like you are seeing properties offered by wholesalers at prices that are higher than your buyers would want to pay. So you want to know if there are real buyers in your farms at these higher prices That way you could then go higher on your offers, getting more sellers to accept them. Is that right?

You could track the properties and see if they sell. 3 or 4 months ago I was contacted about 3 multi-unit properties in my farms by 2 different out-of-area wholesalers. None of their prices were workable for me or for any of my buyers. None of the properties sold and they are no longer in contract. The wholesalers either misjudged the value and/or didn't market it right. The sellers are just left high and dry. One was a confirmed short with a pending foreclosure date.

IMO it's more educational to study comp data for sold prices, type of loan and type of buyer than it is to watch other wholesalers. That being said, consider working outside of a formula. Or at least adjust the formula for the different types of buyers. Rehabbers, landlords, sweat equity buyers, 1031 Exchange in-a-hurry buyers.....they all value properties differently. Find out what they pay so you have a buyer for every type of property in a wider price range.