Things They Would NEVER Mention in Wholesaling Courses

[Alex Ficco]

I’m actually a huge proponent of education and courses, good ones at least, so don’t take this the wrong way, but there’s usually a HUGE gap in what is taught online and what the reality is when running a direct-to-seller model in a flipping/wholesaling company.

The concept is easy enough. Find a motivated seller and put the deal in contract for a price with enough margin to flip it OR enough margin to sell the deal to another investor. Through my local facebook group and the local meetup I run in Reno, NV, the questions I see pop up over and over again are actually the EASY part - finding deals, finding buyers, who to use for escrow, contracts, etc.

You don’t know what you don’t know, so you’d never think to ask about anything else when you’re new, but the PROBLEM SOLVING we deal with on just about every single deal is what really makes things complicated.

In the last few months, we have closed some crazy complex deals, which is what has me wanting to share some of this. These are deals with absolutely no chance I could’ve closed when I was new, and the situations are unique to every deal, so there’s no way you could teach all of it in any type of course - and ‘How to help the seller break up a brutal dog fight in the front yard while the neighbor comes out screaming “I got a gun! I got a gun!”’ is not as appealing as ‘How to make an extra $10k a month on the side!’ for course material - more on that later.

As outlined in a few of my previous posts, a lot of people instantly forget about the MOTIVATED part of the term ‘Motivated Sellers’ as soon as they start marketing for deals. Motivation and distress can be used interchangeably. And where there is distress, there are problems that need to be solved.

All of our Sellers need the ‘easy button’ for one reason or another. That’s what we offer them as investors - quick close, cash, as-is condition, blah blah blah. Again, that’s the part that’s a given. Most of them need much more than that to transact.

Some of the problems we see with Sellers we buy from revolve around money - they need proceeds from the sale to even move out in the first place. Doing a holdback - closing on the deal, holding back $5k in escrow, and giving them 7 days to move out before getting the remaining $5k - is a great way to do it.

Other times - we’ve released proceeds early - just giving them money before the deal is closed - although we require that the deed / final closing docs have already been signed, and the proceeds needed are related to the transaction closing. You have to be very empathetic to people's situations, but with that comes a higher chance of getting taken advantage of, which is why we don’t just release proceeds early with no protection or for no rhyme or reason.

Other common issues we see revolve around moving. I can’t tell you how many rentals we’ve found/done all the leg work for, potential houses we’ve found for purchase, realtor referrals, lender referrals, setting up movers, paying for movers, moving our closing date to work with their other transaction, etc etc.

Again, cool… you found a deal, put it in contract, and found a buyer. Great. Sit back and wait for the closing date! …. until the date comes and you learn the Sellers haven't even started to move out yet, have no path forward to getting moved out, and the Buyer has his trashout guys scheduled for the next morning.

Something like that happens to you and you figure out pretty quick that you have to play transaction coordinator on every deal - follow up with the Seller, follow up with the Buyer, follow up with Title, etc. This is basically how I learned and slowly developed the process we follow today - problem happens, solve the problem, try to not let it happen again.

But some problems cant be solved through improving the process. When I said the thing about the dog fight… yes, that just happened last month coming up on 150 deals in. That’s getting its own video on youtube in the coming weeks, but 10 minutes of watching a dog almost die, screaming, throwing rocks and pieces of gutter found in the front yard, neighbor with the gun, etc… yeah. I don't think I could’ve done much to get ahead of that or will do anything differently in the future. **** happens.

Although my chances of a dog fight seem to be about 1/150, it's a good example of the crazy **** we deal with. It comes with the business, and it comes with the people that it truly makes sense for them to take a discounted cash offer on their house.

This post isn't about how to deal with XYZ, I guess it’s more of a post about preparing yourself for unexpected problems to come up, because they will… all the time. And it's also a reminder that doing acquisitions in this model isn't really about the real estate. Yes that’s how you come up with your offer, but that’s just the product that you sell LATER - whether it's the deal as-is to another investor for a wholesale or a remodeled product to a retail buyer after the flip.

The product you're selling FIRST is problem solving. It’s all about the Seller and how you can help them, not about the house. It just so happens that distressed situations and distressed-condition property go hand in hand, but not all the time. Hopefully this helps.