What if I am Under Contract with No Buyers

Question

I am a newbe at this wholesaling. What happens if I get a property under contract and I can't find a buyer? Am I stuck buying the said property myself?

Joseph Ball · Answer

I never back out. If I commit, I perform. Find buyers, know their needs, fulfill, as Joe V. said. Sometimes (rarely), I get stuck and have to sell to someone else. Knowing my values and my market, that has never presented a problem to me. However, as a wholesaler, I would not wish to get the reputation of backing out of contracts. I try to structure my deals where they are good enough for me to keep, if needed.

Joe Villeneuve · Answer

It all depends on the terms of the contract.  You should have it set up so you just need to back out before the contracted closing date...usually 30-45 days.  If you make a cash offer, you're EMD is usually gone after the 7-10 day inspection period.

This is why I always find my buyers first, then fill their orders.

Joseph Ball · Answer

You can make excuses, or you can perform professionally. If you lose money on a deal, stand by your word. Integrity is more important than one deal. "Exercise one of your clauses" is what GURU's teach. How many GURU's actually do deals in the open marketplace?

Never back out of a deal, if you are a professional wholesaler. Your reputation lingers. Most of my buyers came by word of mouth. Yours will too, if you act with integrity and ethical standards.

JPaul Mills · Answer

If you have the property under contract You shouldnt have a problem selling it if the numberes are corect and if it is in a saught after area of your market. Now of course there always the ones that seem to not follow through until the last minute but you should be marketing the crap out of that thing.  If the property is vacant I write a bunch of bandit signs with for sale sign and put them within a mile of the property and also a sign in the yard so that the Neighbors might either be interested or know someone who would be.  best of luck

Dev Horn · Answer

This is the BIG worry for a wholesaler.  And it's going to happen.  Sometimes, you think you have a buyer but when you call the guy he tells you he has 4 projects going on so all his cash is tied up, etc.  That's why you need to spend time and energy developing a REAL cash buyer list so you can blast your deal out to a bunch of qualified buyers.

In most cases, the reason new wholesalers cannot find a buyer is the deal is not attractive.  The numbers have to be good/right.

If you tried and failed to find a buyer - and you cannot buy it yourself (no cash, etc.) - you can either back out of the deal on your inspection contingency ("We found out this place needed a lot more work than I originally estimated...") -- OR -- you can just go back to your seller and be upfront about your problem ("I had a business partner that was going to fund the purchase and they've decided not to do it....").

I know a very successful wholesaler (Kai Johnson - works here with us) that has gone back to multiple sellers and simply told them, "I screwed up - I offered too much for your house.  As a result, my partners are not interested in this deal.  If you can take $X instead of $Y, I'm still interested.  But if you can't come down to $X, I simply can't do this deal."  In many cases, they will adjust their price for him.  In others, they've understood and he moved on.  He tells me he has never lost the EMD and has never has a seller to demand it.  He has found that being upfront and honest with the sellers has served him well over the years... (P.S. he goes back to them within 7 days if he can't find a buyer - don't drag people along and waste their time and money...)

Richard C. · Answer

"We found out this place needed a lot more work than I originally estimated..." would be what we commonly call a damn lie.

If every wholesaler did business as Joseph and Joe describe, wholesaling wouldn't have the controversy surrounding it that it does.

Jon Holdman · Answer

If you have told the sellers "I'm going to buy your property", buy it.

If you've been up front and told them "I'm going to try to find a buyer for your property, but it I can't, then I can't buy your house", then exercise one of your contingencies to terminate the contract.  If the contingencies have expired, you'll forfeit your earnest money.

Joe Villeneuve · Answer

Joe is correct (must be the name).  I've always believed that if you line up your buyers first, you are an investor...if you tie up the property first, then try to find a buyer, you're a speculator.

Patrick Britton · Answer

exercise one of your clauses such as feasibility and walk away.  sometimes you get a property under contract only to learn that there are a multitude of issues with it.

think wholesalers get a bad rep?  HAH!  I get lied to 3 - 5 times a day by potential sellers or greasy RE agents.

Cody Evans · Answer

@Joe Villeneuve

@Joseph Ball

First off, I want to thank both of you about teaching me the ethics and what integrity means in wholesaling because I may have viewed going back and saying "I actually can't buy the property" on a regular basis as just standard business as usual. I now see the importance.

You guys mention a buyers list. I go to real estate meet ups but being a newbie to everything real estate how would you suggest I create a buyers list and how many buyers should I have lined up before I start driving for dollars? I already have one guy that said he pays a bird dog $1000 per closed deal the bird dog brings him.

What if I am Under Contract with No Buyers

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