How Does Everyone Get Paid?

Question

I've put a few ads out. Links provided

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Say someone comes to me and says I have a house I want to sell. I get it under contract, decide how much to put it up for, etc. and finally find an investor. Can I say that I buy homes with cash? How do the investors normal finance the home, and how do I get that money to the buyer? I see over and over guides telling you the gist of wholesaling but the technicalities (what you do when you get people depending on you) is usually left out.

Thanks!

Jon Holdman · Answer

Sure. Wholesalers make that claim all the time. Its a lie, but that doesn't stop you from saying. But I would not, and I think its bad business practice to start the relationship with your clients with a lie.Some pay cash, some finance it. But its largely irrelevant to you. Money is money, regardless of the exact source. Where it is relevant is that financed deals take longer to close. And conventional lenders will have issues with deals where a wholesaler is in the middle. Cash purchases and purchases with a investor oriented lender (e.g., a hard money lender) will avoid those issues.Its done by the title company or attorney that handles the transaction. In a simple transaction, the seller or their lender sends money to the title company. After closing, the title company disburses the money as determined by the paperwork. Mostly to the seller and their lender (to pay off the loan). But also to everyone else who has a finger in the pie. Like you, the wholesaler.With a wholesale transaction, it can be more complex. You might be doing an assignment or a double closing. But the process is still generally the same.

Dev Horn · Answer

The title company does, yes. You will have an assignment agreement that specifies your "marketing/assignment fee" and that will be on the HUD settlement statement and you & the seller will be paid from the proceeds at closing

Dev Horn · Answer

P.S. I agree with @Jon Holdman - there is a way to do this business without lying to people, and if you do misrepresent that you are Mr. Moneybags, the sellers soon realize that you are bringing over multiple cash buyers to see the place. That's awkward if you haven't been up-front with the homeowners.When I intend to wholesale, I explain that I am 100% on the hook but that my intent is to fund the purchase via one of our partner companies, hence the need to assign the deal prior to closing. Far from avoiding it, I point this out (my ability and intent to assign). If they trust that you can perform, they don't care how the deal gets funded. The key is, you need to perform.And when you are honest, you don't have to remember or cover for any lies or misrepresentations, and there are no "surprises". =)

Nicole A. · Answer

Hello! How else are you searching for deals than Craigslist?You could say you and your partners buy with cash, because that's generally true....whoever the end buyer is that you find would sorta be your "partner" since they're closing the deal for you.You'll be finding end buyers that finance their deals with cash just as you said... Or hard money loans, which many times is explained as "cash" because it funds quickly (as opposed to a mortgage with a bank). Your job as the wholesaler is to find deals and get them under contract and assign that contract to the end buyer before your closing date. It is up to the end buyer to get the funds to buy your wholesale deal.

Jacob Dame · Answer

Yes that would be awesome! Just PM'd you.

Jacob Dame · Answer

I'm asking my real estate agent friend if he knows of any properties or buyers. I went 'driving for dollars' once and only got two properties. I think it's a waste of time, that. I am going to find out how to direct mail, but it's confusing. I don't know where to get the list. I guess the main ways of generating leads would be Craigslist, word of mouth, direct mail and bandit signs. I'll focus on getting direct mail and bandit signs set up. There's also an investment club locally with some members. But it cost you $100 a year to join. I have no capital right now. I'm flipping stuff off craigslist and reselling it. I can make a few hundred a month that way.Jon, thank you for the response! Very informative bits of insight. I would also like to know the answer to Jason's question. Man this place is amazing! I'm surprised they don't charge just to post here. It'd be worth it!

Jason Griffin · Answer

So, the closing attorney can disperse funds to the wholesaler and seller.Correct?