Using a real estate agent for wholesale deals

[Yi Zhao]

Hi everyone,

I'm a house flipper and would like to explore the possibility of working with wholesalers to see if I can find better deals than I can on MLS since MLS is so competitive now days. I'm going to go look at a house tomorrow advertised by a wholesaler.

I've never worked with a wholesaler before and would really appreciate any advice. Some questions I've been thinking about are:

1. What to watch out for

2. What kind of questions to ask

3. I have a great realtor I work with. Would it be a good idea to bring her?

4. I was told that I didn't need a realtor to buy houses from a wholesaler. Would there be any benefits of using a realtor?

5. Anything else that I should be careful about?

I'm a bit nervous about this and any advice would be greatly appreciated.

Thanks, Yi

[Brian Jordan]

I wholesale on average of 10 deals a month in my market and deal strictly with cash buyes. If you follow John's advice, you'd never get a deal from me and would probably be removed from my list altogether. I typically have 3-4 buyers for every deal and I work with the ones that make it easy. However, I may be different from most wholesalers. I'm a licensed agent, I provide a comp packet for each house with a map of all properties, the mls report of each sold comp and a cma of all comps. Next, it's not my job to get the buyer "written bids from licensed contractors". That's the buyer's responsibility and 99% of my investors don't use licensed contractors to begin with. That being said, I do provide a "Repair Budget" number and it's up to the buyer to do their own due diligence to see if they can make it work withing those parameters. I have a background in construction and fix & flip half a dozen or more houses every year so I have a very good idea of what a house will need. Next, any buyer that refused to put down a non-refundable deposit is immediately removed from my list and will never get a deal from me. Any buyer who refuses shows me exactly how inexperienced they are. I have non-refundable deposits out on properties that I have moved past the inspection period based on the buyer's commitment to buy. If I have money at risk, the buyer is damn sure going to have skin in the game. I personally require $2,000 non-refundable paid directly to my holding company on any house under $100k. Over $100k and it goes up from there. I just had a deal where the seller required me to put down $26.5k at the completion of my 24hr inspection period. Money was held by the title company but you better believe that if I have money out because a buyer said they wanted the property then they'll need to come up with at least the same amount to cover what I have out. Sometimes more because I'm not in business to break even.

Attn: New Investors, be very careful listening to John Thedford's advice. Though his precious little heart is in the right place, you'll alienate yourselves from any reputable wholesalers in your area. Though I give comps, I assume they're being verified independently by the buyer or buyer's agent and would never want an investor to go off my info alone. Though I give a repair budget, I give access to the property to the buyer and their contractors so they can perform THEIR OWN DUE DILIGENCE. That being said, I have very few buyers that are inexperienced enough to need a contractor to walk through because they've been in the game long enough to know what it takes.

Be an easy buyer to work with. Buy with cash and close when I tell you and I'll feed you some great deals. I've been doing this full time for over 6 years and have easily wholesaled over 300 deals and have now expanded to multiple markets to increase my volume. One last piece of advice. If you're receiving properties from a wholesaler that you're considering doing business with, set up a meeting with them. Let them know who you are, what you're looking for and that your serious about buying. It's the quickest way to get noticed by me and it will allow me to layout exactly what I expect from my buyers. Hope all this info helps!