Wholesaing Scenario

[John Chan]

I'm thinking about trying wholesaling for a change, but I have one quick scenario for you seasoned wholesalers out there:

You locate a good deal on a property and put it under contract. You start putting out bandit signs to get bites, and you start call people on your existing buyers list, but right now nobody wants that specific property. What now? Do you close on it yourself or forfeit the earnest money? Is this a rare scenario in wholesaling?

[Justin S.]

John-

An inspection clause gives you the right to inspect the property within a certain period of time and if you find something that you did not originally know (for example, mold in the attic), then you can either ask for further reduction in price or walk away.

The "as-is" addendum simply means you buying the property in its current condition, the bank will not fix anything. It does not remove your right to do your own due diligence.

Now on to your main question. If you cannot find a buyer, its not a good deal and you should know what a good is before you submit an offer on a property. Walking away from banks is a great way to ruin your reputation with banks and agents. If you can't close then you shouldn't accept the offer. But if you want to ignore my advice, and I don't mean that to be rude, most people do ignore me, then you want to employ a 10-day inspection period. I HIGHLY encourage you though to not abuse your inspection period. Your offer to the bank gets weaker when you have a bunch on contingencies in your offer.

If I were you, I would first find my buyers and only put in offers that meet their criteria. This does a few things for you:
1. You can probably put in a stronger offer. For example, your buyer says I want props at 80-90K. You can confidently put in offers in the 70K range know you can close.
2. You do not waste your time or other people time putting in offers on houses that you know you can't close.
3. You build a reputation as someone who closes. The banks know that when you submit an offer its serious and they will take you more serious.