Real Estate Investor · Pittsburgh, PA · Member since 2011 · 68 posts · 5 votes
Hello everyone.
Although I have properties under contract, I've seen a few homes and the outcome has been the same. Some home sellers don't understand why I need access to the house if im buying the home with cash. I tell them I'm either going to flip the house or immediately sell it to one of my numerous investor partners.
Here's my question and theory.
I'm thinking my approach is wrong when I approach these sellers. I approach them as if in buying the property so I guess there expecting the cash right away and no terms in the sales agreement.
What approach should I take so these home sellers have no issue with me accessing the property?
How do you other wholesalers approach the home sellers so they feel comfortable with you accessing their home?
What are your explanations for your sales agreement contingencies?
Just me (and I'm not a wholesaler), but I'd be completely upfront about your intentions. Assuming you won't buy the property if you can't find a buyer, you really need to let the seller know this. In my opinion, the seller has a right to know that the sale may not go through if you can't unload the property, and the seller may want to have a contingency should that be the case.
The added benefit to being upfront about your intentions is that the seller should completely understand why you need access to the property.
Just me (and I'm not a wholesaler), but I'd be completely upfront about your intentions. Assuming you won't buy the property if you can't find a buyer, you really need to let the seller know this. In my opinion, the seller has a right to know that the sale may not go through if you can't unload the property, and the seller may want to have a contingency should that be the case.
The added benefit to being upfront about your intentions is that the seller should completely understand why you need access to the property.
I agree with J Scott. You should approach the potential seller and explain exactly what you plan to do. Disclose that you are a wholesaler and your intention is to assign the contract over to another invester. Include an option period in the contract so that you can back out at any time within X days of execution of the contract (the amount of time you think you need to find a buyer) and include in the contract an option fee that is not so high that you are going to take a big hit if you can't find a buyer and not so low that you are wasting the seller's time. What exactly are you needing access for? Inspections, photos? Put that in the contract.
Here's some sales contract forms for Pennsylvania: http://www.parealtor.org/content/form_samples.htm#aos
You may be able to use one as is, or at the very least use it as a starting point and customize it to fit your needs.
Yep Jason is right. Always be up front. It won't look good if the seller arrives at the title company and sees someone else instead of you at the closing table. Questions and problems will start occurring.
It sounds like you are not being taken seriously because they know your intentions are not to buy the house for yourself, but instead to flip it before closing. IMO the seller then thinks to themselves they can get more if they look for their own end buyer (which is true)
I am not saying you should be dishonest about it. But it seems like your approach is killing you coming out of the gate, to the point where you are having trouble getting a contract, right?
I think less is more. And you are saying too much before you have an agreed price.
Will you accept $x for the property?
Great I will send over the contract to you shortly. It will give me a period of time for inspections, and if everything looks good we will close by X/X/XXXX
In a nutshell I would worry about explaining everything after you have an end buyer who wants to look at it. If you cant get one before the inspection is up, then bow out.
I know some people will say this is dishonest, but I would disagree. If the seller is getting the agreed upon price, and you followed your obligations under the contract, then you performed and thats ok!
If it makes you feel better then use transactional funds and double close. Then they wont see the end buyer on the HUD and your assignment fee. But most of the private sellers that we dealt with in the past just care about one thing: How much their check will be at the closing table.
The thing Jimmy is that wholesalers should be dealing with true motivated sellers who don't give a crap that you're a wholesaler and you're getting a kickback from the sale so as long as you get rid of the property for them.
If the seller has a problem with that than they're not really motivated are they?
Also I still believe in honesty is the best policy. I rather be up and honest on my intentions than have a major problem occur later on because I wasn't being truthful on my intentions.
James - I didn't see any blatant lies in what Jimmy wrote that the OP should say.
Originally posted by Jimmy C.:
...
Will you accept $x for the property?
Great I will send over the contract to you shortly. It will give me a period of time for inspections, and if everything looks good we will close by X/X/XXXX
...
There may be some omissions, but nothing there is a lie either.
I didn't say he was lying Steve. I was pointing out that most wholesalers only deal with truly motivated sellers and that being upfront with your real intentions is still a wise move.
If that's what he does and it works than all the power to him but I still feel that being upfront is the best way.
I just went to see another house today. I'm going to be as upfront as possible with the owner because he's a old "BALDING" stressed landlord who just wants to pay off his mortgage. That sounds like a very motivated seller to me lol.
I just feel like the only time any "omissions" would hurt anyone is if I dont close or "perform". As long as my end buyer or I perform, then nobody should ever be too upset with me. They get their check, and life goes on. Sure some people may be get a little upset with themselves for not selling for more. (ask me sometime about a double assignment closing, funny story)
I guess some problems with my approach could happen when someone is starting out. They may not be able to close or fulfull their promises.
I do see where my approach could be bad if it fell into the wrong hands.