Am I doing something wrong?

Question

I just wanted to get your opinion...I have been doing wholesaling seriously for about 4 months now. I say seriously because that is when I started getting leads in. In that time, I have had three properties under contract and I have gotten at least 25 people who wanted to sell their homes. The first house was a horrible deal and never sold, the second one, I didn't use the right contract and it got sold to someone else, the third one was cancelled because he wanted too much for the property. The 25 motivated sellers were all bad deals! Too many vacant homes, asking price too high, etc. So I decided to start making offers on REO's, HUD's and Fannie Mae properties..of course almost every property I choose to make an offer on it is gone by the time I call to make my offer. I spend my whole day now looking at houses on Zillow, Hud and Fannie Mae to make offers on, I think I'm messing up because a) a deal hasn't been done and b)there are plenty of houses but I think I'm getting my emotions personally involved and sometimes I look at a picture and saw eww, who would buy that piece of crap? I don't want to spend all day looking at REO's, my original goal was to make one good offer a day and get it accepted and that's it. Am I being too picky? What should I change? Oh, I got 3 counter offers on Hud's today, I put another offer in on a Fannie Mae property and I have 2 FSBO's pending but nothing is solid..that's all!

Marc Freislinger · Answer

There are a lot of deals on the MLS, but I tend to remove myself from a wholesalers list if I look up the property address and see a pending property for less than the wholesaler is asking.

Two reasons:
1) I have probably already seen and turned down the property.
2) If I decide I do want it, I can make a back-up offer on it, and wait for the wholesale contract to fall through and get it anyway.

If you lock-up an MLS deal, that's great. I know you can get it for less than LP, so at WORST you should be offering it at LP to make your finders fee.

Just my opinion.

Sean Smith · Answer

The real estate game is far from easy but well worth the time put in.  In the beginning, you just have to find what works best for you. And what might help you is if you find someone who would be willing to show you the ropes and split the deal 50/50 until you feel as though you can do it on your own. And you might say i dont want half the money I want all the money lol, but it comes down to if you have the experience to make it happen. Life will only throw so many opportunities at you, its up to you to see them through. So stick at it, DONT give up and before you know it, the deals will just be rolling in.

Jeremiah J. · Answer

Another route to go is to find other investors in defferent areas to pass leads on to for a referal fee. For example someone who specializes in Short sales. It wont pay as much but why waste leads.

Jeremiah J. · Answer

Just keep pluggin away at it Jivonna, it sounds like you're off to a great start. As I've read on here a million times that first deal is always pretty rough then it gets easier from there, especially with leads as your marketing should begin to build on itself somewhat.

Chris Martin · Answer

@Timothy, regarding "Make sure you ask the agent or broker how they structure the deals to give HUD the highest net return on the deal." There really isn't anything to structure. The "net" is indeed what they are concerned about and the HUD form line 7 is either what they want or isn't. Purchase price minus HUD paid closing costs minus broker commissions. That's it.

@Sabrina, regarding "...they HAVE to put the offer in no matter what they think..." this is true in general, but institutions can just say X is the lowest we will consider to the listing broker. If the offer is below the threshold, the broker may not present the offer.

Sabrina Brehm · Answer

I just wanted to let you know that if you make an offer through a real estate agent I believe they HAVE to put the offer in no matter what they think.  I think it's a law that all offers must be submitted.  So don't let them tell you that your offer is to low or that they don't like it so they are not submitting it because from my understanding, they have to whether they like it or not!  Please let me know if I'm mistaken on this point.  Thanks.

Timothy Rosson · Answer

Here is an example that you can use to figure your offer if you'd like to. ALWAYS low ball them if you've never ever seen the property. I figure mine at right around 70.00 sq. ft..to keep it simple, 70 x 1000 sq. ft. is 70,000 ARV. Always come in at or below 50%, which would be 35,000. If it were me, on that deal right there I would offer 15 to 20,000 to start, if it doesn't need any work. Make sure you ask the agent or broker how they structure the deals to give HUD the highest net return on the deal. IF they tell you that it isn't important, YOU NEED TO FIND ANOTHER PERSON TO WORK WITH. That's how HUD figures out which bids to accept or reject. I hope this bit of info helps you.

Justin S. · Answer

You may want to consider becoming an agent.  Since most deals are non traditional sales, it's hard to be creative.  Might as well make a commission on them.

Ken Siew · Answer

Jivonna, just keep making the offers on properties with potential to be accepted (needs work, TLC, etc). Vacant homes could turn out to be great deals also, as some owners live out of state and may want to sell off the properties fast. Anyhow, assuming you're building your buyer's list, then just keep looking for that deal. Never give up, and you'll soon find the gold :-) Good luck!

Greg P. · Answer

Sean, the deals do not just come rolling in.. it's a constant grind, hustle or whatever you want to call it.  I'm a experienced wholesaler and I'm in constant communication with rehabbers, and maybe before the deals were just rolling in, but right now, nothing is rolling in.  Not to sound negative, but you really gotta push it hard, I mean HARD to get a deal that's worth it to a rehabber.  And even as a rehabber it's tough to find deals with decent spreads.  The market here at least is very iffy.  Good luck though.  Just being honest here.

Am I doing something wrong?

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