Wholesaling real estate listings? Why or why not?

Question

Hello BP,

Can a real estate listing be wholesaled? From my understanding of asking people, they say yes. My follow up question is if there is a house currently listed with an agent, im assuming more than likely the house needs little to no repairs, then the seller would likely want as close to the After Repair Value as possible? End buyers, from my understanding, only buy at 65% of ARV minus repairs, why would the seller take 65% of ARV if their house can be sold for alot more?

Or, as a wholesaler, we don't contact sellers who have their houses listed with agents?

I appreciate the feedback in advance.

Henry M. · Answer

Anthony,

Below may not be in exact order, but to give you the gist of a pre-deal

"why would the seller take 65% of ARV FOR their house?"

Motivation.

You search for motivated sellers.

Next you take a look at their existing financing and/or equity... No equity, move on. There's really no point in negotiating unless you are gunning for a short sale. That is a different monster all together.

If  equitable, then C.M.A.s
If numbers are good move on.

Cross reference with the court house records and run a title search at a local title company (liens, etc.).

That is the beginning.

You still have taxes, arrears, etc...

How long has the property been on M.L.S.?

How much has it dropped since its initial listing?

Will M.L.S. info (Kryptonite) hurt the wholesale of property?
(This is a very important question - too much detail to go into)

How many agents in its history?

What disclosures are available?

Why is the seller selling?

How long has it been on the market?

Why has it not sold (Area, Price, Repairs, Ugly, etc.)?

Take a walk through of the house as to access repairs, upgrades, etc.

Pics, curb appeal, neighborhood (location), neighbors, etc...

How is the agent's affect and their knowledge of the listing home? (This is a very important question - too much detail to go into)

This is just 30% of the work for one deal that continues to give indications it is a good deal, most of the time (95%) you will not get this far before you ween them out of your sights.

It is called due diligence.

I could write a whole book on this alone but this is it a nutshell, which really doesn't encompass everything that needs to be done to see if this is a good deal to invest your time into.

Time is money and money is time.

Don't chase everything you see or do not try the shot gun approach, hoping one sticks... Screen what you go after...

Quality not Quantity.

Not sure if this helps, there are rule of thumbs, tricks of the trade, experience, intuition, etc... Too much to cover but you have a decent start.

Good luck and work smart.

Big Henry

Henry M. · Answer

Usually when dealing with a homeowner directly and if they are in default short sale many years ago was always the choice of option. Since the bail-out and guarantee from our beloved government - the banks are not willing to play ball anymore.

Those were the good old days. I would be very surprised if you can short sale in today's age negotiating a short sale deal into a wholesale deal.

Especially on high-end homes where the spread can be lucrative.

John Stevenson · Answer

Well, it can be done... I guess. As to rehabbers being too busy to search the MLS; if there are few private motivated sellers outside of the MLS then the MLS is where rehabbers and investors are going to hang out.

Additionally you may find out very quickly that low balling every property is going to get you a flood of quick rejections and leave a very sour taste in the mouth of many realtors. Generally a seller knows what they need to get from the property and many are willing to wait out the game till they get it.

I wish you the best of luck. Let me know how it works out for you.

Demos Loizides · Answer

I'm looking at MLS listings, because I'm not finding private motivated sellers in my neck of the woods. Some time ago, it would have been rare to find "junker" homes on the MLS. Now there are a lot of them.

Just because a home is listed at a certain price, doesn't mean I can't put an offer at much lower than the list price. If accepted, I create additional equity and a better deal for other investors. Some investors are too busy rehabbing to search the MLS themselves. Others may not be good negotiators. I'm looking for properties that have been on the market for many months and some have been there for years. Either the Realtors don't know how to price these homes, or the sellers aren't very motivated.

John Stevenson · Answer

You are going to have a really hard time wholesaling through real estate listings. For one, the sellers are under contract and you do not want to see what will happen if the realtor figures out you stole their higher spending buyer.

Second, why would an investor that has access to the MLS pay you more for the property when he/she could just buy it straight from the listing agent? MLS Data is very public and is easy to access and most times they are being sold at or close to market value because the agent wants the highest commission.

It is not illegal to wholesale listings but it is going to be a hard sell.

Henry M. · Answer

One more note to add, REPUTATION is EVERYTHING!!!

Don't be that guy that funnels crap through the internet, Serious deals bring serious inquiries...

I hope this helps.

Big Henry

Wholesaling real estate listings? Why or why not?

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