Wholesaling in a sellers market?

[Abrahim Alderwish]

Hello,

In a market that is currently booming and many people are in good situations financially, how does a wholesaler operate and is it still feasible for wholesalers to get good deals in a sellers market? Also, are buyers willing to pay more for properties since the properties are so expensive at the moment?

[Barry Pekin]

@Abrahim Alderwish,

I'm in a very competitive sellers market myself, so I get it.  I'm still very new, so I can't directly answer your question as to how that will affect my business, but affect it it will - I have no doubt.  I have heard it's difficult to find deals, and I've seen that scare some people off.  I'm not one of them.

If you understand that wholesaler's golden formula (ARV * 70% - Repairs), you know what most rehabbers will pay for a property in a typical situation. I just went to a REI meeting the other day, picked up about 8 cash-buyer contacts, and called them over the next couple of days. (It's a great way to build a strong buyers list, btw). In speaking to them in a non-rushed environment, I was able to dive deeper into what they are doing and what they are looking for. Knowing the market, some of them said they would go to 85% of ARV, or even more, if it still made a good deal for them.

Remember, too, that you're looking for motivated sellers of off-market properties.  Their goal isn't necessarily getting the best price for their property.  In fact, they are willing to drop the price quite a bit if they can get a quick deal without having to go through the process of fixing up their house and putting it on the market.  You're not trying to rip them off, of course, but rather you're saying, "We both know you can get more money selling your property through a realtor, but if you're need/preference is to do this quickly without what's involved in that, and you're willing to sell at a discount, then I can help you."  One of the buyers I spoke to just yesterday was telling me about a house they picked up where they had to climb over 4' of boxes to get to the bathroom.  This seller was definitely not going to go the route of listing their property, so the sellers' market didn't have much of an impact.

Some will call me a cheerleader, but the fact is that if you go for it and stick to it, you will make it happen.  When you consider factors like this (lots of competition, sellers' market, etc.), you can choose to have it scare you off, or you can take it into consideration as you build your business.