What Is the best way to lock in your cash buyer

Question

My question is if I am attending to wholesale a property and I have a buyers list.
How would I lock them in a contract or get them to be interested in the property? It seems like on occasion that this method may not be as effective. Getting a property under contract and hoping they will bite.

I do know what areas, how fast they can close and their funding source.
Can someone give some insight on refining my strategy?

Thanks

John Thedford · Answer

The deal will sell itself or not. Earnest money will help guarantee they are serious buyers vs talkers with no ability to close. A nice 5K earnest money deposit will separate the buyers from the others. If you can't find a buyer for the property it probably isn't priced right.

Matt Devincenzo · Answer

I've bought from a couple wholesalers, and it's never been too complicated. It's not my deal until I sign and I can inspect and due DD as much as I want prior to signing, but as soon as I sign it's a 3-5K EMD and if someone else beats me to the party then I guess I should have been quicker. You don't need to "make them bite" if you have a good deal in the target area for where they're buying then they'll take it. If they don't then you obviously don't have as good a deal as you thought. As for going around you, that's why you have a signed contract. If it really is that big of a problem you can file you agreement at the court which will cloud title for anyone else trying to buy.

Kyle J. · Answer

I'm not 100% sure I understand your question, but I'll take a shot at responding. You typically wouldn't have them sign an assignment prior to even seeing the property because by signing an assignment agreement they are essentially agreeing to abide by the terms/conditions of your purchase agreement with the seller and buy the property. I don't think too many people would agree to that on a property they haven't even seen. If you're worried about someone on your buyer's list going around you (hence the reason for having them sign something before showing them the property), that really shouldn't be a concern if you already have it under contract with the seller.

Kyle J. · Answer

You shouldn't have any problem getting interest if the property is a good deal. As for locking in the end buyer, have them sign an assignment agreement and collect an earnest money deposit. Also, from your standpoint as the wholesaler, the less contingencies the better.

Kaz P. · Answer

R. Kerry Brooks Thanks for that insight. It's good that I haven't done that because it would be unnecessary trial and error.

Kaz P. · Answer

Yes J that's true and I'm aware of the no assignment on REOs scenario. But there are other ways. It's just a matter of strategy.

R. Kerry Brooks · Answer

Kaz Phillips it sounds like you are trying to market properties that you do not have a contract on. If you are, there is no way other than having them sign something first. As someone who does wholesales that is going to be very difficult for many reasons. The main two are; with out a contract you don't know what price you can get the property for and are stuck taking list price and adding to it. Most real buyers have already seen most if not all on MLS. The second reason is even if you are dealing with FSBO, you lose credibility with your buyers if they find this out. You are marketing them a property you do not control. You also have the problem of marketing the property, getting a buyer, only to find out the deal is already sold to someone else. Then you have to use the same old tired line when you call back "I'm sorry that property was already sold by one of my partners, let me see what else I can find". Wholesaling is a good way to get started in this business, so not saying it doesn't work. Just not as simple as everyone thinks. You always run the risk of getting the property under contract and then not having someone bite. You can avoid this by getting to know your buyers better, so you know what they are looking for and make sure you know what a good deal is. In this market many deals that look good by running the 70% - rehab- wholesale fee wont even get you a second look. Most investors that are the buyers you want are buying at deep discounts, you have to learn the market and what works for them. What I would suggest is talk to a couple of the buyers on the list and see if you can work with them to help locating properties. The fees you get are not as good as wholesale money, but the lessons you learn will make you so much more money in the end.

J Scott · Answer

You won't be able to assign an REO...you'd need to double close...

Kaz P. · Answer

That's true I know in some cases however if you are doing volume. That's another story. Certainly not a good way of doing business if you are putting 10% down on every property in the MLS or any other type of excluding FSBOs for the bank to consider your offer. I had a conversations with some realtors that don't seem to get it or trying to play you as fool. You are right John, they will go if the price is right.

Kaz P. · Answer

Ok. That makes sense. So The best shot for getting A property under contract would be with an FSBO to save me some money vs. an REO that requires EM. I am anticipating doing volume so an EM deposit on everyone of them would be ridiculous for MLS properties.