The chicken or the egg? Which gets marketed first, sellers or buyers?

Question

I'm putting together a "first deal" strategy for getting my first wholesale. My intention is to launch this plan into action with direct mailer's to sellers starting next week. However, based on all of the preliminary research I've been doing the only thing casting some indecision in my head is whether I should.....

-Dive right in to finding motivated sellers and then deal with finding a buyer once I get the contract

or

-Defining buyers and their "specific" needs so I can go out and look for the seller with their requirements to have a better chance of closing fast

I certainly don't want to waste much more time and I have a gut feeling that simply jumping in and "doing" by getting some motivated seller marketing started is the right way to go. Then when the deal comes through I can just figure out the next issues when they arise.

What's everyone's thoughts on this? Which option would you focus on or did you focus on when you first started wholesaling? Thanks!!!

Paul

Dev Horn · Answer

We STRONGLY recommend getting a few buyers lined up BEFORE you do marketing and get properties under contract. At least know who you will be calling as soon as you find the deal. But understanding the needs of the buyers is very important. They are your ultimate customers, so if you go find product that they aren't interested in, you could waste a lot of money & effort. One other caution. In a little "test", I have offered some excellent pre-qualified leads (motivated seller, over 50% equity, etc.) to guys who represented themselves as buyers, and found that many could not do anything - they liked to say they were "investors" but when given the opportunity, they couldn't take action. So when you talk to buyers, ask them about recent deals they've done, their sources for financing, exactly what they buy, how fast they can act, etc. You get what I'm saying? Just because someone tells you they're a cash buyer does not mean they actually do it or CAN do it. Cut thru the BS so you have people ready to roll when you bring a great deal.

Jerry Puckett · Answer

Hi Paul Zajic You know, way back when, I used to have an extensive Buyer's list, and would email "blast" them when I had a deal. And over time I found out that only a small hand full of real cash buyers was all I really needed. Listen to Dev Horn, he knows what he's talking about. If you have the big Buyer's list, how are you realistically going to form the relationship necessary with each one of them? As to the chicken or egg question, try this, it's an age old rule of thumb known as the 80/20 rule. Since you absolutely can NOT have a deal without product, in the beginning, spend 80% of your resources (time, money) looking for a deal (marketing to Sellers, following up). Spend the other 20% of your resources finding Buyers (taking them to lunch*, qualifying them, getting to know their needs and criteria) Once you have a deal, and I mean a DEAL (please look up and read "The truth about wholesaling" here on BP) switch gears and spend 80% of your resources locating a Buyer, and not neglecting to continue marketing for another deal. Notice that both activities are ongoing, but the priority changes. (* keep this up over time, and it won't be long before the Buyers are taking you out to lunch!)

Paul Z. · Answer

Thanks Maria S.!!

Maria S. · Answer

Dev explained it well.... build your buyers list first just so you don't have to back away from a deal if you can't find a buyer later. Look for buyers and ask them several questions to see exactly what they are looking for and are willing to buy saves you a lot of headaches. Good luck!

Paul Z. · Answer

Thanks guys! I really appreciate the advice and feedback!

Braden C. · Answer

Paul Zajic Jerry gave you the best advice and as a full time wholesaler, I can say that with confidence. TRUE wholesale deals will easily sell. I've done a number of deals in areas of my state that I had zero buyers in. The deals were all so good that I easily sold them. Get working on finding deals and start marketing to buyers in your spare time. You should have some additional things in place before you start marketing to sellers or buyers. This includes contracts, assignment agreements, a title company, and the resources you'll need when pricing properties ie. running comps, repair estimates, ect. Good luck!

Brian Watkins · Answer

Paul Zajic Greetings. I asked a similar question recently as I was also getting conflicting information for all the information overload on the net. I received some good feed back. Here's the link...copy it into your address bar. Hope this helps! http://www.biggerpockets.com/forums/12/topics/91597-what-to-do-first-find-buyers-or-sellers

Paul Z. · Answer

Jerry Puckett Thanks Jerry! Excellent advice and definitely clears up some of the static in my head.

Paul Z. · Answer

Dev Horn thanks for the reply. Definitely going to consider all of your information. Just trying to keep all the cracks filled before I make an all out move.