Approaching potential sellers as a wholesaler

[Sawyer Scott]

Hello all, I'm a newbie in the wholesaling game about to approach my first potential deal. I have done all the research and ready to reach out to a potential seller, however I don't know the proper way to describe my position. They are willing to sell, but I cannot buy it myself so I do not want to get their hopes up if none of my buyers come through. They've given me a price, but I need to talk them down almost $15k for the deal to make sense.

Long story short I am confused on how to explain and/or negotiate an option period to give me time to find the right buyer. Should I just disclose that I plan on wholesaling they're property? Will that scare them off or aggravate them? Please let me know how some of you approach sellers and what has worked for you.

PS. I would love to get your take on whether I should pursue a double closing or use a contract. Are there are any basic contracts available through bigger pockets?

Cheers,

Sawyer Scott

[Jerry Puckett]

Hello @Sawyer Scott

Sad to say, but ordinarily a post like this draws all the wholesale haters out of the woodwork. In retail, very often, a full price offer is made just to hold the property down for a look see. Most Agents don't consider that unethical....to tie up a property and take it off the market just for a look and a thank you , no....but plenty of sellers do.

You'll be told that if aren't in a position to close, you shouldn't make offers because you will in fact be operating as an unlicensed broker. And that's true, but doesn't answer your questions.

Now that that's out of the way....

The answer is yes, telling them your position in detail will scare them away and aggravate them. You'll basically be saying "I have absolutely no intention of closing, I'm just a middleman acting as an unlicensed broker, which may or may not be legal in this state".

When I'm asked, "what are you going to do with the property?" I simply smile and tell them the truth. "I don't know yet, I haven't even inspected or made an offer...let's not get ahead of ourselves" If I make an offer, the one single contingency I need, that practically everyone asks for whether retail or no, is the opportunity to inspect the property. I make my offer subject to inspection. 

Who knows? I might take it down and flip it. I might vest it in one of various LLCs I own, am a partner in, or even offer it to someone else I'm acquainted with. I look the property over and the only number I give is what it is worth to me. I am not required to pay full retail price if I can negotiate something better. That idea is absurd. If they don't like my offer, they do not have to take it and I'm on to the next.

And because I am not sure how I will choose to close the property, I make the contract assignable. If I want to change my mind a week, a day an hour or a minute before I close...that's up to me.

If, during the inspection period I find that it doesn't make sense to me or anyone I work with, I have two choices. I can terminate the contract, or I can renegotiate based on my findings. Again, it happens all the time in retail. Contracts are negotiated. Ask, offer, counter offer....Nothing moves forward until everyone is in agreement. I don't care if you flip, wholesale, hold, list, lease option, seller finance....whatever....the process is the same.

If you make an offer and find zero justification for it during the inspection period, you didn't make a good deal. Don't waste more of Seller's time...unwind or renegotiate. Let me put it a different way. If you make yourself a good deal, folks will come out of the woodwork asking to buy it from you and you can choose whether to buy it yourself or assign. But if you make a bad deal, and your numbers are wrong, no one else will be interested either and you will know this very quickly.

As for a contract...there are tons of simple one pagers out there and they have their place. But best practice and a basic rule of thumb would be to get ahold of your State's contract and use it. It's what everyone is used to seeing. If you should ever, (God forbid) get hauled in front of a judge, one look at the one pager will knock whatever leg you have to stand on right out from under you.