Wholesaling With Integrity

Every action leading up to this moment made me feel I had this cat in the bag. Apparently not. I would say that I’m highly experienced in the wholesaling space seeing as I’ve closed maybe a dozen or more deals. Including the ones where I’ve virtually never met the owner or set foot in the title office to say the least. Now let’s dive in head first. I cold called a gentleman and asked if he had any interest in selling. Profoundly, he said yes. I found out how much he wanted and quickly sent the contract over via email. Without hesitance he signed, and we were ratified, YES!!!!! The terms were $42K offer price, $1K EMD, 10-day inspection, 14-day close. The ARV (after repair value) was $125K. The owner said it was gutted and framed needing only appliances, sheet rock, paint, flooring, etc. Considering this was a three-level house 1200 sq. ft. I estimated repairs around $35K. At this stage I’m thinking to myself cool I am still in the MAO (maximum allowable offer) formula, 65% of ARV- repair cost. $125K X .65% = $81,250 - $35,000= $46,250. Comprende?

I immediately opened escrow and the 10-day inspection period started. The title company pulled a preliminary title and said he owed roughly around $32K on the property. Then I thought hmmm…I wonder if he would take a haircut. The property was a little way from me like an hour and a half. I went to the property, dropped a lockbox and had the owner put a key in for inspection purposes. I shopped (marketed) the property via Facebook groups, cash buyers list…still no traction. I put the property on the MLS for $47K and got a ton of tire kickers, low ball offers, you know the drill. So as my 10-day inspection deadline was approaching I got greedy. Mind you I never saw the property. I said Mr. Seller the repairs came in a little high I have to slightly adjust the price to $30K. He said no, no, no so I said fair enough I will send the release and I hope it works out for you. Mysteriously he says $32K. I said could you repeat that sir (lol). He said man you’re getting a good deal and I’m not making no money. I said thank you for reconsidering but $32K is tight for me could you possibly do $30,500? He said hell no…so I said okay, reluctantly. I guess we can do $32K. I sent over an addendum to adjust the offer price and it was a done deal. To say the least it took two months to get all the payoffs which was good on my part however I was missing the key ingredient. Can anyone guess what that is? You got it. A BUYER. With no interest I was faced with two decisions. Release the EMD or keep making excuses why the deal has not settled. I eventually decided to release the EMD and tell the truth how I can’t close on the property because I don’t have a crew to travel that far.

Lessons Learned

• Never get lazy. Go see all properties and if you’re not sure of repair cost call in a contractor or two for their expertise.
• Don’t get greedy. No traction of buyers means release the deal and keep it moving. Pay attention to those warning signs, not just dollar signs.
• Key take away be anxious for nothing…Sometimes it cost to be a boss.
• #WholesaleWithINTEGRITY