All Forum Posts by: Sekelle O.

I have wholesaled a few properties. When putting the house under contract with the seller, the EMD is whatever you negotiate. My smallest EMD was $100 and the highest was $10,000. For the $10,000 EMD I negotiated with the seller to put up $1000 when the contract was signed and the rest when the contingency period expired. Then I got the end buyer to put up the $10k, and got back my $1000. I always get the EMD back from the end buyer when I assign the contract. I also collect my entire fee at that time as well. It goes into escrow and I get it at close or if the buyer defaults. Having a real cash buyer helps make it all work and putting together a good deal helps land a real cash buyer.

@Bob Derwin How did your loan with LendingOne turn out? Did you close? Was it for a flip or buy and hold? How did it turn out?

I agree with other posters that it is important to maintain control over your transaction. The first step to doing that is to get the property under contract. Run your numbers, negotiate a purchase price with the seller and sign a contract you can assign that has a reasonable due diligence contingency period. You may be worried about if you can find a buyer, so you are waiting to put the house under contract. If you create a good deal, either your buyer will step up or you will find another buyer. Visit your local REIA, put an ad on Craigslist, talk to HML lenders, all can help you find cash buyers. When you find a buyer, get your entire fee up front and in escrow. Down payments are for purchase contracts, not assignment contracts. Real cash buyers can pay your fee up front. You will collect at closing or if the buyer defaults. But your first step right now is to get the property under contract, asap.

Linda Young Oh ok. So when you say you are giving the seller the down payment you mean a check made out to title company, not the seller directly. Thanks for clarifying. I have only closed wholesale deals, so I can only give you a Wholesaler's opinion of your numbers. It does not sound like this deal meets 70% ARV - repairs. If ARV is $195k and repairs are say $20k, ideally you would be buying at $117k or less. Your purchase price is 71% ARV. These are tight margins for a first flip, not a lot of room for first timer mistakes. Would the hard money loan or even closing on this deal impact being able to get the $150k LOC? I would think that once that came through, you would be able to compete as a cash buyer and get the really good deals. I would not want to put the LOC in jeopardy, if it were me.

Linda Young you mentioned giving the down payment to the seller... are you closing with a title company? I find it unusual to give the seller any cash until clear title transfers and the new deed is recorded in your name.

I had someone threaten to call the police once. Another caller was going to turn me over to City of Richmond??? Another caller yelled at me for 10 minutes because I addressed my letter to her husband and did not include her name on it. Strange indeed.

The way the term "equity stripping" is being used confuses me. I thought it was a type of foreclosure rescue scheme. If the investor buys the property for $38k and it is worth $100k or more, is it still equity stripping if the seller understands that he is giving up all rights to the property and that the transaction is in no way meant to help him save his home or allow him to continue to live there?

I have seen listings where the agent says they will not review offers during the first 7 days the house is listed. That should be long enough to generate multiple offers. On a different note, you are hoping buyers will offer $40k above list price? I agree with pricing low to generate multiple offers but I think most homeowners will balk at having to pay $40,000 or more above list. I hope other members chime in on what would be a good starting price. I wouldn't go lower than $299k but I would feel better at $310k. Thoughts?

I am not worried about robots replacing humans since advancing technology always seems to create as many problems as it solves, and while AI can solve problems whose parameters are well known, I don't think it will be able to solve new problems where the parameters still need to be discovered and defined. When AI can see an apple fall from a tree and discover gravity, or find some green stuff growing in a lab and discover penicillin, then I will be worried.

On one of my wholesale deals, i was negotiating the price with the seller, who needed to sell for enough money to pay for his mom's nursing home. Based on what he said the monthly cost was, I realized that his asking price was about $2k too low. I pointed this out to him and raised the purchase price $2000 higher than what he had said he would accept. I have helped sellers move, I once tracked down an out of business mortgage company to get a paid in full letter for a seller, I helped relocate a tenant, all to get the deal closed, but also doing work that the seller wouldn't/couldn't do themselves or else they would have been able to sell their house the normal way. 2 of my sellers were about to be foreclosed on and get nothing but were able to get some cash out instead. No, I don't explain that I won't be the end buyer and yes, I had to cancel a contract once. But when I sign with the seller, I explain that I have a 10 day due diligence period during which I can cancel if something unexpected comes up (not being able to find an end buyer would be unexpected since if I didn't expect to be able to find an end buyer, I wouldn't make the deal). Most realize that this carries no more risk than a conventional buyer with a financing and inspection contingency. I don't know about other wholesalers but I work hard to find motivated sellers and then I work twice as hard to make sure my deals close. I don't have to justify my fee to anyone, I earn it. Sorry, not sorry.