All Forum Posts by: Eric F.

Wholesales are usually cash since the houses need work which would cause problems getting traditional financing. Also, there is a time issue and getting conventional financing can screw that up. Most wholesalers would not be OK with their buyer getting a bank loan. It is more of a time and risk of not getting approved issue than anything else. 

The reason you can buy a wholesale deal for below market is because of two things. Cash and quick. If you have to get a bank loan both of those are gone. And if you involve and agent to boot why would the wholesaler even want to sell it to you? He may as well list it on the MLS at that point.

Closing costs on a wholesale cash deal usually are not very much since there are no financing fees and stuff like that. I think usually we each pay our side of the closing costs. I now offer to split the title search if my buyer does it and there is a problem. If it is clean they pay it at closing. 

@Dixie Lee You say "We simply explain that they have nothing to lose at all. We will negotiate the price up for them and we collect a fee that is not paid by them. The buyer will pay it all."

Usually I roll my eyes at accusations of brokering without a license here, but this is the definition doing so. 

@Juan Mendoza my advice would be don't sign deals you would not close on yourself. It makes this business a lot easier. Now, if you intend to close on it and then something comes up like a bad inspection, title issues, or whatever and you can't close that is not on you. If you can't close because you offered to much and can't wholesale it and never wanted the thing, that is on you. 

I sign deals intending to wholesale them but I never sign something I would be in trouble if I had to close myself. It makes this business a lot less stressful :) 

@Michael Quarles I tried to use the @ three times and it didn't work. I'm glad you found it anyway. I'm not sure why it worked this time.

Anyway, thanks for your podcasts, specifically the seller calls. I'm actually pretty good at all that stuff now, but they helped me a lot back when I was really increasing my call volume. 

Everyone, it looks like these are the seller podcasts http://michaelquarles.com/daily-deals-michael-quarles-real-estate-show/  His site is being slow right now (or it might be on my end) but I would listen to a bunch of these. 

Why do you feel like you need an agent? I guess you could use one but I don't see the value added. You have already identified the house, you can go look at it with the wholesaler, the price should mostly be agreed upon, you should be buying cash most likely so that removes a lot of complexity from the closing, and the deal should be open and shut. Make sure you get a clean title at closing and do an inspection. You're done. No agent required. 

Most agents don't even understand the concept of wholesaling and will probably try to talk you out of it. Do you already have a deal identified you want to buy? 

The whole point of wholesaling is to work directly with someone to streamline the acquisitions of properties at a good price. I probably would not wholesale a deal to someone working with an agent just because I see 30 headaches involved. Most agents do not understand the concept (NOTE: SOME DO, SAVE THE HIJACK) I sold a deal to someone with an agent one time and it wasn't that bad, but it was still annoying. We already agreed on the price and everything, the buyer already did an inspection, and then all of the sudden he has an agent AFTER we have done literally everything we had to do to wrap up the deal. The agent did not do anything to make the transaction easier but he charged the other guy 2% comission (I wouldn't pay it since we had agreed on the price cash, no agent commission).Most agents (NOT ALL) nitpick stuff because they need to look like they are adding value. I'm not going to war over a $1,000 dollar flooring allowance on a below market deal, my deal is already a deal and I can find another buyer in 24 hours, so I don't deal with that crap. In the above deal the agent tried to nitpick a few things but I shut it down. The house was fully rehabbed, almost everything was new, and we had already agreed on the price, done an inspection (where everything was fine), and at that point the deal was a deal. I told him no on 3 nitpicking requests and the deal closed as agreed upon. I feel like if he was there from day one the agent would have made me back out of the deal over something stupid.

Note: I actually liked this agent and if I ever want to list a house in his area I am going to use him, but still....

I think the only leads I would pay $200 a piece for are sellers who called a few investors 6 months ago, met with at least 2, decided to "fix it themselves and list it" and still have the house 6 months later. If anyone is selling those near me I'm your guy!! Hell, I'd pay $200 for it even if I was one of the investors who met with them. Actually, I'd pay $300 if I met with them already 6 months ago :)

I would not pay $200 for a random screened call. I could get those for less than $200 myself. I really don't understand what value you are adding unless these leads are highly screened and highly motivated and willing to sell at a good price already, and if that is the case why aren't you closing them yourself?

Michael Quarles has some podcasts where he plays live seller calls. That will help you more than any book. I think the podcast is called buy flip sell or something like that. I'm sure you can find it via google. There are probably a bunch of other podcasts/youtube videos with seller calls as well.

I have not reread it since I really got to know what I am doing, but I felt like Sean Terry's book told you everything you needed to know to take your first step, which Sun Tzu tells you is the most important one to start the journey. The real work is the reps from taking calls and going on appointments, building rapport, and finding out what offer will work for both of you, and no book will teach you that. The closest you can come is listening to seller calls. Once you know the basics I think I would dedicate my time to listening to seller calls, recording and listening to yours to identify mistakes* (legal in most states..Not California though which is where you are), 

*I still talk took fast, say "uh huh" too much and let good opportunities to assess motivation slip by. 

PS Whatever you do, just read one book/podcast and get started. Don't read 20 books, listen to 900 podcasts, read BiggerPockets 7 hours a day "to learn." You learn by sending letters, putting up signs, calling craigslist ads, whatever it takes to get leads. Not by listening to interviews with 30 different wholesalers. You don't need to know everything at first. 

@Claire Trammell 8-9% for yellow letters? Holy moly, mine was way lower than that. I guess if anyone would have the statistics it is you guys.  Maybe I need to go back to them.

I only did Zip Letters once but my response rate was really low. 

One issue I have with tracking is I mail the same list over and over but mix up my mailer. So if they call off a postcard or a zip letter I don't know if it is more due to cumulative touches or the postcard being effective. Since we all know you need repeated touches, it is not fair to give all the credit to the postcard when it is the 5th touch vs the cumulative impact.  Are you stats based on first mailing?

Define no intention of buying it? Every deal I sign will close unless there is a title issue or something like that. I usually close on them myself to be honest. I signed 2 deals that did not close last year. Both had title issues. That would have happened if they sold through an agent as well. A third I have been working with the seller for 6 months to get clear title. I am still going to close if we can. What MLS buyer sticks around for 6 months?

I'm going to disengage from this argument because you are taking things unethical people do and trying to make me defend them as if I do them myself. It would be no different than accusing you of embezzlement and fraud because some agents in the link I posted up there committed it. 

@Jay Hinrichs

"Hoarder houses are something we do quite well with.. I have done about 6 of them this year in PDX> and we do get very good deals on them for sure.. however mine have not been such easy issue with the owner.. I had to evict them.. and one house was SO bad I could not enter.. another one I just bought same thing there are over 10 dead cats in it.. among other things..I am having to evict but in our market these are still 200 to 500k props..

Are you having to evict because the seller refuses to move out? When a seller wants to stay though closing what I have done is create an agreement like this. Say this house is 50k. They get 45k at closing and 5k stays with the closing attorney. They have 14 days to move out. If they do they get the 5k. If they don't, they lose the 5k which covers my holding costs during the eviction. My attorney reviewed this agreement and he holds the money in escrow himself. It is even on the HUD in some form. I have done it two times. With 5k on the line you bet your butt they are out. I went to one house and they had like 10 people moving out on the last day.

I had a friend spend at least 5 months getting someone out (they bought their line of "I'll be out next week the first 2") and I said "that won't be me." Worst case scenario is I get the house for 5k less, which goes to holding costs and court costs, but at least I break even except for my time.

@Ralph R.I posted about it in the link below this paragraph. I don't really have a reason to get one. I considered it but I don't want to deal with having to hang my license somewhere. If I could just pass the class, pay the fee, and be done I would do it probably. They can hold me accountable all they want. I don't break any laws. I never want to list another person's house or be another person's buying agent so what is the point?

https://www.biggerpockets.com/forums/311/topics/36...

@Michelle B.

including

1. selling for far under market ( Equity Stripping)

Where do you get that definition? I think you are thinking of a different term maybe? Equity stripping, as I understand, would be creating liens against your property (usually to another company you own) so it looks like you have no equity when you actually do. Say you have a 100k house free and clear. You would create a 95k lien on it, payable to another company you own. The  point being if you get sued or something it looks like you don't have any equity since there is a lien on it (they do not know the lien is to another one of your companies) so it is not worth going through with the lawsuit. (By the way, I don't do this and think is sounds very shady and maybe illegal...I don't know for sure though).

@John Thedford I tell every single seller what their house is worth if they would fix it up. You would be an idiot to lie about this because everyone knows how to type their address into google now and see anyway. I bring comps and everything to appointments and probably give a more accurate presentation than 90% of realtors do. 

I just got off the phone with a lady who told me the 3 closest sales to her house, what she could could get for it if she fixed it up (maybe 15k of repairs), and what she was asking, which was less than FMV - repairs. Why does she want to sell it for less? She has to move NOW, not in 6 months, she can't make 2 mortgage payments, and she understands she could maybe make more if she fixes it up and sells it, but she can't do it.

Can a realtor help her? No, one cannot. This is where investors come in. I could buy her house in 3 weeks if it works for me. She is done and can continue her life. 

What I think @John Thedford fails to grasp is a house is not an asset for everyone. For some people it is an anchor. They don't care if they sell it to someone who will make money off it, they need it gone so they can move on with their lives. Not everyone has 20k to fix up a house to list on the MLS and get full price. Not everyone can wait 6 months to "hopefully" sell their houses. Say after broker fee, utilities, fix up costs, taxes, and everything they make 10k more if they sell with a realtor after 5 months. They were still making mortgage payments the whole time. They had to have this anvil hanging over their heads for 6 months to make 5k more IF it sells.

"IF you find a deal yourself you are not slicing off equity into your pocket and sending the deal out to others. As investors we all need to buy under market."

Oh, I see, as long as you can get all the equity everything is awesome...what a shocker