All Forum Posts by: Joshua S.

Jake-

What kind of market inefficiency are you referring to? The seller not being able to instantaneously connect with a FMV buyer? If so, then by that logic, aren't real estate agents also exploiting a market inefficiency?

Rob-

Regarding numbers, I can't speak from first hand experience quite yet. I'm currently in the position of "no hat, no cattle." But it seems simple to me... as a wholesaler, if I'm being greedy and trying to squeeze too much profit out of my deals, I won't survive in this business. If the numbers don't make sense to the investor, then I will simply be ignored. Personally, my business strategy will be to take a $4,000-10,000 assignment fee, depending on the size of the deal and how much profit is in it for the investor. And that, I feel, is pretty modest here in a market where the average 3-bedroom home is $250,000.

Regarding time frames and having the ability to actually close on properties I put under contract: The way I see it, it's my JOB to have cash buyers who can close within 30 days. I take full responsibility for that. If I get a property under contract, and I can't deliver, then I've failed at my job. Either I haven't done enough to assemble my buyers list, or the deal wasn't as good as I thought it was, and I shouldn't have put it under contract in the first place. If this is happening to you on a regular basis, then you're irresponsible and/or incompetent, and you won't be in the business for long.

And as for letting the seller know they're in on a wholesale deal-- I suppose that's up to the individual wholesaler. I bet if you asked 10 wholesalers what they say to their sellers, you'd get 10 different answers. I'll probably say something to the effect of "my partners and I are looking for properties in your area." After all, am I not partners with my buyers? And again, if none of my partners are interested in picking up my deal, then I've failed at my job.

Rob-

I find your avatar ironic. Do you have a problem with the idea of bird dogging, too? Do you not see the value that a wholesaler can add? Think of it in terms of leverage- you're leveraging someone else's time and effort for a reassignment fee. Wholesalers bust their butts to find deals for investors who don't want to hassle with handwriting yellow letters for hours on end, pounding the pavement knocking on doors, weeding through hundreds of calls, and sitting at kitchen tables negotiating with prospects. Just my .02

Mike-

I have not actually paid for a list from listsource just yet, but I've been playing around with the filters. I'm glad you asked this question, because I'm not 100% sure that I have the right parameters selected. Maybe another member with more experience can advise. Here's what I selected:

Geography - The 3 counties I'll be operating within
Property - Equity% - From 100 to 100
Property - Last market sale date - Last 3 months
Property - Property type - Residential: SFR
Options - Absentee owned - In-state only
Options - Corporate owned property - No preference

Bill-

Good to know, I'll be careful with the marketing. Like Jon said, hopefully I'll have done good enough with my buyers list that I won't need to market to anyone but them.

As for Zillow, I see you're in the same state as Brandon... Zillow gives itself a 1-star accuracy rating in Missouri! lol, I certainly wouldn't use it if I lived there. However here in Portland, it's pretty much spot-on. BUT, as I said, I will be pulling my own recently sold comps just as a real estate agent would, and only be using the "Zestimate" to see if I'm in the same ballpark. I definitely won't be putting all my eggs in that basket.

Jackie-

I've thought about getting my license, and I will probably do it eventually.

Brandon-

I hadn't planned on using currently listed properties as comps, just sold ones. Also, Zillow gives you two different figures for sold homes: the actual "sold for" price which is pulled from public record, and their "Zestimate," which is the website's estimation of the home's value, which may or may not be even close to accurate, depending on a few factors.

From what I understand, Zillow uses a complicated formula to determine value, using things like recently sold comparables, bedrooms, bathrooms, and square footage. However, I don't think they take into account things like the quality of the appliances, floors, countertops, floorplan, or whether the grass in the front lawn is dead. It just assumes that the house is on par with its neighbors, which can cause some fluctuation in value. Furthermore, they rate the accuracy of their Zestimate in different markets. Fortunately my area has the highest rating. lol, and it looks like your area has the lowest possible accuracy rating. Here's a link- http://www.zillow.com/howto/DataCoverageZestimateAccuracy.htm

And that's good to know about investors expecting you to give them the rehab cost. I wasn't sure what to expect. I really like your idea of using contractors to get bids, and being upfront with them about what's going on. I'm going to do this. And even if I had to pay for the bid for some reason, I'd be okay with that.

Jon-

Thanks for the great wisdom. Since I am not a realtor, I will probably be using Zillow to help determine ARV. I've found it to be a powerful tool. In my state, it shows accurate data for recently sold homes. I'm not sure if it's like that for every state. So I'll be pulling comps for recently sold homes, with my criteria being something like +/- 200 sq ft, equal bedrooms, equal bathrooms, within a 1 mile radius. I'll then compare my results to Zillow's "Zestimate" to see if we're in the same ballpark. Another cool feature is that I can sometimes see interior pictures or read descriptions of other homes (sometimes even ones that sold several years ago), so that will help determine if other houses in that neighborhood have granite countertops, hardwood floors, etc. I'll also look into those other threads you mentioned.

As for determining repair costs, I think that is my biggest weakness. I will have to err on the side of caution and overestimate the costs when deciding which deals to pick up, until I gain more first-hand experience. Which will probably mean missing some good deals, in favor of getting the "crazy good" ones. And instead of attempting to give my buyers my own estimation of costs (and making myself look like a fool), I'll just say something like "kitchen needs updating, plumbing will need work," and let them figure it out for themselves.

Brandon-

Congratulations! Only two weeks-- that's impressive! lol, I bet you're scratching your head now wondering why you waited so long to get started. Thanks for the advice, and best of luck to you!

Hi everyone,

My goal is to launch my wholesaling business in January and hopefully snag my first deal. I've been doing lots of reading and listening to podcasts, trying to get my bearings and really understand how this business and its systems work. I think things are starting to come together. I was hoping to get some feedback on my plan, get a few questions answered, and see if I'm missing any critical pieces of the puzzle--

Main objective: Obtain contracts on single family homes in my area, and flip them to cash investors who intend to rehab or rent. (I may branch out into seller financed deals and lease options and other creative strategies once I get several deals under my belt, but for now I think it would be wise to stick to clean and simple flips)

1. Begin building my list of buyers. I have compiled a list of about 100 different ways to find them, but here is where I will start:
a. Use listsource to find recent cash transactions by in-state absentees
b. Attend local REIA meetings and network
c. Attend courthouse auctions and network with the buyers

2. Market for motivated sellers. Meticulously track all results.
a. Yellow letters. Begin with 300/month
- Use listsource to target a niche
- Handwrite with red ink on yellow legal paper
- Stuff in invitation envelope, use a real stamp
b. Post ads on Craigslist, Backpage, and Kijiji
c. Future plans, when I have a bigger budget:
- MORE yellow letters
- Bandit signs
- Squeeze page with SEO

3. Take calls from advertising.
a. Take control of the conversation, answer their questions with questions
b. "Tell me about your situation," shut up and listen.
c. "What do you want to have happen?" Shut up and listen.
d. "If we were able to come to an agreement, how soon would you want to sell?" --Listen for motivation!
e. Set the appointment if it sounds like a winner
***Credit to Matt Theriault for the above script. I love it because it seems like it will be easy to remember when I'm nervous, and it seems like a great way to get all of the necessary information while simultaneously building some nice rapport.

4. Attend the appointment and get the deal.
a. Do some research, and make sure I "know my stuff" beforehand.
- What the house is worth
- The most I can pay for it (guesstimate repairs, if possible)
- Have purchase agreement already filled out
- Have print-outs of the cheapest comps in the area
b. Meet with prospective seller, begin building rapport immediately
c. Walk-through house. Point out flaws/repairs
d. Sit down at kitchen table, begin talking numbers only once rapport is established
e. NEVER be the first one to give a price. Ask them what they want and shut up.
f. Continue the back-and-forth negotiations, remind them of the repairs, show them the low comps, repeat "Is that the best you can do?" etc
g. Once an agreement is reached, shake hands, and sign the contract.

5. Send the paperwork to a title company?
- I'm not 100% clear what to do at this point. I'm in Oregon, and when I Google title companies or escrow services, I get results for lots of "title insurance companies." Is a title insurance company the same as a title company? Also, is a title company the same thing as an escrow company? Would it be a good idea to go ahead and schedule an appointment to sit down with a rep at one of these companies and see if they're "investor friendly?" Will some of them turn their nose up at assignment contracts or double closes?

6. Market the property
a. Take pictures, upload them
b. Send out email blast to my buyers list
c. Make ads on Craigslist, Backpage, and Kijiji
d. Put up signs
- This might be a silly question, but how do sellers normally react to their houses being marketed like this? If they're still living there, and I'm sticking a sign in the front lawn, will they be upset? Especially if they were under the impression that I would personally be paying with my own cash and then rehabbing the property after they moved out? I guess it doesn't really matter what they think since I have the contract, but I'd still like to be prepared and know what to say. I would prefer everyone to "win," and everyone to feel positively about the transaction.
- How are owner-occupied deals usually handled, anyway? I'm guessing they're given 30 days to move out? Are funds withheld until they've moved? What if they request more time? What if they don't actually move when they're supposed to? And are cash buyers ever reluctant to purchase homes currently occupied by the owners?

7. Obtain a buyer, close on the property, and collect my check!

Anyway, wow, that ended up being way more long-winded than I intended! Thanks for reading, and please give me any pointers that you can think of.

Well, I'd say you guys have slammed the book shut on this one. And then set it on fire and threw it off a cliff. lol

I listened to their podcast about backflipping and I was intrigued. However I'll admit that I have ZERO interest in paying for their program.

Reading through this thread got me thinking though... couldn't you build a system around this like you would with wholesaling short sales? As Joel Owens said, it could very well be a needle in a haystack kind of deal... but couldn't you build a pipeline, and start sorting through all that hay? If so, I think it could be very profitable. A 10% fee on a $1M deal is nothing to sneeze at.

For example:

1. Use listsource to target $600k+ homes that are underwater.
2. Blast out yellow letters.
3. In your letter, say something to the effect of "Upside down on your mortgage? I can negotiate with your bank and then get you re-financed for less than the current market value of your home! Ask me how."
4. Sit back and wait for leads (I'd imagine you'd get a high rate of curious call-backs)
5. Meet with your clients, get them on board with the idea and pre-qualified for their new loan, begin negotiations with the bank
6. ???
7. After skillfully negotiating a ridiculously large discount on the note, bring your client to closing and collect your just reward.

So, that's what I'd do. I'd imagine that the hardest part would be knowing how to handle purchasing the note from the bank. You'd probably get turned down many times before scoring a deal, but I can't help but wonder if you'd hit gold from time to time.