Originally posted by @Lenzy Ruffin:
@Maikel Figueredo, I think you missed the point that @Adrien C. was making. You can put an MLS-listed property under contract and wholesale it. It's done by wholesalers all over the country by assigning the contract through whatever is the local convention for contract assignment. You will need to show proof of funds, though, regardless of using a contract or LOI or anything else. The listing agent is going to require that you prove that you can buy the house.
The point Adrien was making is that the property you're looking it is not a good wholesale candidate. If it's been listed for over 100 days, everybody who has an Internet connection and invests in your market knows that property is for sale and nobody is interested in buying it at that price. So who is going to buy it from you at the list price plus your markup?
If you can negotiate the seller down to a wholesale price and put the property under contract, that's something entirely different. At that point, you'd be offering your buyers a deal that is not available on MLS.
You should check with a local REIA to see how others in your market are wholesaling MLS properties. The paperwork, addenda, name on the contract (your name or LLC), etc...all these things are done differently in different localities, so the best way to find out how it's done where you are is to ask someone local who is doing it.
OK- If any wholesaler or Realtor tells you to ignore listed properties or shy away from them is losing out on tens of thousands of dollars this can make you.
BEFORE I BEGIN, I AM BOTH A REALTOR AND A WHOLESALER
YOU MOST CERTAINLY CAN-
WHAT I AM ABOUT TO TELL YOU IS FACTS- NO MATTER WHO SAYS SOMETHING DIFFERENT AFTER MY POST.
THE GENTLEMEN WITHIN THIS THREAD HAVE REALLY GOOD POINTS AND THEY ARE ALL VALID, HOWEVER, I CAN SENSE EVEN THEY HAVE LIMITED BELIEFS ON THE POWER OF REALTORS.
MY FIRST WHOLESALE PROPERTY EVER (AND I'VE DONE OVER 100) WAS WITH A REALTOR INVOLVED ON THE SELLERS SIDE.- THERE ARE MANY MANY MANY REALTORS WHO LIST JUNKERS (FYI HINT: TRY SCOUTING OUT LISTING AGENTS FOR REMAX AND/OR KELLER WILLIAMS)... WHY THESE 2 RE FRANCHISE FIRMS? GUESS WHAT? BOTH OF THEM WERE STARTED BY INVESTORS/WHOLESALERS ( THE GENTLEMEN WHO CREATED KELLER WILLIAMS I BELIEVE WAS JUST A WHOLESALER)**.. THEY ACTUALLY TEACH THEIR NEW AGENTS THE POWER AND ADVANTAGES OF WORKING WITH INVESTORS OF EVERY KIND, WHETHER IT'S PASSING PAPERS (ASSIGNMENTS/DOUBLE CLOSES/OR TRADITIONAL BUY, FIX AND SELL/HOLD- OWNER FINANCING AS WELL)... SOME OFFICES HERE AND THERE GO ROGUE AND DIRECT A MORE TRADITIONAL ASPECT OF THEIR AGENCY (HOWEVER, THE FRANCHISORS OF THE COMPANY PROMOTE THAT WORKING WITH INVESTORS SHOULD NEVER BE IGNORED- THEY HAVE A 3 HOUR SEMINAR FOR THEIR NEW AGENTS COVERING EVERYTHING FROM ASSIGNMENTS TO DOUBLE CLOSES (YES)!
DON'T BE SCARED AND JUST DO IT- I DON'T CARE IF IT'S YOUR FIRST TIME YOLO (BTW I AM A AGENT MYSELF)
I JUST MOVED A PROPERTY (NOT FOR ANOTHER BUT FOR MYSELF THROUGH ASSIGNMENT- MEANING I WAS A INDIVIDUAL WASN'T ACTING ON BEHALF MY RE AGENCY)...OK NOW HERE IS HOW YOU WHOLESALE MARKETED PROPERTIES...
1) FIND A PROPERTY- THE COMMENTS ABOVE DIRECT YOU TO DIVERT TO THE OFF MARKET FSBO'S WHICH SHOULD ALSO BE A MAJORITY OF YOUR BUSINESS HOWEVER SHOULD EQUAL OUT TO YOUR ON MARKET PROPERTIES AS WELL.
- GO TO REDFIN, SEARCH YOUR FAVORITE ZIP CODE
- LOOK UP WHATEVER PROPERTY TYPE YOU WANT AND GO TO "SOLD" PROPERTIES WITHIN THE PAST 3 MONTHS ONLY OR EARLIER
- GO DOWN THE PAGE AND CLICK "DOWNLOAD ALL"
- IT WILL THEN PROMPT YOU TO OPEN AN EXCEL DOC- OPEN IT-
- FROM THERE FILTER THE PROPERTY PRICE LARGEST TO SMALLEST
- FIND THE AVERAGE PRICE BY HIGHLIGHTING THE ENTIRE "LIST PRICE" COLUMN OF THE SOLD PROPERTY SPREADSHEET
- AFTER CLICKING THE "AVERAGE" FUNCTION, YOU WILL BE GIVEN A DOLLAR AMOUNT- (BOLD THAT FIGURE)
- THEN GO TO THE SQUARE FEET COLUMN AND DO THE SAME- FIND THE AVERAGE SQUARE FOOTAGE - THEN CLICK "AVERAGE" HIGHLIGHT THAT FIGURE TOO
- DIVIDE THE AVERAGE DOLLAR AMOUNT OF ALL THE PROPERTIES SOLD WITHIN MAX 3 MONTHS FROM THE AVERAGE FIGURED SQUARE FOOTAGE TO GET YOUR MEDIAN PRICE PER SQUARE FOOT
- YOU WILL USE THIS FIGURE TO DETERMINE IF A PROPERTY WITHIN YOUR PREFERRED AREA CODE IS DEEPLY DISCOUNTED
- THEN, YOU WILL GO BACK TO REDFIN AND CHANGE THE SOLD TO ACTIVE AND DO ALL THE FILTERS PER YOUR PREFERENCE- "PUT IN KEYWORD AREA- "TLC" "CASH PURCHASE" , "NO FHA" AND "UNINSURED" AS WELL AS HAD A PRICE REDUCTION - EITHER MUTLTIPLE OR AT SOME POINT WHILE IT WAS LISTED HAS A REDUCTION (THIS USUALLY MEANS SELLER HAD HIS LISTING AGENT REDUCE PRICE BECAUSE HE WANTS TO SELL QUICKLY- ) SO IF A PROPERTY YOU FIND (AND THERE ARE A LOT) HAVE HAD 3 REDUCTIONS IN PRICE AND HAS BEEN LISTED FOR AWHILE... IT CAN HAVE BEEN LISTED FOR 2 DAYS, AS LONG AS IT HAD A PRICE REDUCTION, THAT IS A TELL TALE SIGN THE SELLER WANT'S TO GET THIS PROCESS OVER AND DONE WITH- JUST MAKE SURE IT'S NOT A FORECLOSURE (THAT WILL BE A WHOLE OTHER TACTIC I AM NOT GETTING INTO ON THIS THREAD- BUT MANY WILL ALSO SAY THAT TOO CANNOT BE DONE)***
2) YOU WILL THEN GET A LIST OF ALL PROPERTIES THAT CANNOT HAVE BANK FINANCING BUT SELLER WILL HAVE IT LISTED WITH AN AGENT-YOU WILL FIND LISTING AGENTS NUMBER
THEN BEFORE CALLING GET YOUR MATH SQUARED AWAY USE THIS FORMULA (WORKS NATIONWIDE AND NO MATTER WHAT I MAKE MONEY FROM THIS FORMULA)- ARV * 65% - Repairs - wholesale fee = Wholesalers Max Offer
FYI wholesale Fee should be anywhere between $5,000 - $25,000 depending on the deal
whatever figure you have for your MAO, if it's much less than the "list Price"- DON'T LET THAT DISQUALIFY THE PROPERTY- PLACE YOUR OFFER ANYWAY! IT'S CALLED NEGOTIATING
3) FOLLOW MY EXAMPLE VERBATIM AND YOU WILL PROBABLY NOT EVEN LOOK AT A FSBO AGAIN
EXAMPLE: YOU FIND A PROPERTY THAT CANNOT BE FINANCED BY FHA, NEEDS WORK, US VACANT AND IS BEING SOLD "AS IS" AS WELL AS PRICE IS PER SQFT IS LESS THAN THE MEDIAN PRICE YOU FOUND.
IN THIS EXAMPLE YOU FOUND A PROPERTY FOR $100,000 YOU RUN IT THROUGH A QUICK AND DIRTY COMP SEARCH (IF YOU DON'T HAVE MLS- USE BIGGER POCKETS CALCULATOR FOR ARV (IT'S PRETTY ACCURATE AND NOT TOO FAR OFF) - JUST DON'T USE ZILLOW OR TRULIA OR EVEN REDFINS- USE BIGGER POCKETS ARV CALC AND/OR THIS SITE THAT ALSO HAS A FREE ARV CALCULATOR CALL REIKIT--- I NOTICED THAT EITHER TWO SITES HAVE ARV VERY SIMILAR AND NOT TOO FAR OFF FROM THE MLS--- WAY MORE REALISTIC THAN ZILLOW, TRULIA ETC INFLATED ARV'S!!!! DO NOT USE THOSE COMPS PLEASE!!! EITHER GET THE ARV FROM A REALTOR, OR USE EITHER ONE OF THOSE 2 SITES.......
YOU FIND OUT ARV IS $390,000 THE PROPERTY IS 1900 SQFT AND NEEDS AN ESTIMATED $65,000 IN REPAIRS.. YOU ALSO WANT TO MAKE $25,000 FROM THIS DEAL
AFTER PLUGGING EVERYTHING IN- YOU GET $163,500----- FOR GOOD MEASURE I DEDUCT AN ADDITIONAL $2000 FROM MY TOTAL MAX ALLOWABLE (MY PREFERENCE ONLY YOU DON'T HAVE TO) AS A FUDGE FACTOR AMOUNT ( YOU WILL SEE WHY SHORTLY) ...
NOW YOU HAVE $162,500 AS YOUR MAO- WHICH IS PERFECT BECAUSE THE LISTING PRICE IS $100,000-- THIS IS A POOR EXAMPLE HOWEVER IF YOU SEE THAT MUCH OF A DIFFERENCE BETWEEN YOUR MAO AND THE LISTING PRICE (WITH PRICE IN YOUR FAVOR) THEN THAT WOULD TELL ME THE SELLER IS MISINFORMED WITH WHAT IS GOING ON IN HIS OR HER MARKET, AND THAT THE REALTOR IS AS GREEN AS PEAS! OR HAS NO CLUE WHAT THEY ARE DOING (WHICH MOST BTW REALLY DON'T )****
YOU WILL THEN CALL THE "LISTING AGENT " WHICH IS USUALLY AT THE TOP RIGHT HAND CORNER ON REDFIN
CALL THE LISTING AGENT-
TELL HIM THIS - THAT YOU ARE INTERESTED IN BUYING THE PROPERTY AND THAT YOU CAN OBTAIN CASH... YOU WILL THEN TELL HIM YOU WANT TO BUY, FIX, AND SELL THE PROPERTY!! THEN FOLLOW RIGHT UP WITH- "I AM ALSO NOT REPRESENTED AND I WOULD LIKE FOR YOU TO DELIVER MY OFFER AS MY BUYERS AGENT- I WILL PAY YOU $2,000 FIXED AMOUNT AT CLOSING AS WELL AS HAVE YOU REPRESENT ME AS MY LISTING AGENT WHEN I RESELL" - I AM AWAITING MY LENDER TO WIRE OVER THE FUNDS WITHIN THE WEEK SO I WILL BE ABLE TO CLOSE WITHIN 10 DAYS OR LESS- WILL PUT $100.00 DOWN EMD TODAY, WILL THAT SUFFICE? THEN SHUT UP!! DON'T SAY "WELL I AM A INVESTOR AND WHAT I WANT TO DO IS ASSIGN THE PROPERTY AND HAVE NOTHING BUT EQUITABLE INTEREST IN IT" ........ THE AGENT MAY NOT UNDERSTAND ALL THAT TALK, PLUS IT'S NONE OF THEIR BUSINESS WHAT YOUR GOING TO DO, AS LONG AS HE RECEIVES 3% FROM SELLER, THE $2,000 FROM YOU AS WELL AS HIS CLIENT SELLING OFF HIS PROPERTY AT THE PRICE CURRENT LISTED PRICE (OR WHATEVER YOU NEGOTIATE) .... SAY THE ABOVE IN YOUR OWN WORDS, BUT DON'T DEVIATE-
NOTE: LET YOUR BUYERS KNOW TO USE THE SAME AGENT WHO IS LISTING THE PROPERTY CURRENTLY AS THEIR LISTING AGENT WHEN THEY ARE READY TO SELL-
YOU AND BUYER THEN COMPLETE THE ASSIGNMENT CONTRACT - (INDICATE YOUR SPREAD TO THE BUYER- BEFORE THE CLOSING- WOULDN'T HURT HAVING THE BUYER INTRODUCE HIMSELF AS ONE OF YOUR FINANCIAL ENTITIES-- THIS WILL A) ELIMINATE YOUR BUYERS ELEMENT OF SURPRISE WHEN HE SEE'S YOUR SPREAD AT CLOSING B) SO THE AGENT OF SELLER ISN'T CONFUSED OR FEEL MISLEAD, CALL THE AGENT BEFORE CLOSING TELL HIM THAT YOU HAVE ALOT GOING ON SO YOU WILL BE HANDING THE PROPERTY TO YOUR FINANCIAL BUSINESS PARTNER (AKA CASH BUYER) HOWEVER , NOTHING YOU AND THE AGENT AGREED UPON HAS CHANGED. REASSURE THE AGENT THAT THEY WILL BE STILL RECEIVING THEIR $2K PLUS THAT THEY WILL BE USED AS THE LISTING AGENT WHEN YOUR FINANCIAL ENTITY IS COMPLETED WITH THEIR REHAB--- (SIDE NOTE: MAKE SURE YOUR CASH BUYER TRULY DOES USE THE AGENT FOR THEIR DISPOSITION- IF YOU DONT KNOW THE BUYER WELL ENOUGH, I'D EVEN PUT A CAVEAT WITHIN THE ASSIGNMENT CONTRACT STATING THAT CONTRACT IS CONTINGENT UPON CASH BUYERS PROMISE TO UTILIZE THE "AGENTS FULL NAME AND LICENSE #" WITHIN THE ASSIGNMENT- THIS WILL OBLIGATE YOUR CASH BUYER TO KEEP YOUR PROMISE TO THAT AGENT TO USE THEM FOR THE DISPOSITION- MAKE SURE THE CASH BUYER FOLLOWS THROUGH WITH THIS AS WELL - KEEP YOUR PROMISE TO THAT AGENT AND YOU WILL BE ABLE TO DO BUSINESS IN THE FUTURE WITH HIM OR HER.
NOW- EVERYONE KNOWS EVERYTHING (TRUST ME- IT WORKS)
AGENT WILL NOT COMPLAIN WHY?
BECAUSE THEY ARE GETTING 3% FROM SELLER, $2,000 FROM YOU, AND WILL MAKE A FUTURE 3% FOR THE RESELL-
I DO THIS ALL THE TIME MORE THAN FSBO- IT'S NOT "MORE ADVANCED" AND CAN BE DONE ON YOUR FIRST DEAL IF YOU WANTED.... JUST DON'T BS ANYONE (EVEN IF A AGENT WASN'T INVOLVED)
IVE NOTICE A LOT OF WHOLESALERS WHO FAIL AND/OR HAVE DEALS FALL THROUGH DON'T DISCLOSE EVERYTHING UP FRONT WHICH LEADS TO A SERIES OF "SURPRISES" FOR BOTH THEIR BUYER AND THE SELLER.. YOU DON'T HAVE TO TELL THE AGENT YOU ARE PLANNING ON "ASSIGNING" JUST
