All Forum Posts by: Rickina Velte

The MLS is a highly efficient market.

You are very welcome! Like I said there are people who are doing this and making it work but they have been doing it awhile and have resources behind them. I work with a lot of newbies and these are the obstacles they combat when approaching on market deals. From my own personal experience I can say that off market deals are much more profitable. My average wholesale fee is 25K and I try to at least bring in one 40K+ deal every month. Off market deals give you the room and flexibility to make those kinds of fees. And being direct to seller means you can get a first hand account of their pain points and what they really want. I had a seller once who told me he was going to use the money from the sale of his property to buy an RV and travel across the country with his dog. So I asked him, if I bought you the RV would you sell me the house for your loan balance? The loan balance was less than 30K and he agreed. I bought the house for what he owed and I bought him an RV and he was happy. That would NEVER happen with an on market deal. 

Its not that you CANT wholesale from the MLS, because you can and some wholesalers do. But the obstacles you face in order to do so can be difficult to navigate. I will give you some of the most common issues wholesalers run into when dealing with MLS properties:

1. Negotiation--If the property is listed at a attractive price you can bet other investors will be submitting offers. Since they are the end buyers and not the middleman they will always be able to outbid you as a wholesaler

2. Agent--The listing agent is there to be the barrier between you and the seller. Their job is to find a QUALIFIED buyer for the seller and to prevent direct communication. Without some inside information about the sellers motivation it's very difficult to assess and use leverage. The agent is incentivized to sell the property for as much as possible because their commission amount is a percentage of the sales price. Which means the lower the price the less they get paid. 

3. Proof of Funds--every agent will require this. And the good ones will verify it. There are a lot of fake POF companies out there and you certainly dont want the legal headache that comes with a financial fraud case. Using a fraudulent POF is considered an attempt to commit financial fraud and you can be prosecuted if the agent contacts the authorities. Without a valid proof of funds an agent will not even present your offer to the seller.

4. Showings. If the property is owner occupied you will need to explain why you are showing it to other people. If the property is vacant it will be on an agent lockbox which means you will need an agent to provide you access everytime you want to show it to a potential buyer. Since you arent the actual a buyer an agent cannot represent you and therefore has no path to potential income from working with you so good luck getting an agent to meet you at properties you cant buy aka the agent working for free. 

5. Public. Because this listing is posted for everyone to see, there is absolutely nothing stopping a buyer from calling the listing agent and informing them of what you are doing. I met an investor in the Dallas market who specifically did this every time he got an email from a wholesaler featuring a listed property. He would call the listing agent, tell them what the wholesaler was up to, send the email with the property information and the agent would call the wholesaler and terminate the agreement. This investor would then send over his offer and POF and the seller would accept and the investor would have a deal. Imagine being the wholesaler in that scenario.

6. Buyers. There are many buyers who flatout refuse to pay a wholesaler for bringing an on market deal. There are some that have no problem with it because a deal is a deal but most will pass. And if you cannot find a buyer then you have to back out of the deal and the agent will not be happy about that.

7. EMD. On market deals have a lot less flexibility than off market deals. My typical EMD on an off market deal is $100. On a listed property standard EMD is 1% of the offer price. So on a $250,000 house thats $2500.

So to answer your questions, no. Title searches are standard procedure for any deal. On or off market. And if a property is listed with an agent they will most likely have title open already at their preferred title company which is probably not investor friendly so even if you overcome all the other obstacles, you are still in trouble because the title company won't know how to close a wholesale deal (assignment or double close) and because the agent has a relationship with the escrow officers, they will probably fill the agent in on what is going on and you can guess how that is going to play out. And no having a home inspection (which you would have to pay for BTW) is not going to entice an investor tobuy an on market property from you. 

I totally get that you are very new and you are learning and Ive worked with tons of new wholesalers who have been lured by the same idea of easy money and chased on market deals only to learn the hard way all the obstacles I have listed in this response. A lot of the gurus pitch this 'on market deals' strategy but you can be sure they are not buying off market deals, if they actually invest in real estate at all. 

That is your 1st mistake, deals are not on MLS, ( for the most part. All 500 or so of mine have been off market ) So you have no money but want to put a property under contract ? HMMM, How are you going to order title, you do not have the funds to close? Whos paying for the title search PLEASE stop reading books, PELASE connect with someone doing deals, LEARN then apply what you learn

I wish you all the best 

The key to having MLS offers accepted is providing evidence that you can close. Whether or not you plan on assigning your contract of double closing, the only way for an MLS contract to be accepted is with Proof of Funds and/or pre-approval. It does not have to be from a traditional lender.

In my opinion, you paying for a title search or home inspection won't make a property more appealing to a cash buyer. If I have not dealt with you before I'll do my own inspection & run my own numbers to determine if it's a good deal or not.  

Regarding the assignment of contracts- Many, not all, properties sold on the MLS use standard state contracts. It's not mandatory to use the contracts but many have clauses that prevent assignments. If you have your own contract but are forced to use a standard state contract, review it carefully to ensure there's no clause that prevents assignments.

@Rickina Velte until you know your market, the values, rehab costs etc of your buyers, then it's just EASIEST to supply your buyer, maybe just a handful of LEGIT buyers, the pictures or a walk through video or even better, access to the property for them to walk it and give their price.  Of course listed deals make this another hurdle to do this and easier when off market deals, but you become the negotiator at that time.  They give you a price based on their exit strategy, their rehab costs, their holding cost.  ALL of the things that you DO NOT know, hints getting their price makes life easier.  All you have to do is take pics, video or give them access, once they tell you their price, then all you have to do is negotiate a lower price with the seller.

REMEMBER that the buyers price USUALLY isn't their highest price out of the gate.  It COULD be, but that's part of building that relationship with the buyer to know if they could come up a little, usually depends on how bad they want the deal and if they want you to keep working for them, they won't be low balling you every time or they know you'll start bringing someone else deals who isn't trying to take advantage of them so that you can still put food on your table.

Go read the book "If you can't wholesale after this, i've got nothing for you" by my good friend Todd Fleming. It will be far more clear and easier to understand the easiest way to wholesale and the LEGIT transparent way to do it also the ethical way to do it.

I couldn't agree more on exactly what Austin said. One thing I'd like to add is that it's GREAT to already have your buyer in mind FIRST! Know their buy criteria, get their purchase price first (on any future deal, MLS or direct to seller) this way by the time you get a property under contract, you have NO PROBLEMS satisfying your contract with the seller (and agent), then you can assign or double close making EVERYONE happy. :) This will help you to remain more credible in your market vs being like so many other wholesalers which give LEGIT wholesalers a bad name. KEEP IT SIMPLE, if you have your buyers price then the ONLY thing you need to do is make sure your purchase price to the seller is below that! You DO NOT need to know repair costs or ARV's etc. @Rickina Velte

Going to disagree with your assessment. Some of the best deals we have done for clients were on MLS. They were such great deals we had to identify them within an hour, and get an offer within a few hours. Over the years we have seen fantastic deals sitting in plain sight.

Why people can’t always see them is they don’t have an agent watching for deals every day (so they miss them) and/or are lacking the analysis portion that makes a meh property on MLS a great investment that nobody else can see or understand.

@Rickina Velte this can be done… although you have to remember a few things. Most real estate agents have their investor clients, and when they come across a nice investor deal, they will usually send it out to their investors before it hits the market. A lot of times, the really good deals don’t even see the market. A lot of agents will also either not want to work with wholesalers, or not understand wholesaling and kill the deal.

That being said, you should hunt for the homes that are off market where you will have full control over the deal… you won’t have to communicate through the agent, you deal and build rapport directly with the seller and you will know what’s going on at each and every stage.

I find working with agents when wholesaling can suck, some know and are experienced in that field and some just aren’t. I think you will have better luck and success finding great off market deals.

Best of luck