All Forum Posts by: Ryan Webber

Yes, you can wholesale them, but they aren't the best place to start for new wholesalers. You can not assign them, though. You should do a forum search for wholesaling REO. There are tons of threads on the subject and the different aspects to consider.

Sharon Vornholt So if you offer a property at a higher than market price and someone buys it, you are screwing them?

Now obviously if you are representing them as THEIR agent or in some type of mentoring relationship, that is something totally different. But as another investor or a homeowner, selling a house to a complete third party? What if you were into the properties for the amount you were selling them for, but that amount is vastly higher than market value?

I understand where you are coming from, but its hard for me to wrap myself around that its MY responsibility to make sure someone doesn't pay more than is "fair" for a property that I am selling. Should I stop them from buying other people's properties that are being sold for too much too?

Now understand that my actual business model is fashioned around the opposite idea. I sell houses at a discount, but I don't do that to be "fair" or "nice" or "ethical". I do it for the money. I do it because my business model is built around building relationships of trust with my buyers and offering them real deals. I do it for return customers.

I wouldn't and don't do it 3-5% either. My spreads aren't based on percentages though. Percentage wise my spreads would convert to somewhere between 10-30% of my sell price.

This is an excellent point. I also know professionals in other fields that invest in real estate and they won't buy without their agent.

I think wholesaling to solid cash buyers for so long has really spoiled me, because I would so much rather just work with my buyers. The ease of working with these guys is absolutely wonderful. There's no pretense crap or games like there is with realtors. There is real trust with these guys. Many of them I don't even need a contract with. And I get answers in hours, not days or weeks.

I'm not fully convinced that there is a significant level of income lost either. Obviously you will be paying commissions, and you will most likely have to close on it. So you will have increased expenses with carrying it. I have listed wholesale deals on the MLS before and I've never been excited about it or had stellar results.

I did just list one today, though. We'll see how it goes.

Well close. I actually hold that wholesaling must have the discount component and the non-end user component. The non-end user component being that you are reselling to a non-end user (an investor) who will rent or resell the house to someone else. How you purchase or resell doesn't matter, but WHO you resell to would. Assignments, double closings, entity selling, and even closing and reselling are not factors to me in whether you are wholesaling or not.

I have to admit that I follow a similar idea but just within the context of selling it for the most I can within an exclusive market of serious cash buyers who can close very quickly with absolutely no belly aching. I've learned that what it takes to sell it in that specific market is meat on the bone. So, the game I play is figuring out the smallest amount of meat that I have to leave on the bone and still get serious players to bite.

I also have no issue with maximizing my profit through retailing a house. Especially, if its that close to retail ready, but I don't hit up my investor buyers with those. I had one earlier this year that way. It was the only house I've ever bought that was absolutely retail ready. No paint, no cleaning, no new carpets, nothing. Well I did have the carpets cleaned after we had a poker party in it, but that was it. That was the only one I've ever bought that way.

The vast majority of the time a deal doesn't come down to the difference of 2K-3K. Yes, I have had deals that do. When it does happen I will make a couple phone calls, but I won't commit to buy the house until I have a strong buyer on the hook.

I actually just ran into this last week. The seller was firm at 5K more than I felt comfortable buying it at, so before I committed I called one of my strong buyers and had him go by and tell me if he would do it with a $3,000 margin on top of the seller's bottom dollar. He said it was higher than he wanted to be at (I already knew that) but he would take it. I knew I had 3K in my pocket so we went back to the negotiating table with the seller and ended up getting it where I was comfortable at anyway. That turned it into an 8K spread.

In my home market, I buy with NO contingencies. So even if my intention is to wholesale the house, I have to be comfortable with buying it myself at that number or I won't take the risk. If I can get a solid investor on the hook to buy it, I will take the risk, but only if I have the sell side locked up already.

Here's the problem with that mentality, and its something that I battled with in a former partner of mine that I mentored. He asked me the same question, and I told him to fix $5,000 in his mind as his minimum. $5,000 is the number, but then I shared with him that we could do as I outlined above if we couldn't make $5,000 work. So what does he do? Now instead of $5,000 being the minimum and negotiating for it, he begins to squeeze down every deal to $2,000-$3,000 whenever there is any pressure from the seller in negotiations. I kept bringing it to his attention but he didn't get it. His threshold for pressure in negotiations was too low, so he would cave too fast.

So fast forward a couple years and his average wholesaling fee was $3,000, while mine was $5,000. But maybe he gets more deals, right? Nope. Not even close.

The issue is mentality in negotiations.

Jon Holdman is right on. Work on both. Check the sticky topic at the top of the Wholesaling forum. It has a ton of ideas to find buyers. Though, you should be working on both, the majority of your time, effort, and money should go into finding a smoking deal. If you have a great deal to sell, buyers start coming out of the woodwork when you market it.

Ok, Andy M., I'm going to have to expand on this because I know some more of the details. This was an absolutely EPIC negotiating tactic on your part, and this type of thinking is why you're a ninja at negotiating.

Andy knew one of the seller's major motivating factors was to close quickly, so what does Andy do? He has title work done and ready BEFORE he even looks at the house with the seller. Andy was ready to close RIGHT THEN when he made his offer to the seller. They could drive over to the title company and the seller could get his money IMMEDIATELY. Andy, of course, uses this to cinch the deal from his competitors.

That really is top notch problem solving. If you wanted to sell your house as quickly as possible, how could you not sell it to Andy?

Really, Andy, teach me your ways.

James Burrell, yes, ABSOLUTELY it happens, but you've actually already stumbled onto the solution.

Its a problem IF you only have ONE investor interested. So the trick is to make sure you have multiple investors interested.

So how do you get multiple investors interested?

PRICE.

Price overcomes all objections.

If I was trying to sell that $2,000 gold bar for $1,500 or maybe $1,900, would I have the same interest? NO!!! The price is what creates the increased demand.

Now there is also a factor of effectively marketing the property to solid cash buyers.

If I only knew one person with $500 to buy my gold bar, she could easily haggle me down to $350 because I only have one interested buyer. Now If I know 10 people with $10,000, I bet I could get the full $500 with no problems.

Find better deals and find more cash buyers. That's wholesaling in a nutshell.

James Burrell, Would you buy a gold bar from me for $500 that is worth $2,000? What if I only paid $5 for the bar of gold? Would you still buy it from me for $500?

Of course you would.

Jon is right on with assignments and double closings, but I disagree with him about profit margins.

I won't touch a deal, even if I'm buying the house for $2,000, for less than a $5,000 gross profit. With a $100,000+ house I'd want a $10,000 profit to wholesale it. As a professional wholesaler, a $2,000-$3,000 gross profit may not even cover my marketing expenses to get the deal. To stay in business long term you will need more meat on the bone or you'll end up just chewing on bones.

K. Marie Poe, I really love how you wrap this giant stick of unarguable reason with soft velvet and then smack me upside the head with it. That's the power of a smart woman.

Well, no, actually I have not tried it recently, but now I will. I have the perfect one for it. Thanks for the suggestion.

I keep a pretty close look out on local serious buyers by tracking the sales data, but I do miss some of them, and having multiple systems of connecting with them is always a good idea.