I first called the owner on this deal in October of 2019. I scheduled an appointment to meet with her and was all set to see the property, make an offer, and hopefully agree on a price. Then of course she canceled on me. When wholesaling you have to get used to people hanging up on you, completely changing their minds, and canceling appointments. I reached out to her again several times in the following weeks to set follow-on appointments that were pushed backed or canceled altogether. Eventually I decided that she was not really motivated to sell and moved on.
Then COVID-19 happened and the world started panicking. We decided it would be prudent to follow up with cold leads (old leads that have not been touched in a while) now more than ever based on the assumption that the pandemic would have changed some people’s situations and potentially created new motivation to sell. With this seller we found exactly that. COVID had created new motivation for them because they now felt the need to liquidate before the market potentially took a fall and left them with a damaged house that they couldn’t do anything with.
One thing that I really enjoy about wholesaling is that it gives you a real opportunity to help people. You can’t always say that when you buy a house you help the seller. However, when you target motivated sellers when wholesaling, you find stress in their lives that by buying their house you can genuinely help them solve. At the very least, you can take that one thing off of their plate and free up room in their life for them to fix the underlying issue. There is not an off market deal I have done that hasn’t been the result of a problem the seller was having. In every case, I was able to help that seller solve their problems, put money in their pocket, and generate a good deal for myself to profit on the back end. This is a true win-win structure, and the people who wholesale the right way – through integrity – produce a tremendous service in my opinion. This deal was another example of the ability to help a seller out of a bad spot while creating a good deal for myself and my partners.
In regards to the specifics of the deal, I went on the appointment, gave the offer, negotiated the price, and got the contract signed. In all of my wholesale deals I have performed these actions, acting as the Acquisitions Specialist. The Acquisitions Specialist is simply the person who locks down deals. For their role they collect a percentage of the wholesale fee, in this case 20%. The Acquisitions Specialist does all of the things I mentioned above, and more, and focuses on converting leads into contracts or deals.
Once we got the property under contract, we solicited our buyers list and found a happy buyer. The end buyer got the property at a solid price to make a good flip or buy and hold while we made a profit on the difference between what we got the property under contract for and the amount that we assigned the contract to the end buyer for. Another example of a win-win.
Wholesaling can be a great strategy to generate cash to fund your other deals – which is what I do. I have saved and put my wholesale fees to work with buy and hold investments. It would be easy to buy some consumer goods to celebrate, but that is not what the prudent person chasing financial freedom does with their profits. Smart investors reinvest their profits and because of it see exponential growth. I believe that wholesaling is worth looking into for these reasons. However, don’t believe the social media pot mixers and gurus out there who chatter about wholesaling being an easy way to make cash with real estate with no money out of pocket. It takes a lot of time and effort to go on all of the appointments, negotiate with sellers, and get properties under contract. And if you do it yourself you will be spending a lot on marketing costs to fill the top of your deal funnel with leads. With that being said, I am proof that it can be done, even while working a full time job. And it is a low-risk way to get started with low out of pocket if you invest your time. In the beginning this may be your only option – it was for me. Read the literature out there about it, find others who are doing it and see what is working for them, or ask me if you have any questions. As always, I am glad to serve you.
Contract Price: $40,000
Sell Price: $68,000
Wholesale Fee: $5,600 (20% for doing my Acquisitions role)
- First, as the name of the post implies, is to follow up with your old leads. This lead was more than 5 months old by the time we followed up and it just so happened that when we called back their situation had changed. Seller’s situations do not stay constant over time so it is important to touch them when they are motivated to sell. That could be 5 months or a year and if you don’t follow up you may be leaving money on the table. This goes with every niche in real estate, not just wholesaling.
- Find the seller’s motivation. I am a believer that you cannot convince anyone to sell their home. They must want to sell or have something that forces their decision to sell, either way they make the decision to sell. It is your job as a real estate investor to first find the seller’s motivation and then make it the cornerstone of your discussion. Focus on their pain point and do your best to provide the solution. Is the house going to foreclose next week if they don’t sell? This is an example of motivation to sell quickly which can afford you a good price. Is the world in a pandemic and the seller needs to liquidate? This is also an example of motivation to sell at lower price to meet the seller’s liquidity needs. Find the motivation because without it you will be barking up the wrong tree. Do not waste your time with unmotivated sellers.