How To Wholesale A House Listed With A Real Estate Agent - 6 Challenges EXPLAINED

did you know that you can wholesale on market properties that are listed for sale with real estate agents i've done it hundreds of times but there are some challenges that can make it more difficult than wholesaling off-market properties so in this video get ready to learn the sixth biggest challenges wholesaling on market deals and how to overcome them coming up [Music] for a limited time you can get a free copy of jerry norton's quick start kit with everything you need to flip your first house in 30 days or less download it now at myquickstartkit.com if you're new here i'm jerry norton i went from dead broke to millionaire flipping houses and after doing a thousand deals i created this channel to help you master the art of wholesaling and flipping real estate so you can live your dream life be sure to subscribe and click the bell icon to get notified when new videos are released now in case you don't know on market is when a seller hires a real estate agent to list and sell their property when a property goes on market it becomes public and shows up on zillow redfin trulia and realtor.com for everyone to see now this gets the seller maximum exposure and ideally the highest price that the market is willing to pay in return the seller agrees to pay commissions out of the gross sale price which is typically three percent for the listing agent and three percent for the buyer's agent for a total of six percent so for example a two hundred thousand dollar sale price would be twelve thousand dollars in commissions and remember the seller pays the commissions not the buyer and it's important to know that sellers don't just list properties with agents for help to do the transaction they do it because they know that listing their property for sale on market should get them the highest price and it's worth paying the commissions now the thing is most people including a lot of real estate investors think that only unmotivated retail sellers go on market and you can't find distressed discounted properties or motivated sellers on market which is just not true some sellers look for a cash buyer off market and some sellers look for a cash buyer on market the reality is every day distressed motivated sellers list properties for sale with agents which means you and i can find these deals make offers and get contracts so if you're a wholesaler i want to make something very clear to you just because there is an agent representing the seller doesn't change the fundamentals of wholesaling a contract with a seller is a contract with a seller it doesn't matter if you're dealing directly with the seller an agent is helping the seller a lawyer is helping the seller or donald trump is helping the seller once you have an executed contract with a seller you now have an equitable interest in the property that contract is yours to do with as you please you can perform on the contract and buy the property or you can assign it to someone else that's your right the agent's job is to help the seller get an executed contract and see the deal to closing that's it if you decide to sign your contract to someone else that's on you to find a cash buyer and execute an assignment contract and notify title it does not involve the agent and there's nothing the agent can do about it they may not like it but at closing the seller gets exactly what is stated in the contract and the agent gets their exact commission same as if you bought the property yourself but having said that i realized there are some challenges with wholesaling on market properties that are unique that you don't have to deal with when wholesaling off-market properties let's go over the six biggest challenges and how to overcome them but first i want to point something out that i can't reiterate enough and that is that on market legion is free it doesn't cost you anything to find on market deals that is huge especially if you don't have a marketing budget in fact if you have zero money for marketing and you want to learn step by step how to get your first deal be sure to check out a video i did where i break it down in detail i'll put the link to that video in the description below for you okay let's cover the six biggest challenges and how to overcome them the first challenge is a stupid agent are we allowed to call agents stupid let's not say stupid how about difficult a difficult agent maybe they don't like wholesalers which is common yes it's true that some agents can make the wholesaling process way more complicated than it needs to be just because you have a negative experience with a difficult agent doesn't mean it doesn't work do you know how many complicated uncooperative hard to work with difficult private sellers i deal with yeah like half of them handle a difficult agent the same way you deal with a difficult private seller or a difficult lender or a difficult contractor or a difficult teenager or a difficult anybody work through the issues as best you can now having said that i don't typically tell agents that i plan on wholesaling the property first of all it's none of their business what i do with the contract and two why create unnecessary drama they'll find out eventually at closing and when they do i simply say i've got a lot going on right now and i'm passing this deal on to one of my partners partner is referring to your cash buyer i had an agent get upset one time when they found out at closing i was wholesaling the deal i said to her i performed on the contract we closed on time the seller got exactly what we agreed to in the contract and you got paid your full commission what's the problem okay the second challenge wholesaling on market properties is making sure your contract is assignable now since the property is on market and there is an agent involved they will use their state-approved contracts so you have to make sure that the agent includes the right terms and clauses in that contract so that you can wholesale the deal in fact i created a 10-point offer sheet to provide agents that covers all of the essential elements of what needs to be included in the contract you simply provide that to the agent so they can make sure everything is included when they're at the offer now if you want that i'll give it to you for free i'll put the link in the description below for you but one of the most important things to make sure is that the contract can be assigned now a general rule of thumb is a contract by nature is assignable unless it states in writing that it cannot be assigned this is called a no assignment clause which means you would have to do a double closing to wholesale your deal which is not always ideal now if the contract does not have a no assignment clause then by default you can assign it and if you want to be extra safe where you put your name on the contract as the buyer add the phrase and or assigns which means you're the buyer or anyone you assign it to so if i sign a contract as a buyer using my llc jerry is a flipping genius llc i could add comma and or assigns giving me the ability to later assign the contract to a cash buyer however i'm reluctant to do that sometimes because it could send a red flag to the seller and the agent that you're a wholesaler which they may not like that's something you have to decide if the contract has a no assignment clause such as bank owned properties then be sure to follow my work around strategy using a designated llc now this technique allows you to still do a single closing wholesale i did a video that explains it in detail including all of the paperwork you need i'll put the link to that in the description below for you the third challenge when wholesaling on market properties is most agents require proof of funds and earnest money which neither of those things comes up with private sellers let's discuss each one as a wholesaler when you make a cash offer most agents are going to call you out on that and basically say prove to me that you have the cash now if you have hundreds of thousands of dollars lying around like me then just show them a recent bank statement and all is good but if you don't have liquid cash sitting in a bank account in the amount of your offer then you can provide a proof of funds letter which basically says you have a financial relationship with a funding source who could provide you the funds assuming the deal meets certain guidelines now a proof of funds letter is equivalent to a pre-approval letter from a lender and this is sufficient for about 90 of agents and if you're a pro or prime level subscriber to my wholesaling and house flipping deal management system called flipster you get unlimited custom proof of funds letters for as many offers as you want now that alone is worth the subscription to flipster to learn more and see it in action just go to getflipster.com but what do you do if the agent doesn't like the letter and wants to see hard proof of funds here's how to handle that tell the agent the following my partners and investors i work with can provide a hard proof of funds in the form of a bank statement just like you want but i can't ask them for that unless i first have a fully executed contract on the property so let's do this let's add a contingency clause to the contract that i will provide a hard proof of funds within 10 days of accepted contract then find your cash buyer get him to provide you a hard proof of funds and use that to provide to your anal retentive agent okay earnest money is also expected with on market properties earnest money is a good faith deposit held in escrow at the title company and applied towards the purchase and is typically 500 to a thousand dollars but it could be as high as 10 percent of the offer price earnest money is not due until you get an accepted contract and if you wholesale the deal you'll get it reimbursed to you on the day of closing but i have a lot of people tell me jerry i don't have a thousand dollars for earnest money so my first response to that is unlike off market which most methods cost thousands of dollars in marketing just to generate leads finding on market deals does not cost you anything for marketing i typically spend three thousand to five thousand dollars in marketing cost per off-market contract now i don't spend a dime with on market so coming up with 500 bucks or a thousand bucks to float earnest money for a few weeks until you get it back is nothing compared to what you have to spend with off market having said that if earnest money is really an issue here's a strategy similar to how i handle the proof of funds issue put in your contract that you need a five or a ten day inspection contingency for due diligence and that the earnest money is due at the end of the inspection then during that five or ten day window find your cash buyer and get him to provide the earnest money okay the fourth challenge wholesaling on market properties with agents is getting cash buyers access to the property because typically the agent needs to coordinate access with the seller and in some cases the agent wants to be present you can see how that would complicate things with cash buyers so to overcome this i make sure to address this up front i get the agent to include in the contract in writing at the time of making the offer the following seller to give buyer unrestricted access to property via a contractor lock box now i explain the following to the agent from the moment of accepted contract to the day of closing i need to be able to get in the property at any given time with my investors partners and especially contractors so that i can plan and prepare to be ready when we close on the purchase now this is crucial so i really make a big deal about this on a recent deal i had a cash buyer do a site visit and he left the lights on and he didn't lock the door and the agent freaked out on me and made it very difficult for me to continue with unrestricted access so make sure you explain your cash buyers to secure the property after seeing it even better is to follow my technique to only show the property one time to all of your cash buyers now i call this an inspection party and i did a video that breaks it down in detail you know the drill link in the description the fifth challenge wholesaling on market properties is cash buyers who don't like to buy on market properties when you take your deal to a cash buyer and he googles the address he's gonna see that it's on market he won't know your contract price but he'll see the list price and in some cases regardless of the numbers or how good the deal is if the wholesaler price is anywhere near the list price the cash buyer will feel like he's not getting a deal for example let's say a property comes out for sale priced really aggressively for 175 000 and let's say that 175 000 is a great price for a flipper and let's say that if you found that exact same deal off market your cash buyer would buy it all day long for 175 000 but it's not off market it's on market which means nothing other than there's an agent involved and it's public and let's say that you get the contract for 160 000 and you take it to that cash buyer for 175 000. even though 175 000 is a good deal and fits his formula he won't buy it because he feels like it's not a deal because he's paying list price so let me illustrate using a scenario that happened to me i once got an awesome on market deal in philadelphia that came out for sale for a hundred thousand it was a smoking deal and i made a lowball offer and i got the contract for 75 000. then i took it to a local cash buyer i knew that flipped in that neighborhood and he went and he looked at the property and then he told me that he would pay 125 000 cash for it which i accepted then he called me back a few hours later and he said he found out that it's on market for a hundred thousand and now no longer wants the deal so i said to him why does that matter if a hundred and twenty five 000 is a deal for you what does it matter if it's on market he said i could have bought it for a hundred thousand i'm overpaying at 125. i said but you didn't i did stop counting the money in my pocket and count the money in your own pocket so i wholesaled it to someone else the reality is some cash buyers like me won't care about list price as long as the price fits their formula some won't be interested at all just because it's on market and some will be interested only if it's significantly lower than list price that way they feel like it's a deal for example i just got an on market deal for 67 000 that was listed for a hundred thousand now i can wholesale that deal for 80 000 without much issue because the cash buyer price of 80 000 is significantly lower than the list price of a hundred thousand so the cash buyer still feels like he's getting a good deal so here's what i suggest you do go to your cash buyers who you have a relationship with or find a cash buyer that you can build a relationship with tell them that you want to go hard after on market properties and make a lot of lowball offers ask them the following if i find an on market deal and i negotiate i get the contract and i bring it to you at your exact buy formula and desired buy price will you have an issue if it's on market solve the problems before it's a problem by the way that is exactly me i do fix and flips all over the country and i'm always looking for another deal so if you want to be a finder for me i'll pay you 10 000 for every deal that meets my criteria and yes i will buy on market deals if that sounds exciting to you register for a free training to learn all the details go to my10kcheck.com and finally challenge number six which is the biggest excuse i hear the most with wholesaling on market and that is that it's competitive and it's hard to get good deals which is true but since when did we let hard stop us from being successful so let me give you three tips for overcoming competition tip number one follow my double dip technique this is where you do not use a buyer's agent to make the offer and represent you on the transaction instead go directly to the listing agent unrepresented and offer to let her also represent you as the buyer this is technically called dual agency and it means the listing agent represents both the seller and the buyer and will get both sides of the commission and make twice as much money on the deal now this is very motivating for most agents now some states don't allow dual agency if that's you you can still accomplish the same objective by doing designated agency which is using another agent representing you in the same brokerage as the listing agent or the list agent could become what's called a transactional coordinator which means they don't represent the seller or the buyer in the transaction and if you'd like my double dip scripts you know exactly what to say i'll give those to you for free just go to agentofferscripts.com tip number two is to make the offer as soon as it comes out for sale my goal is when a distressed property comes out for sale i call the agent i make my offer within an hour of going public now the more time that goes by the more opportunity for other offers to come in in many cases speed wins the deals i've lost deals because i was an hour too late so make sure you set up automated notifications i did a video that shows you how to create searches and get notifications on zillow for distressed properties be sure to watch that video link in the description tip number three is to make a lot of offers i'm blown away at how lazy most new wholesalers are be prepared to make a lot of offers yes it's hard yeah you're going to get a lot of no's but if you want to do deals consistently month in and month out put in the work i believe the magic number is five offers a day that's a hundred offers a month if you do that consistently you will do deals every single month remember the deal of a lifetime comes around about once a week but you won't get that deal of a lifetime sitting the sidelines you've got to get into the game and the way to get into the game is to make offers every single day so if you're excited to go after on market deals leave a comment and say thank you for sharing your wisdom you are a flipping genius the next thing that i want you to do is watch a video where i show you how to instantly find on market underpriced homes so that you know the very best deals to go after first so watch that video now and if you haven't yet be sure to subscribe to my channel with over 600 videos this is the number one channel on youtube for all things wholesaling and flipping and i'll see you on the next video

Channel: Flipping Mastery TV

Views: 33,032

Rating: 4.9715538 out of 5

Keywords: How To Wholesale A House Listed With A Real Estate Agent - 6 Challenges EXPLAINED, jerry norton, flipping mastery, wholesaling houses, wholesaling real estate, how to wholesale real estate, real estate wholesaling, real estate investing, how to wholesale houses, flipping houses, real estate agent, virtual wholesaling, wholesaling real estate for beginners, first wholesale deal, wholesaling with real estate agents, how to wholesale a house with real estate agents involved, flip

Id: kbC4aQakfUE

Length: 18min 54sec (1134 seconds)

Published: Fri Jan 01 2021