If you want to start Wholesaling Real
Estate in 21 Days or Less without spending $1 in marketing and without having to have
tons of experience, hey everyone. My name is Alex Martinez. I'm the CEO and Founder of
realestateskills.com. We help everyday people to wholesale, flip houses across the nation.
This strategy alone I'm about to cover today, it helped us generate over 12 million in
revenue, our first year in the game in real estate. First off, what I'll cover today is what
is wholesaling real estate exactly. I'll cover the wholesaling process at a high level so you
understand. Then number three, I'll cover this 12-step process on how you can start wholesaling
real estate in 21 days or less in your area.
First off let's cover what is wholesaling
real estate exactly? But what wholesaling is, is when you get a property under contract
at one specific price, let's say $100,000. Initially you are the buyer on the deal. You
put the property under contract at $100,000, but then you find a cash buyer,
typically a fix and flipper that wants to buy this deal at a higher price.
Let's say they want to buy it at $110,000. Now, all you need to do is put that
property under contract at one price, and then sell the contract to your cash buyer at
a higher price. If they want it at 110,000, you make the $10,000 difference as a profit. It's very
simple. There's two main ways to close a wholesale deal. It's through assigning the contract.
Let's say you have a property under contract to buy. You can assign those contract rights,
which is essentially just a transfer of contract rights from one party to another party. All
right. This is a pretty simplistic approach. We do this for about 99% of our wholesale deals. We
always love assigning, because it's so simple.
The second way to close these deals are through
double closing. Double closing, essentially, what it means is you close on that property with
some funds, typically funds from a transactional lender, someone who's willing to lend funds
for 24 hours or up to 72 hours on this deal. In that example, the $100,000 deal, let's say
you brought the funds to buy it for $100,000, but then you lined up the second buyer. You
lined up your cash buyer to buy it $110,000.
There's actually two closes that happen. It
can happen within the same escrow company, sometimes two different escrow companies. But
what's going to happen is you close on the deal at 100,000 and then gets resold to your cash
buyer at 110,000. There's going to be some fees, some closing costs. You're not going to make
completely $10,000 when you double close, but you will still make a nice profit.
That's why I recommend assigning the contract versus double closing, because there are
more steps involved. Today, in this process, to make it as simple as possible, we're just
going to cover assigning the contract to your cash buyer so you can wholesale it.
Let's cover the wholesaling process at a high level. All right. Essentially we want
to do is, number one, find a house that is in a distressed condition, meaning it's outdated,
it's stuck in the '70s. The grass is overgrown. There's mold. It smells like cat pee. Basically
a house where a first time home buyer can't move in and get a first time home buyer loan or a
conventional mortgage. It's a house that is distressed so that it needs to go all cash.
Now what you're also going to be looking for is a house that has a seller who's in a
distress situation. Maybe they're facing a foreclosure. They're not able to make their
mortgage payments. Maybe they're going through a divorce and they have a lot of memories in the
house and they wanted to sell the house quickly. Maybe there was a death in the family and
they got inherited a property. They don't know what to do with it. They just want to get
rid of it. They don't want to deal with it.
When we can find a property that's in a
distress condition and the seller's in a distress situation, I like to call that a
double whammy. There's a lot of motivation for that deal. There's a lot of motivation for
that deal to go below market value. Those are the types of deals we're looking for. I'm going
to show you today exactly how you can find those deals in your area across the United States.
The second thing we need to do is once you find that deal, you need to get that property
under contract. You need to get under contract, hopefully below market value. That allows
you to mark that price up to a cash buyer so that you can wholesale it and make a
nice profit and your cash buyer can make a profit from reving property as well.
Once we get under contract, you sell those rights to your fix and flipper, and then you close
the deal. What we see across the nation from doing hundreds of deals over the last decade is that
the average wholesale fee is about $10,000. I want you to shoot for that. Some deals you
will make more than $10,000. Some deals you will make less. It's totally fine. Just to know,
it will average out typically around $10,000.
Now let's get into the 12-step process so you can
start wholesaling real estate in 21 days or less. Step number one, what you want to do is pick your
market. All right. You want to pick your market. The market, you plan on wholesaling it. I got some
chicken scratch. I was a C student in English, but got an A in real estate. As long as
you can read that, we're good to go.
You want to pick the real estate market, you
plan on wholesaling again. I get asked all the time, "Alex, should I start virtually
wholesaling in estate, five states over? Or should I start wholesaling locally where
I live?" What I recommend 9 times out of 10 for someone is just start local, start in your
city, start in your county where you're located, because it's going to be a hundred times easier
to wholesale a house there than if you just pick a random state to start wholesaling in because
you heard someone else's wholesaling there.
There are deals in every single market across
the United States and there's deals right there in your own backyard. It's what I want you to
understand. Pick your market. This takes about one minute. If you want a wholesale virtually,
you absolutely can. What I do recommend is that you have some affinity to a market. Maybe
you lived there for five years beforehand, maybe you know real estate agents
and investors there already, maybe you bought a house in that particular market.
Then sure, you can start virtually at wholesaling. But know that if you start local, you're
going to be able to attend local Real Estate Investors' Association Meetings. You're going to
be able to meet face-to-face with cash buyers. You're going to be able to meet face-to-face with
real estate agents and sellers at property.
There's so many benefits to starting local and
you know more than you think you know about your market. You probably know up and coming
neighborhoods. You probably know the bad areas. You probably know the prices to some degree,
good zip codes, bad zip codes, and all that local knowledge will help you be a better wholesaler
and help you to wholesale houses faster.
Number one, pick your market. Is it local? Is
it virtual? I recommend local. Then let's go to step number two. Step number two is find three
to five cash buyers. Okay. You want to find three to five quality cash buyers in your market that
are actually buying deals. Typically, these cash buyers are going to be fix and flippers. We like
working with fix and flippers who will buy your wholesale deals for all cash and cash buyers
that are buying multiple houses per month.
This way you don't deal with a cash buyer who
says, "Hey, I buy a house every 6 months or 12 months." They're not going to be fast to respond
to your wholesale deals. They're not going to be the ones willing to pay you top dollar for
deals. We want the cash buyers that are hungry, buying multiple deals every single month in your
area. That way you can confidently wholesale 3, 5, 10 houses every single month.
That's not a roadblock. It's not a hindrance for you at all. One of my last videos,
I created a training on how to find cash buyers online for free. I'll put a link here
and in the description. You can check that out. I'll teach you exactly how to find these cash
buyers for your wholesale deals in your market.
Now let's go to step three. All right.
Step three is finding and filtering for deals. Okay. Now remember what I mentioned.
What types of deals are we looking for? We're looking for houses that are in a distressed
condition and a seller who's in a distressed situation. We want to find
and filter for these deals.
What I always recommend for anyone is to utilize
the MLS. The MLS is the Multiple Listing Service. It's a database of all the houses on the market,
in your area, and it's created and maintained by real estate professionals. According
to the National Association of Realtors, about 90% of all real estate transactions that
occur every single year happen on the MLS, on market. These are on market deals. All right.
That means 10% of the rest of the transactions happen off market. If you want to have
the best success and wholesale of house, as soon as possible and consistently do it
and predictably do it, I recommend the MLS because there's always new houses coming on the
market every single day that are distressed.
Now, majority of houses that will be on
the market, they're going to be retail and move and ready for first time home buyer. But
guess what? They're still distress, property and distress condition with a seller and distress
situation being uploaded to the MLS in your area every single day. The best part is you don't
have to spend any money in marketing. You don't have to send any letters for direct mail.
You don't have to put out any banded signs.
You don't have to make any cold calls to
be able to find and get these deals on the MLS. To get access to the MLS, most states
have something called Assistant Access to where if you're on license, you can work with an
Investor-Friendly agent and get access to the MLS. If you are licensed already, then you can
get access to the MLS in your market.
But let's say you don't know an Investor-Friendly
agent and you want to get started today, what's the next best thing you can do to find
and filter for these deals on the market? Well, the next best thing, instead of the MLS, you
can use redfin.com, put that down, redfin.com, Zillow or realtor.com in your area. Okay.
These will pull listings. These will pull houses for sale from the MLS and
put it onto these websites.
It's not exactly the same thing. There's always
going to be more deals, more history, more data on the MLS. We like to refer to the MLS as the
king database. It's something as a serious real estate investor, as a serious wholesaler,
you're definitely going to want access to sooner or later. The sooner you do it, the
better your business is going to be.
But once again, if you want to start a wholesaling
in 21 days or less, you can hop on redfin.com, Zillow and Realtor, and look at the houses
for sale in your market today. All right. I'll give you two strategies, two really good
strategies we've been using for 10 years to be able to find these deals consistently.
Number one is going to be the day zero strategy. I'll explain that and then
old listings. All right. One, two. What's the day zero strategy?
What are we doing here? We're trying to find houses that have just been put on
the market date on ... the first day, within 24 hours. That's why it's not the day
one strategy. It's the day zero strategy.
With that day zero strategy, what you want
to do is find and filter all the new deals that were listed on the market. Let's say
there's 50 new houses that would put on the market today in your county. What you
want to do is filter through those deals, which houses are in a distress condition that
looks like, "Oh man, this needs to go all cash. It's stuck in the '60s, the '70s. It's completely
outdated. There's mold. There's water damage."
Those are the houses that we're looking for.
Also, if you use the MLS, there's going to be more information about the property. Typically,
there's remarks that are confidential for anyone who has access to the MLS. Sometimes it tells you
the seller's motivation and why they're selling. All right. Now in Redfin and Zillow, it will
have some descriptions as well the property, even realtor, too, and what's going on?
It might have the seller's motivation, but a lot of the time it does not. If you just use any
of these platforms to find deals on a daily basis, using the day zero strategy, you find 50 new
properties, maybe 5 to 10 of those are distressed. Those are the deals that you're going to
want to focus on a daily basis. All right.
You just do that alone. You're going to be able
to wholesale multiple houses and find these houses and put them under contract every single
month. The day zero strategy works really well, because if a distressed house gets
put on the market immediately today, and it's going to go to an investor, it's going
to go to a wholesaler, it's going to go to a fix and flipper. It's going to go to someone
who's bringing all cash. Why not you?
All right. If it's going to go to an investor,
who's going to pay all cash for this property? Typically, it's going to go to the investor,
who's going to build the most report with the agent. Okay. Speed's the name of the game with
the day zero strategy. As soon as that property is listed on the market, you want to call that
agent so that you can tell them who you are, what your company is about and learn
about this property and build rapport.
We'll get into that in the next step, but also
want to tell you about the old listing strategy. With the old listing strategy, if you look
at property now on one of these platforms and you see the property's been active on
the market for 60 days plus or 90 days plus, we know that in today's market, there is
something wrong with that property.
There might have been litigation, some legal
issues, something, a reason why that house didn't sell that house could have been listed
at way too high of a price. Now the seller's willing to come down in price. There's
a lot of reasons. If you call in those old listings that are definitely wholesale
worthy, there's going to be a problem.
When you talk to the real estate agent, you're
going to want to understand why hasn't this property sold for 63 days or 94 days. What's been
going on with it, just so I understand? Sometimes they can bring you a problem. If you can solve
that problem for that agent, for that seller, guess what? You can be the knight in shining armor
and close that deal and get under contract.
There's other strategies we cover. But just those
two alone, you'll be able to wholesale your first house in 21 days or less using those strategies.
All right. Now on a daily basis, when we find these types of deals using these platforms,
step four is to make discovery calls daily. Okay. Make discovery calls daily to real estate agents.
All right. What you want to do is once, again, if you find 50 new listings that came on the
market and maybe 5 to 10 of them are distressed, if you use the MLS, you're going to have the
contact information of the real estate agent that's selling that house on the market. On the
strategy, we do not target the homeowner directly. The homeowner who put their house on the market
has hired a real estate agent called a seller's agent or listing agent that's willing to sell
the house on the market for the seller.
We contact that listing agent directly. If you
use the MLS, what's great about it, it will have the phone number, the email for that particular
agent so you can call them directly. If you use Redfin or Zillow or Realtor, sometimes it doesn't
have all that information. It may have their name, the listing agent's name, but then you just want
to Google that listing agent's name and then find their phone number and their email.
The very least just find their phone number and then give them a call about this
particular deal. We call the agents daily. One, we want to get a pulse on the deal. Number two,
we want to build rapport with the agents. We want to be professional, and we want to make sure
that we build credibility and authority. When you call these agents, you're not just a wholesaler.
This is what I teach all my clients. I recommend for anyone who wants the wholesaler real estate,
don't look at yourself as just a wholesaler.
If you want to be just a wholesaler, that's
really fine. But I encourage you to be a real estate investor. Someone who not only
wholesale, but fixes and flips property, buys and holds property and builds wealth
through running out the property to other people. If you see yourself as that, then project
yourself as that. When you call an agent, you're not just a wholesaler, you're a buyer, you're an
investor. That's what agents want to work with.
Agents want to work with decision makers. If you
make yourself a decision maker on these deals, they're going to want to work with you. All
right. This is a big tip. I see so many amateurs call agents say, "Hey, I'm a wholesaler."
Agents don't like that word. Then they say, "Hey, go kick rocks." They're crying. They're
wondering why the heck they never get deals.
It's because what you say is very important,
what you say and how you say it, all right. On this call, we're building rapport and you're
checking in on the deal you're calling on, that lead. Do the photos. Match up with the current
condition of the property. You can ask the agent. Is there anything out of the ordinary about this
property that needs renovation? Does it need a new roof? Does it have any crack slabs?
These are significant repairs that you'll need to add to your repair budget when
we get to that particular point in time. Then also you can ask this agent questions like,
how's activity been on the property? Are there a lot of offers on this property by any chance?
Now you can get a pulse on your competition.
They may say, "Hey, we got three offers,
but they're all below this price at 150." We've had agents tell us that. You want to ask
information about the deal, about the competition, who's in the running. You could have agents
say, "Hey, you're the first one to call. I like what I'm hearing. I definitely want to
work with the cash investor on this deal. How about you come meet me at the property at
2:00 p.m. and we make this deal happen?"
That can happen, too. That's where with
day zero, the day zero strategy speeds part of the name of the game. Once again, call
agents daily. Talk to them about these deals. We're only calling on distress deals. You're
not calling on beautiful brand new renovated property. That's not going to go all cash.
That's not going to go to a wholesaler. You're calling on distressed property.
Be sure to do this, because once again, a lot of amateurs think every single property
they can wholesale. That's absolutely not the case. Once we call the agent, we're verifying the
condition of the property. We're understanding more about the property. Has it been updated
or is it in its current state? Do the photos match with the current condition? Are those
photos old on the MLS or on the market?
Now, when we end this conversation, you don't
have to close the agent. You don't have to give this agent an offer price. It's very important
you understand that. Because a lot of people get really nervous and think they got to throw out
an offer and they pull something out willy-nilly that doesn't even make sense, that they're
going to have to backtrack on eventually.
Just know, you can leave every conversation,
every discovery call you have with an agent, you can say, "Hey Vanessa," the agent name
is Vanessa. "Hey, Vanessa, I really enjoyed talking with you. Thank you for sharing so
much information about this deal. What I'm going to do is I'm going to get back with my
team. We're going to evaluate this property with all the information we have now. I'm going
to be able to get back to you within a few hours and give you a no nonsense, genuine cash offer
that we can stick to. Does that sound good?"
I've never had anyone tell me "No." They're
going to say, "Yes. That sounds good." Now what you can do is once you end that conversation
and you understand, great, I got a hot lead on my hands. I understand everything about this deal.
I see the photos. They match up with the current condition of the property. I know my competition.
Now what we can do is go to the next step.
All right. We can further analyze the property.
The numbers we're going to get here are the ARV, the repairs costs, your wholesale fee, and our offer price, also known
as the purchase price. All right. Some people may be saying, "Well, Alex,
don't I want to analyze every single deal before I call a real estate agent?"
You can. But it's not recommended.
Because what's going to happen is you're
going to take an hour, two hours, three hours analyzing a property. That's hot. That's on
the market. That's going to go do a wholesaler. If you spend that time, two hours analyzing
it, then 6:00 p.m. Then you don't call that agent that day. You wait till the next day to call
them. Guess what? Myself, my students, my clients, we've all called that agent immediately and
been able to get that deal under contract.
We call the agent first to verify is this house
even on the market's deal? We call this agent to build rapport with that agent. Because if
you just think that a text message or an email will be sufficient in building rapport
with an agent, getting your offer accepted, you'll be sadly mistaken. People
work with who they trust and like.
It's so important that we call the real estate
agents first. We want to do that once again so that we can further analyze the property.
The agent might tell you information about this deal that directly affects the repair costs
that you'll be analyzing for, that you would've just had to assume about before actually having a
15-minute phone conversation with that agent.
We analyze the property after we talk to the
agent and they're open to working with us on the deal and everything sounds
good. This property's distressed and it's going to go to a cash buyer. With
analyzing the property, the first thing we want to do is find the ARV. ARV stands for the After
Repair Value. The property that we're working on, let's say we're working on one property at a
time, that's called the subject property.
Now for the ARV, we need to find comparable
properties. Let me give you an example. Okay. If the subject property we're working on is a ...
Let's say three bed, two bathhouse, all right, 1,200 square feet. That's the property.
That's the hot lead we called on, three bed, two bathhouse, 1,200 square feet.
What we want to do now is find properties that have sold in the last six months,
not two years ago, last six months within a half a mile radius with the same bed, bath counts, in
the same city, in the same zip code plus or minus 20% of the square footage of this property,
so about 1,000 square feet to 1,400 square feet. We're looking at houses that have sold and
that are renovated in that particular area.
Because we're trying to find what is the
future value of this property we're wholesaling once it's renovated by our cash buyer and once
it's resold. Okay. That's important to understand. It's important to understand how the
fix and flip business model works so that you can get the largest wholesale
fee possible and you don't bring silly deals to cash buyers that they don't want.
We find the ARV. If you can compare apples to apples, you're going to be winning. If
you can find other three bed, two baths, 1,200 square feet that are renovated, then
you'll probably be able to find that ARV. This is exactly what we do every single week
with our clients. We help analyze their deals all across the nation. We use this strategy
to find the ARV, which is so important.
Let's just say the ARV was 300,000, for example,
because we found three comps that were at 310, 290, and 300. All right. Now we know that ARV is
300,000. Now for repairs. This is something that no one's great at analyzing for repairs every
single time, every single deal. It's always my goal to get within $3,000 to $5,000 of the
true repair costs of running this property.
Let's say our subject property was a
three bed, two bath, 1,200 square feet, and just need all cosmetic renovation. It
didn't need a new roof. It didn't have a crack slab that need repair. All that needed to
happen was new flooring, paint, redo the kitchen, redo the bathrooms and all cosmetic work.
Paint interior, exterior, some landscaping, nothing major, nothing constructional that we're
not adding square footage to the property.
A rule of thumb you can use to start with and
you're going to want to hone this in over time, if a property needs all cosmetic
work, you can use $30 per square foot. All right. Let's say our subject property
was a cosmetic fixer. You times $30 times 1,200 square feet, you're going to
get an estimated repair cost of 36,000.
You can go ahead and use
your repair cost as 36,000 for this particular deal. You're probably
going to be plus or minus $3,000 to $5,000 away. But it's important that you understand
you don't need to be perfect on your repair estimate because the only person who
knows exactly what the repair estimate's going to be on a house is the actual general
contractor that your cash buyer is using.
I've been working hard at it for a long time.
I can't read mines. I can't predict the future. Don't worry about it. As long as we can
get close, we're able to move forward. As you can see, speed is part of the name of
the game here. We're not trying to be perfect and take days to analyze a property because
good deals go quickly. It's important to get the ARV. It's important to get the repairs
numbers down and I'll give you a tip.
How we hone this repairs number over time is once
we start to get deals under contract, we send them to our cash buyers. We can get feedback from our
cash buyers on how our numbers look and we can ask our cash buyers, how do you estimate repairs?
Now you're going to be able to find the exact dollar per square foot number for each of your
cash buyers that you can multiply times a square footage of the property to get the exact repairs
every single time your market so you can analyze for repairs just like that, very, very quickly.
All right. Let's keep moving. We get repairs. It's cosmetic fixer, 36,000; ARV is 300K. Now
for the wholesale fee, I recommend always aiming for $10,000 or more. That way, if push comes to
shove and you need to negotiate a little bit, you can always shave off a little money off
of your wholesale fee. But at least we're starting with a reasonable amount that you'll be
happy with on each and every deal. $10,000 is a great starting point. All right, 10,000.
Now from there, we're able to know exactly where we need to offer. What we use now,
after doing this for about a decade, we have our own spreadsheets and calculators. We
get the exact dollar from out and we can get the largest wholesale fee possible by knowing
every single number on the deals.
But essentially what you're doing is projecting
what's the profit of our cash buyer going to be, and then making sure it's a profitable deal for
them. It's met their criteria of what they want. Once again, step two, we find those three to five
cash buyers. We talk to them. We find their buying criteria. We find exactly what they want.
That when we find deals on the market, we're finding the exact deals that they want and the zip
codes that they want and it meets the profit that they want. Once again, we use a lot of different
calculators and spreadsheets to calculate this, but I'll give you a simple formula
today. That is a little elementary, but will help you get started in a wholesale
of house in 21 days or less. All right.
The formula is ARV times 70%,
and this 70% is adjustable, I'm about to show you that in a second,
minus repairs, minus your wholesale fee. All right. Let's do that math. That ARV is 300K
times 70. Let me just double check my work. That's 210,000, all right, minus repairs, 36,000 minus the
wholesale fee of 10K and let's calculate all that. All right. 164 Is your maximum allowable offer on
where you're able to offer in this particular deal where you can make a $10,000 wholesale fee.
Now, here's the caveat to this, 70% of the ARV is very, very low and some fix and flippers will tell
you, "Hey, I'm only going to buy it 70% of the ARV minus repairs, minus wholesale fee." But know that
you can go up to 80%. Use that formula with 80%. Today, there are definitely fix and flippers
buying at 80% of the ARV minus repairs and minus the wholesale fee.
Let me just show you real quick just how important that is, because at 70% we can
offer 164. But if I do 70% times 300 once again and we have 210K minus ... Oh, we want to go 80%,
80% that's 240K minus 36K minus 10K. Been a little messy here. But essentially what's going to happen
is we can offer now 194K on that property.
That's a big swing. Okay. What I want you to
notice is depending on the formula our cash buyers are using, we can have a $30,000 swing of where we
have to put this property under contract and sell it to our cash buyer for, okay. That's really
important. When we talk with our cash buyers, they may tell you 70% of the ARV they're willing
to buy minus repairs and the wholesale fee.
But keep in mind you get a deal at 75%, 80%, 82%
of the ARV minus repairs and the wholesale fee. Guess what? Still send it to them. because when
push comes to shove, a lot of these cash buyers are still going to buy these houses at 80% of the
ARV minus repairs minus the wholesale fee. All right. That's how we reverse engineer the deal.
Let's just say on this particular deal, we do all the math. I'll put these numbers here.
We analyze this deal. We got the ARV. We got the ARV at 300,000. We have repairs at 36,000.
We know our wholesale fee is going to be 10K. With all of this in mind, we
know we have to offer at 194. Okay. Boom. Now we know our offer price where we
need to offer on this particular deal. 194, 80% of ARV minus repairs minus our wholesale fee.
We're doing really good here. Okay. Once again, that's 80%. That's going to be 240K. Now
we know exactly where we need to offer, 194K. We can go back to the real estate
agent. This is step six. Call back the real estate agent. The same agent we were
talking to the whole entire time, call him back. I have to call this the close call. The first one
is discovery call. We're building rapport. We're understanding about the property. We're
understanding about the competition.
We'll leave that call saying, "Hey, we're going
to go analyze the deal to go review with our team. We'll get back to you. We'll give you a no
nonsense offer we can stick to." Then we further analyze that property. We know exactly
where we know to offer. Okay. I'm taking some time explaining this for you. But you'll be able
to do this very quickly within 30 minutes on a deal to get these deals under contract and submit
offers constantly on these deals. All Right.
Now we know exactly we need to offer. We can call
this real estate agent and discuss the offer price and discuss putting it under contract at that
number. If you did a great job of finding a distressed house that needs to go all cash because
it's moldy, there's water damage, it's outdated, and the seller is in a distressed situation as
well. There's motivation for this property to sell cash. There's motivation for this
property to sell below market value.
All right. Keep that in mind. When you talk to
the agent, let them know, check back in with them when you give them a call because they might not
remember. You could say, "Hey, this is Alex again with XYZ homes. We talked a couple hours ago and
I just want to let you know, I met with my team. We're very excited about working with you on
this particular deal. We can actually come in on this house today. We can have you represent
us and we can offer $194,000 on this deal."
What you want to do, you might have to
talk them into your offer a little bit. One thing I always like to say is,
"Well, an offer's better than no offer." What I want you to understand is I've had so
many agents tell me throughout the years that, "Hey, that's never going to work." Guess what? I
still submit an offer and it works. All right.
It's our goal. When we're talking and working with
real estate agents and we're using the strategy, it's always your goal to work with the
listing agent who's selling the property. What's beautiful about this process, we're not
dealing with anything off market. I'm not telling you to write up your own contract. In fact, if you
write up your own contract, send it to an agent on a house on the market, you're going to look
silly. You're going to look like an amateur.
When we work with real estate agents,
they write up the contract for us. It's our goal to call this agent back and have
that listing agent write up the contract for you, all right, and represent you as your buyer's
agent. What's really important that you understand is if that listing agent represents
you as your buyer's agent, they're going to make twice as much commission on this deal. That's a
big incentive for a real estate agent to go with your offer versus another offer. All right.
Once again, it's the goal that the listing agent will represent your offer. They make twice as
much commission. Technically they'll become your buyer's agent. Now that listing agent is not open
to doing that. The next best thing you can do is ask for a referral from the listing agent, someone
they know that can represent you, maybe within their brokerage or a friend of theirs.
Why is that the next best thing, when a listing agent refers another
agent to a buyer or sell a property, that agent's going to represent that buyer, for
example, and they're going to get a commission. That listing agent can get a referral commission
typically about 25% of their commission. They could still make a grand, two grand, three grand,
or even more just from making that referral. That the listing agent is still somewhat incentivized
to go with your offer versus another offer.
Listing agent, then a referral from the listing
agent. If you can't get a referral from the listing agent, what's the next best thing for
you to do, to get an offer in on this property is to find an Investor-Friendly real
estate agent that can represent you so you can get your offer in on this house.
Now, one thing to keep in mind, that listing agent on every single house representing
you, that's legal in a majority of states, some states they don't want that listing agent
to represent you as a buyer's agent as well. What you can do, and typically in those states
that broker, there's always a listing broker can then become an intermediary broker or
transactional broker so that the broker can at least represent both sides. You can still
make it incentivizing for that broker.
No matter what state you're in, ask the
agent, they're open to representing you, because sometimes they say "Yes," and then
they'll say, "I'll just have a friend represent you. I'll just have a referral represent you
and they still make it work." That hierarchy, once again, listing agent represents you, if not
a referral. If not, work with an Investor-Friendly real estate agent that can write up your offers
for you, represent you as your buyer's agent.
You can meet these agents in Facebook groups.
Just look in your area, real estate agents, type in your area. Facebook, you can go to real Estate
Investor Association Meetings, just Google Real Estate Investor Association Meeting and your city
name. Then you can attend those. That's where real estate investors hang out. People are interested
in working with real estate investors.
Or heck, you can just go on the MLS, Redfin,
Zillow, Realtor, and start cold calling if you want. But it's a lot easier to just go
to these Facebook groups and say, "Hey, I'm looking to work with an investor from
the agent and put in multiple offers every single week. Is anyone willing to work with
me?" Now you can start getting warm leads and getting people contacting you.
We call back the agent. We agree upon that price. We agree upon terms. Typically, when
we're wholesaling a house or we're competing with other investor offers, a couple things important.
Typically, this seller is going to want a quicker closing timeframe. For some basic foundational
terms that you want an offer typically, like a 14-day close, that means from the day you put your
contract, 14 days later, it's going to close.
Then this is really important. Every single
contract you're starting out, put an inspection contingency in the deal. Most of these contracts
that we use, actually, in fact, every contract I've seen when working with real estate agents
has an inspection contingency clause in there. Make sure that's at least seven days
when we're dealing on the market.
That inspection contingency says, "You're
able to back out this deal if it doesn't pass your personal inspection." That's very
important. That is your backout clause. All right. I don't recommend if you're
just starting out. If you're a beginner and you want to start wholesaling, never submit
an offer without inspection contingency clause. Otherwise, you're technically saying, "Hey, I'm
going to buy this property no matter what."
It's really important to have that clause there
to where a fire happens day two, guess what? You can back out the contract. You're good. Or
let's say you're buying a house and there's tenants in there, or you're looking to wholesale
this house. You want that inspection contingency to be as long as possible. Because let's say you
have only a three-day inspection contingency and the tenants were supposed to move out day five.
But on day four, they tear the house apart. They punch holes in the wall. Technically,
you're supposed to buy that house because it's outside of your inspection
contingency, given that you didn't have any other inspection contingencies. All right. That's
the importance of the inspection contingency and always to work within that contingency. The goal
is to wholesale the house before that is over.
If you cannot wholesale the house before
your inspection contingency is over, pretty much means you found a bad deal or you
didn't find the right cash buyers, just so you know. But if you can't wholesale it within that
special contingency timeframe, the worst thing you do is cancel the contract. It didn't pass your
personal inspection. You're able to be go away, scot-free and go onto the next deal.
All right. That's never the goal. We want to close every single deal we put in a
contract, but I just can't stress. How important that is. The inspection contingency will keep
you protected. All right. Fourteen-day close, seven day inspection contingency,
there we go. Typically, EMD is due, our Earnest Money Deposit, is due within 72
hours of this property being put under contract. It's typically anywhere from $500 to $10,000.
Now, when working with the house on the market, if you do these steps right, you don't have to
put $1 into the deal. If you find three to five cash buyers who are buying deals every single
month, you can put this property under contract and not have to put in the EMD. All right.
Really important that you understand that. You can wholesale this house in 72 hours
once you put it under contract and your cash buyer puts in the earnest money deposit.
Once we talk with the agent, we get to that price. Let's just say in this example, the listing
agent is writing up the contract for us. What you want to do now is be professional and
send the offer terms via email to the agent. Send the offer terms via email to the agent. The
agent can put those offer terms in the contract and the agent writes to that contract
and sends it back to you via email.
