Making Money and Finalizing the Wholesale Process

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If you want to do more deals, show your potential end-buyers the money! By presenting your deals in a specific way, you can showcase how the end buyer is getting a great deal while you are. Creating win-win scenarios will not only help you close more deals, but it will continue to build your reputation as an upstanding local investor who is known for doing safe and secure deals, where everyone benefits. 

Example of wholesale assignment to a fix and flip investor:  $400,000 ARV

  • $50,000 Repairs/Holding costs
  • $40,000 Profit upon fix & flip
  • $10,000 Assignment fee
  • = $300,000 Purchase Price

*Running these numbers to present to an investor also calculates our Maximum acceptable offer. Suppose we know that a purchase price of $300,000, above, makes us a $10,000 assignment fee. In that case, we may offer $280,000 initially, to then negotiate to the $300,000 range. Any amount we can get the property under contract below $300,000 becomes additional profit on our assignment fee. 

Power Team
Even as a wholesaler, we will need a powerful team of professionals to help us build a system for earning consistent and recurring income. For help with our contracts and making offers, we will need one or many realtors on our team. They will need to be well-versed in the strategy of wholesaling and should understand how we make many offers to find one great deal. In addition to good realtors, it will be necessary to have a good real estate attorney and or title company that can complete your wholesale assignments with ease. They should understand how to do a double close, should be able to offer transactional funding, and have the proper state-required contracts to get the deal through completion, ensuring you get your proper fee and are protected from liability as much as possible. Next, having a good contractor or set of contractors is always beneficial as we can get estimates on repair work. Selling many deals will involve knowing how much repairs will cost and how long they will take. Having a team that can prepare these items can be highly beneficial when presenting to another investor. Not to mention, if you continue finding work for local contractors, they will always be willing to help you first and are more likely to give you a break on costs since you help them get consistent work. We also may have use for inspectors, appraisers, escrow agencies, county officials, etc. These individuals will allow us to complete transactions and be a great lead source. They are working with many other investors in our local area.

Contract Process

  • You will begin with a signed purchase and sale agreement, with your name “and/or designated entity” as the Buyer.
  • The contract will include all other exit clauses necessary to provide time to market the deal without risk to you as the agreed Buyer.
  • The agreement signed by both parties is sent to the real estate attorney or title company, who will serve as the closing agent. 
  • Market the deal to your potential end-buyers, finding a buyer interested in your deal prior to expiring exit clauses. 
  •  * If the timeframe to exit the contract is close to the end (2-3 days), and you still do not have an end buyer, you will need to speak with the seller. Offer to exit the contract as per the agreement or ask if the seller would like you to continue searching for a buyer. Allow them to market/show the property independently and give you the first right of refusal to match or beat any offer they receive. This allows the seller to market their property without fear of it being pending or unavailable. At the same time, you will have additional time to locate a potential end-buyer.
  • Complete the assignment of contract agreement or the second purchase and sale agreement and get to the closing agent.
  • The new end-buyer will fulfill any original purchase and sale agreement requirements. The deal will close on the specified closing date.
  • The closing agent makes sure all funds are dispersed appropriately, and the assignment fee is paid!

Properly executing your paperwork and having a solid team of professionals will always be necessary to complete any real estate transaction. Marketing the deal and showing the benefit to your end-buyer will always increase the likelihood that they will purchase and that you will get paid. Our last section will go into how we exit the deal and earn our fee.

Sell the Paper
You have found a distressed seller. You have a great deal under contract. Now we must get the deal across the finish line. Our last step in the wholesale process is selling the paper, assigning the contract for a fee, and completing the transaction. Let’s look at how best to go about this. 

Building your Database
Many new investors fear finding a buyer for their deal. They are nervous about a lack of experience or a lack of knowledge. Wholesaling is a strategy in which we will always need someone else’s money, so we need to overcome our mindset and think from a place of abundance.

“Get the property under contract. Let your investors tell you if you have a good deal!”

These words couldn’t be truer for wholesale assignments. If you have a good deal, the money will follow. But how does one find those investors if you are new? We network, and we market. Then we network, and we market. Finally, we network, and we market. 

Tell people what you do. Hand out business cards, attend local Real Estate investment association (REIA) meetings, property auctions, call investors with for rent properties, talk to the construction teams at your local hardware store in the mornings, signs on your car that say “We Buy Houses!” with a phone #. 

One of the best ways to start building your database is to work smarter, not harder. You want warm investors calling you for your help, not you cold-calling other investors hoping to find a needle in a haystack deal. Posting ghost advertisements will get your phone ringing! 

Contract for Investment Property for sale!
Experts say it’s worth $300,000
Must sell now for the first $280,000 that calls!
For tax reasons, I cannot keep the property.
Call me today! Phone #

You may be thinking, “Great, that sounds like it will work!” or “Oh my gosh, what if someone calls?” Any investor reaching out to your ghost ad hopes to find a discounted property when they call you. So, you have no properties, no money, and no credit. Still, now an investor is calling your phone asking about your discounted properties for sale. What do you say?!

“Hi, my name is ___________, I’m a real estate investor like you, but I just sold the last property I had available. WHAT KIND OF PROPERTIES DO YOU TYPICALLY PURCHASE?”

Now you have an opening and a way to learn about your buyer and what they require for a deal. Keep this info in a database or spreadsheet every time you meet a new investor or speak to one on the phone, in a coffee shop, at a REIA, etc. You can now market specifically for deals that you know an investor wants or refer to your list for potential assignments as it grows. You find more and more sales coming down your pipeline. 

Packaging the deal
We have already spoken on having the numbers and expenses prepped on any deal under contract to help make the end-buyer enticed to purchase and therefore pay you a fee. One last missing piece is having the financing for the deal available. This can be done by taking the deal to a mortgage broker or a hard money lender and asking them if they have any available products to help obtain the property.

You will have a real estate professional vet the deal you have under contract by going this route. If they won’t lend on the deal, then maybe it’s time to move on to another property. If they are willing to fund the deal, you can advertise and market the transaction with approved funding in place! This will exponentially increase your ability to seal the deal for an assignment fee and may allow you to charge a higher assignment fee.

Wholesale assignments are one of the most basic principles in real estate investing. This strategy is all about getting paid for finding a deal. We focus on acquiring properties under contract at a deep discount to sell them to another investor for a lesser discount. By creating a winning situation for our end buyer, we not only can be profitable, but we can build a connection that encourages continued teamwork and a sharing of wealth.

This strategy involves using none (or little) of your own money or credit so that you can quickly earn an income without the headaches of repairs, timelines, tenants, or trash. Although Wholesale is an earned income strategy, it is time to find the next as soon as you close a deal. It is an exit strategy suitable for any real estate investment. The more you learn how to structure these deals creatively, the bigger problems you will solve. The bigger the problem you solve, the bigger the paycheck!

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