If you want to know How To Wholesale, make sure you learn these clever tips.
When people think of real estate investing, they usually imagine something along the lines of house flipping or long term buying and holding. However, a crucial part of the real estate world that is often overlooked is wholesaling.
As you might know, wholesaling is the act of finding a property and then, instead of buying it, putting it under contract and finding a buyer to close in your place.
Wholesaling bares much less risk than standard house flipping and can be appealing to people that have not yet built up a sum of expendable income.
Below are a few critical ways to improve your mindset and execution when wholesaling.
How To Wholesale | #1. Â If Your Offer Gets Rejected, Donâ€™t Give Up!
Price negotiation can be a tricky ordeal. You might have to balance submitting a more appealing offer than the other bidders, meeting the sellerâ€™s needs, and making sure that the price doesnâ€™t exceed your MAO, or maximum allowable offer.
You might haggle back and forth for a while before reaching a stalemate. The sellerâ€™s bare minimum asking price is still higher than your MAO and thereâ€™s no budging on either side. So you part ways and forget about the house right?
Well not necessarily. You should always check back with the seller a few weeks to a month later. If the house still hasnâ€™t sold, the seller might be willing to negotiate down further than he originally wanted to.
How To Wholesale | #2. Ask Your Buyer To Prove His Intentions
One of the greatest parts about being a wholesaler is the fact that you donâ€™t have to spend any of your own money. To make sure that this happens, you canâ€™t just simply find a buyer.
Even if the buyer agrees to purchase the property, he might back out do to a finance problem. Other times, buyers will take advantage of sellers. A buyer might agree to purchase your house, and is telling other sellers the same exact thing. In the end, he chooses the house that he wants and leaves the otherâ€™s hanging.
There are a couple ways to avoid be taken advantage of:
Proof Of Funds
If the buyer agrees to pay in cash, have him provide a proof of funds letter insuring you that he does indeed have the money to back up his offer. If he continually declines, you might want to look elsewhere for a buyer.
Earnest Money Deposit
An earnest money deposit is exactly what it sounds likeâ€”itâ€™s a sum of money given by the buyer up front to ensure that he intends to buy the home. In a competitive market, the deposit is usually around 2 to 3 percent of the purchase price.
How To Wholesale | #3. Make A Backup Plan
Even if you get a proof of funds or an earnest money deposit, deals can still fall through. The best thing you can do is...