Wholesaling Real Estate Blog
Hey there Everybody!
Hope you all had a fabulous holiday and your 2012 is off to a great start!
I’ve got a brand spanking new email for you guys to enjoy on this fine (but chilly) Friday evening. In this installment, I answer a question asked by one of my coaching students about how to protect your EMD (earnest money deposit) in the event that your end buyer backs out of the deal. Check it out…
If you have questions or comments, leave them below and I’ll do my best to answer!
 | George on Friday Night Reader Mail: Reo Wholesaling Questions Hi Steph! With the high price of Real Estate in Southern California... Will wholesaling REO'S work there? I plan to move there ... |
 | Carlos on Friday Night Reader Mail: Reo Wholesaling Questions Hi Steph! I found a good investor friendly title company in my area, and I met with them last week. They ... |
 | Antonio on Friday Night Reader Mail: Reo Wholesaling Questions I need to know something about those investor comps you mentioned being the lowest comps in the neighborhood. I did ... |
 | Stephani on Friday Night Reader Mail: Reo Wholesaling Questions Hi George, Your questions aren't stupid....everyone has to start somewhere.
To answer your question about showing the property to your end ... |
| Stephani on Friday Night Reader Mail: Reo Wholesaling Questions Hi Robert, I'm not sure what you mean by a sellers list, but if you're looking for leads you can check ... |
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On January 06, 2012 at 5:20pm, Steve Walter said...
Steph – Always enjoy your videos. Good information. Thanks!
On January 06, 2012 at 5:24pm, Stephani said...
Thanks Steve- Happy New Year!
On January 06, 2012 at 5:44pm, Jeffrey Smith said...
When a wholesaler is just starting out and has no established reputation for finding great deals, why would a wholesale buyer put up non-refundable earnest money with no inspection contingency? The wholesale buyer doesn’t know whether it is a good deal until it is inspected.
On January 06, 2012 at 5:50pm, Stephani said...
Most serious, cash buyers just need to walk through the property themselves to know if it’s a good deal, and they inspect it before they make the offer.
The wholesaler’s reputation has nothing to do with it- it’s either a good deal and the numbers work, or it isn’t.
You can give your end buyers an inspection period if you want to, but you’re setting yourself up to get burned if they change their minds.
Take care,
Steph
On January 09, 2012 at 11:35am, Suite Freedom Properties, LLC said...
Jeffrey,
I just closed my first deal about a month ago. The original contract was for $7,800, and I got an assignment fee of $7,500 — of which $1,000 was a non-refundable deposit. The buyer DID get to “inspect” the property before committing. We met at the property, he walked through, asked questions, etc. When I went over the paperwork (after he’d committed), it plainly states that the “inspection period” ends with the signing of the contract. Trust yourself more and doubt less! Happy and prosperous 2012!!
On January 09, 2012 at 3:15pm, Stephani said...
Congrats on your first deal, and thanks for the comment!
How did you find this deal?
On January 06, 2012 at 6:35pm, jack barnett said...
hello steph davis happy new year to you lady!
On January 06, 2012 at 6:41pm, Stephani said...
Thanks, Jack- same to you!
On January 06, 2012 at 7:56pm, Carl said...
Hi Steph…..HNY2U2! Thanks for the great video as always!
On January 07, 2012 at 6:04am, Stephani said...
You’re welcome!
On January 06, 2012 at 10:05pm, Al Winston said...
Great Information as usual, Steph. Hey did you say before the holiday started that you were going to be visiting relatives and/or friends in St. Louis? Are you from St. Louis as I am? Have you done any deals here? Please let me know when you plan to come back or if you decide to train or do business here.
On January 07, 2012 at 6:05am, Stephani said...
Hi Al, My sister, her husband, and my nephew live in St. Louis, so that’s where I’ve been going for XMas for the last few years.
I’ve never done any deals there, but will keep you in mind if I ever decide to move operations up that way!
On January 07, 2012 at 2:25am, Antonio said...
This is a two part question.
Part 1:
I found someone with a home for sale. It is a nice 3 bed 1 bath home in great condition. There are hardly any repairs that needs done to the home. I asked the owner how much repair work is needed on the home if any. He did not have an exact amount. I came up with a figure of at least $500 or less in repair work based on what I saw. The owner agreed it may not even need $500 in repair work. I finally got an agent to get me the value on the home, which is worth $65k to $70k. The owner wants $68k, but is willing to negotiate a lesser price. I want $7k assignment fee. I came up with an offer of $47, 530 for a home worth $65-$70. Should I bring my assignment fee lower? Or should I change 70% of FMV to something lower?
Part 2:
Who do I contact to find out when and where all the real estate auctions take place in my county?
On January 07, 2012 at 6:12am, Stephani said...
If the owner is asking full retail value, they probably aren’t that motivated to sell, but you can always try and throw a low offer out there and see what happens. I also would not be relying on a Realtor to determine the ARV value for you. You always want to do your own due diligence to determine value. If you don’t have MLS access you can use free sites like Zillow, Trulia, and Homegain to look at recent sales.
The amount you should offer really depends on what investors are paying for similar properties in that area. The 70% formula works in some markets, but you have to be much lower in others. Once you get out and start talking to some active buyers, you’ll have a much better idea of what they are willing to pay, and what formula you should be using.
As far as the auctions go, you should just be able to Google “X county foreclosure auctions” to get the info you are looking for. Or try your County Clerk’s website.
On January 07, 2012 at 6:17pm, Antonio said...
I don’t have access to MLS. I have done what I could to run comps on a few properties using Zillow, which many investors hate because of the inaccuracy of the information they say comes up on Zillow. How many properties do I need to comp to figure the value on the homes I want to get under contract? The last house I ran comps on did not match any of the homes in that area. The distance was far apart. The year built did not match because the other homes were one year or a few several years in difference. The square footage was way off compared to the target property. The recent sold homes were from more than six months ago. The rest were recent sold some years ago. These are the problems I run into when running my own comps. Although the seller is asking for retail price, he did say he is willing to negotiate a lesser price.
And as for the auctions, I only wanted to use them as a source to find cash buyers. Unfortunately for me, most of the auctions are done online and I am not allowed access to the buyers contact information. Had I been able to attend a live auction, I would have been able to meet these buyers in person to get them on my buyers list.
On January 08, 2012 at 7:33pm, Stephani said...
From my experience, Zillow’s recent sales info is pretty accurate- it’s the “Zestimate” that isn’t reliable.
The more recent comps you can get- the better, but if there aren’t very many available, you just have to work with what you have. When I go into a new neighborhood and I’m unsure about the values, I find it easiest to locate some active investors who are buying in that area and just ask them what type of deals they are looking for and where their numbers need to be for it to be a good deal.
As far as finding the cash buyers from the auctions, if you have the addresses of the properties that are being sold, you can look them up in the tax records and see who bought them. Then send them a letter or try and dig up their contact info on Google.
On January 08, 2012 at 9:31pm, Antonio said...
So if I run comps and come up with only two properties that come close to my target property, I can go with that since that is all there is to work with?
On January 09, 2012 at 3:11pm, Stephani said...
It depends on how comparable the comps are to the subject property and how recent they are. Either way, you can still use them to get a ball park estimate of the ARV of the subject property. Like I said, though, if you are still unsure- the best way to find out what to offer is to locate some buyers who are looking for deals in that area and just ask them what their criteria is.
On January 20, 2012 at 12:57pm, Antonio said...
I found an investor that is interested in buying properties in my town. I have a list of vacant homes I never put under contract. I never had buyers showing any interest in my area until recently. You say it easiest to locate some active investors who are buying in that area and just ask them what type of deals they are looking for and where their numbers need to be for it to be a good deal. The investor/buyer wanted the address on the homes, so he can do his homework on the home before making a decision to make an offer. This way he would be able to tell what he would pay for the property. Isn’t it a bad move to give the buyer the address of the home so they can investigate for themselves, especially when these homes are not under contract?
I wouldn’t want to give this guy the exact address fearing this investor will take the property themselves and wholesale it since I never did put the homes under contract. What would happen if I made up a story that I did have the home under contract just so he would not consider going behind my back? Do investors ever check to make sure the wholesaler have homes under contract like they say they do? And if I ask that one investor how much they would pay for the property, can I go with that one buyers criteria as to how much he would pay for the home? I am just saying I am not dealing with a group of investors at one time. The value of the house is on what the house would sell for right? So I figure I use whatever price the buyer would pay for the home minus repair costs minus my assignment fee. This would be what I would pay to the original seller then go back and add my assignment fee on top of my contract price which would still be less than what the buyer was willing to pay. Would this work out or not? I don’t trust giving out the home address, but I could just give out the street name, city, state, zip code and description of the house. But not the direct home address. Let me know if this is a really bad idea.
On January 23, 2012 at 6:58am, Stephani said...
I would just be honest with him and let him know you don’t have anything under contract yet, but when you find something that matches his criteria you will give him a call. Then once you find out what he is looking for, you can go out and make offers that reflect his buying criteria, and once you get something under contract- give him a call and let him know.
On January 07, 2012 at 6:25am, DJ said...
Steph-Happy Prosperous New Year to you too! You always give great info, thanks DJ
On January 08, 2012 at 7:26pm, Stephani said...
Thanks, DJ- Happy New Year!
On January 07, 2012 at 1:48pm, Marie Joseph said...
Any suggestions for the best way to do auctions, remotely? Do you recommend auctions as a way to find deals?
On January 08, 2012 at 7:26pm, Stephani said...
Most foreclosure auctions will require you to have cash to purchase the properties, so that’s something to keep in mind. Also, I believe that when you buy at a foreclosure auction, there can still be liens attached to the properties, so you’ll need to research the title (or have a title co do it for you) so you know what you’re getting yourself into. I know quite a few people who have gotten burned buying properties at auction because they didn’t do their due diligence. So….be careful!
On January 07, 2012 at 2:01pm, Kevin said...
Great info in your latest video Steph! Love all your videos that I’ve watched.I just started a marketing campaign for sellers and buyers and will keep all your info in mind. Can’t wait to celebrate my first deal that’s coming!
On January 08, 2012 at 7:21pm, Stephani said...
Let me know when you close your first one- would love to feature you as a Success Story!
On January 08, 2012 at 6:49pm, alonzoman said...
Thank you,for the valuble information.
On January 09, 2012 at 3:05pm, Stephani said...
You’re welcome, Alonzoman!
On January 08, 2012 at 9:45pm, Antonio said...
Has anyone ever wholesaled preforeclosures? The owner is close to losing the property to foreclosure. The owner still has possession of the property before it is gone for good. Does this means I can still make offers on the property and put it under contract? What is the downside to wholesaling preforeclosures compared to wholesaling deals from private sellers that are not in the stages of foreclosures?
On January 09, 2012 at 3:13pm, Stephani said...
You need to find out what they owe on the property and what the property is worth. Many people who are in pre foreclosure owe more on their house than what it is worth, so the only way you can make money with it is if you do a short sale on the property.
On January 08, 2012 at 11:01pm, anduwan said...
Hello stephani. I wanted to know why investors hate properties that are listed on mls. Also what’s the best way to go about finding distressed homes? Thanks
On January 09, 2012 at 3:04pm, Stephani said...
Hi Anduwan,
None of the buyers I sell to have issues with buying MLS listed properties. As long as they are great deals and the #s work for them- they don’t care where the deals come from.
My preferred method for finding properties is the MLS, but there are tons of different ways to find deals; direct mail marketing to absentee owners, probates, pre-foreclosures, etc., bandit signs, online marketing… the list goes on and on. Whatever method you decide to go with- just keep in mind that you need to be consistent with your marketing efforts if you want to see good results.
Take care,
Steph
On January 09, 2012 at 7:58am, Jill said...
Your video questions are very helpful. My question is how do you advertise for and then are able to access the properties to show… before you actually buy them. Wouldn’t the prospects just bypass you and go directly back to the owner or bank or realtor.
And are there other addendums that you now have to attach to your Contracts going into 2012
Thanks for all your help
On January 09, 2012 at 2:58pm, Stephani said...
Hi Jill,
When you have the property under contract with the bank, the agent will mark the listing as pending in the MLS, and will stop taking offers on the property. As long as you have a ratified agreement with the bank, your buyers can’t go around you.
As far as showing the property to your perspective buyers…. if you’re an agent you can just show it yourself…if not- you can usually get access to the property to do your inspections and show it to your buyers then. Most of the wholesalers around these parts (Tampa) just get the lockbox code from the listing agent and then give it to their buyer so they can get inside. I’m pretty sure that’s against the rules, though, so be careful if you decide to go that route.
Take care,
Steph
On January 09, 2012 at 12:42pm, Danielle said...
Hello Steph,
I love your info. I want to know what to tell buyers while they are waiting for you to find properties. Also i am new and never have met my buyers.
On January 09, 2012 at 2:48pm, Stephani said...
Hi Danielle,
Just let them know you’ll contact them when you have something that fits their criteria.
Take care,
Steph
On January 09, 2012 at 2:07pm, Boobs McGee said...
Yo, Steph! Another great reader mail tip! Simple, but hugely important. Folks, you’ll do well to follow Tampa steph’s advice!
…Boobs
On January 09, 2012 at 2:46pm, Stephani said...
Thanks for the input, Boobs!
Hey- I have a really cool video of a hippo to show you…
On January 20, 2012 at 7:28am, Zac said...
Boobs McGee, huh? As in “You’re watching Channel 4 News with five-time Emmy award-winning anchor Ron Burgundy and Boobs McGee.”?
On January 09, 2012 at 4:17pm, anduwan said...
Thanks stephani, I’m glad I’m following you here also on facebook. Have a good day.
On January 10, 2012 at 8:40am, Reginald Weithers said...
Happy New Year Steph,
I appreciate all the effort you put into your video commentary on real estate just for my benefit.
Not looking for reward or fame but just the simple opportunity to help others along the way.
LOVE you Steph for all you have done for me. (Sure others feel the same way too)..
Keep up the good work, God bless you. 2012 will be your year to shine.
On January 12, 2012 at 11:40am, Stephani said...
Thanks so much for the kinds words, Reginald- I appreciate it!
Happy 2012 to you!
On January 10, 2012 at 10:23am, gordon said...
Have you ever used websites to have motivated sellers contact you? do you have your own
website like ” we buy houses”? just curious if it works.
On January 12, 2012 at 11:45am, Stephani said...
Hi Gordon,
I prefer to just go after properties on the MLS, but I do know investors and wholesalers who use the internet to find leads. It definitely works, but only if you know how to get traffic coming to your website. You can also buy leads from sites like webuyhouses.com. I know people who do well with those type of services, too, but from what I understand- they can be a bit pricey.
Take care,
Steph
On January 11, 2012 at 2:50pm, dannyw said...
how can i get stared in wholesaleing REO
On January 12, 2012 at 11:47am, Stephani said...
If you look under the FAQ tab on this site, there are a bunch of videos that talk about REO wholesaling.
I also have an ebook that walks you through the process: http://www.flipthisreo.net
Take care,
Steph
On January 12, 2012 at 4:45pm, Carlos said...
Hi Steph,
I am new to the wholesale real estate arena and I have two questions.
First question: Is the EMD (earnest money deposit) basically the amount written in the (assignment fee portion) of the assignment contract?
And does the original seller of the property have to be present at closing? Thanks again!
On January 16, 2012 at 2:18pm, Stephani said...
Hi Carlos,
the EMD is the deposit that you put down when you are making an offer. It is usually held in escrow at the title company, and then credited towards the purchase price at closing.
The assignment fee is the profit you are making when you flip the property to another investor. So, say you have a property under contract for 40k and have a buyer for 45k….you would assign the contract to the end buyer for an assignment fee of 5k, which you would get at closing.
As far as the seller having to be at closing- they will need to sign the closing documents, but that can be done via mail if they aren’t able to be there at the closing.
Take care,
Steph
On January 12, 2012 at 8:09pm, Daniel said...
When wholesaling a HUD property I understand how the “double” or “simultaneous” closing works but in my area (Nashville) you are required to “own” the property for 2 years I believe before it can be resold. In not sure if it is like that everywhere or just my area if so how do you get around that?
On January 16, 2012 at 2:20pm, Stephani said...
I’ve never heard of a rule like that with HUD properties. As far as I know, you can flip the property any time after you buy it.
On January 13, 2012 at 6:40pm, Denise said...
Hi Steph! Happy Friday 13Th!:
First of all, I would like to THANK YOU for your blog, all your videos, and your ebook (which I purchased–great info!), and for being so candid about the wholesaling experience!
You would be so proud of me! I’ve gained access to my local MLS, now have great access to non-listed REOs thru my p/t endeavor, and I have and am continuing to build my list of potential buyers. My biggest hang up to submitting offers is not knowing how to navigate the reliance on OPM (other people’s $$) to come up w the EMD. Would I essentially have to “date” only one buyer if I wanted to make offers on properties? What if I want to broadcast the deal to the highest bidder…and that is all to say if it’s accepted by the bank? How would you engage a buyer on a potential deal when you havent made an offer to the bank because you lack the $$ for the EMD?…(whew! that one wore me out!
Please forgive me if you covered this very thing in one of your vid’s…got thru many of them but not all and I’m tired of watching the game…I am ready to participate!
Thanks so much,
Denise
On January 16, 2012 at 2:23pm, Stephani said...
Hi Denise,
Glad to hear you are getting out there and getting the ball rolling- congrats!
Have you considered bringing a partner in if/when you get an offer accepted? Most of the time they will not cash your EMD check until AFTER the offer is accepted. If you have a really good deal that you can make some $$ on, you can partner up with someone and have them supply the deposit and then split the profits. I did that several times when I was just starting out and didn’t have $$$ for an EMD. I made less on the deal, but it was better than nothing…
Take care,
Steph
On January 25, 2012 at 6:44pm, Daniel said...
I am working on my 1st property which is in pre-foreclosure and is set for auction a couple weeks from today I finally was able to inspect the property today for 1st time due to occupants still living there so I have not put the property under contract but will be doing so asap now that I’ve seen the property. Is there any advice or you or anyone can give me to help get through this process? Thanks
On February 01, 2012 at 12:25pm, Charles Thomas said...
Step,
If i buy a house from a private seller and sell the property to an cash buyer, can i do a double closing
at the title company instead of assigning the property for a fee?
On February 02, 2012 at 3:47pm, Stephani said...
Hi Charles,
Yes, you can do a double closing instead of assigning the contract. Just keep in mind that there will be two sets of closing costs to pay if you decide to go that route.
Take care,
Steph
On February 02, 2012 at 2:40am, anduwan said...
hi steph! I have a question, can you wholesale a property if its listed with a agent? Is there a way to wholesale a foreclosure or preforeclosure if so what are the steps and how can I obtain listings on the mls? Thanks steph
On February 02, 2012 at 3:45pm, Stephani said...
Yes, you can wholesale properties listed on the MLS as well as foreclosures and pre-foreclosures. If it’s an REO, though, you can’t assign the contract so you have to close on it first, and then immediately sell to your end buyer. You can get listings by contacting a Realtor and having them email them to you.
If you click on the FAQ tab on this blog, there are a bunch of videos where I answer questions about wholesaling REOs.
Take care,
Steph
On February 02, 2012 at 5:49pm, anduwan said...
Thanks Steph!