Why No One Trusts Wholesalers & How To Beat That
Wholesaling is hot. It’s a fantastic way to get started in real estate. More opportunities appear to be popping up to be flipped as wholesale deals for those who want to scale their businesses.
One of the biggest hurdles some investors will have to overcome to cash in on these opportunities is the lack of trust the rest of the industry has for wholesalers. Realtors, rehabbers and rental property investors often have little faith in them. That can be a real drag on business, even when you are offering awesome deals. Of course, it is not too unlike investors, landlords, Realtors and real estate attorneys or mortgage lenders in general. So, why the lack of trust? How do you beat it to close more deals?
Value
Whether it is out of greed or not understanding the local market, one of the top complaints about wholesalers is that they are asking too much for their ‘deals’. Be sure you know the current value, ARV, and current market trends. Know what other investors are willing to pay as a percentage of ARV for real deals today. Offer value and you’ll move plenty of properties.
Property Condition
As a wholesaler you may never lift a hammer or swing a mop, but you’ll move far more properties if you get a good handle on the current condition and pass the most comprehensive and accurate information on to your end buyers.
If all you send is a couple of photos, they are going to have to assume the worst case scenario. That is that all the guts are bad and they may have to do a complete teardown. That pricing obviously isn’t going to line up with what you are asking in most cases.
So, is it just cosmetics? How is the expensive stuff like roof, plumbing, AC, and electrical?
Transparency
Lack of transparency is a big roadblock. Many investors have dealt with wholesalers who are tangled up in all types of chains and who don’t know what they are doing. Most wholesalers out there today don’t want to provide any transparency into their end of the deal. Typically because they are just trying to assign contracts and are not using transactional funding to buy and resell and protect their interests. By double closing you can avoid being cut out of the deal and protect your profits. So, you shouldn’t be too averse to sharing what you are making and being open to some negotiation.
Short Term Thinking
Most people in the industry are only thinking short term. They are only thinking about making money on this one deal. They are only thinking about the bills next month, this year’s goals or maybe 5 years out. If you can show buyers that you are serious about long term relationships and offer deals that reflect that everything changes. You earn trust. After a couple of deals, your buyers will just know that this is a buy and will take it. Sure, you may make a little less on this next deal, but you’ll may turn that buyer into someone who buys ten a month from you every month.
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