As investors, we are always looking for motivated sellers. People needing to seller their house fast and willing to take substantially less than market value. We want to buy at wholesale prices. Maybe you even have a sign or two up around town or a classified ad that reads "I Buy House Fast for All Cash".
Unfortunately, most sellers are not sophisticated when it comes to the real estate industry. They might have a decent understanding of the retail market but don't even know a wholesale market exists for residential homes. As a wholesale investor, your offers are turned down four out of five times, if not more often.
Wholesaling is often an entry point for new investors, those that are working at investing part time and can least afford to spend time analyzing deals that will never get off the ground. Being upfront with sellers from the beginning can save new wholesale investors a lot of time and frustration.
Often, I see investors spend several hours preparing to make a wholesale offer only to have it turned down without a counter offer. You can save yourself a lot of needless work by explaining upfront that you are a wholesale buyer. Make it your up front practice to explain that you are a wholesale buyer before making an offer.
Instead of driving across town to look at a house and then doing a market analysis followed by writing an offer, spend your first few minutes explaining your investment business model.
Explain that you serve a purpose in the industry but that you are not a retail buyer. You don't need to get qualified for a bank loan. You will pay cash. And you can close in as few as three days. You help people out of really bad situations but only at wholesale prices.
Automobile sales make a good analogy. Most people understand the automobile supply chain. Manufacturers sell to dealers at one price and dealers mark up the price to retail before selling to the end buyer. When it comes time for a new car, owners trade their old car in at wholesale prices to avoid the work of selling it at retail them self. That is the service you are offering. To buy their house at wholesale when they can't find a retail buyer but need to get out of the property fast.
The time to do this is when you have the first telephone call with a seller responding to your advertisement. You already know that most sellers aren't desperate enough to accept your low-ball offers. Instead of doing the up front worked needed to make an offer that will be rejected, tell them that you will be making a wholesale offer. Ask them if they are still interested. If they are, you can then go look at the house, do a market analysis, and make an offer.
It's as easy as stating - "You might be familiar with how wholesale works in the auto industry. If you buy a large fleet of delivery trucks, you deal directly with the manufacturer to negotiate a wholesale purchase. Otherwise, you buy from a dealer selling at retail prices. Another part of the auto wholesale market is when you are ready to sell your car to buy another one. You have a choice. You can put a "for sale" sign on your current car and run classified ads to sell it at retail. Or you can trade it in with a dealer that pays you the wholesale value. It's your choice."
"I offer that choice with real estate. While I am interested in helping you sell your house, I need you to understand I will not be able to offer you the retail price. If you are interested in selling wholesale, let's discuss how I can help."
It's honest, straight forward, and without gimmicks. By making it clear up front that you are a wholesale buyer, you avoid wasting both your own time and that of a seller expecting a retail offer.
Please leave a comment if this article was helpful or if you have a question.
Author bio: Brian Kline has been investing in real estate for more than 35 years and writing about real estate investing for 10 years. He also draws upon 30 plus years of business experience including 12 years as a manager at Boeing Aircraft Company. Brian currently lives at Lake Cushman, Washington. A vacation destination, a few short miles from a national forest. With the Pacific Ocean a couple of miles in the opposite direction.