While unfortunate to note, not many wholesalers truly know the unmatched value they offer to sellers. In this short but awesome episode, virtual investing coach Lauren Hardy gave a clear insight into the massive value only wholesalers can provide.
Not only that, she also shared how she handled a challenge she encountered. If you’re unsure about the value you provide as a wholesaler and not sure if you’re doing wholesaling right, this episode is for you!
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Understanding The Value You Deliver As A Wholesaler . . . And How To Always Win The Deal
I’m a virtual real estate investor. What that means is I buy, flip and wholesale virtually, meaning outside of my backyard. For me specifically, I go out of state. I want to talk about how wholesalers help sellers in their transactions. The way that wholesalers can help sellers is that we offer convenience in time. I like to illustrate this with my own personal experiences as being a motivated seller. The stories that I have to tell will help you realize where your place is as a wholesaler and how you can help sellers as well.
I have been a motivated seller more often than you might think. That’s because I started out as a house flipper. As a house flipper, we are buying lots of deals. Some of them are home runs and some of them you wish you’d never bought. I have had both experiences. Luckily, I’ve had more home runs. On a couple of occasions, I have bought some homes that I wish I could have thrown away. I want to give an example of one in particular so you can see how had I had a wholesaler come to me and offer me cash for that property, I probably would have sold it to them.
I bought this property and I call it Roanoke because it was off of Roanoke Street. It was an out-of-state property that I decided to flip. I got this property and I thought I had a smoking deal. I bought it for $70,000 and it was worth $150,000 if it was fixed up. I didn’t think it needed that much in repairs. I thought, “This is a no-brainer. I’m going to put about $30,000 in it and profit the rest. It’s going to be an easy remodel. It was a fairly newer home. It’s not that it needed that much work, it just needed some cosmetic stuff. What could go wrong?” Everything went wrong.
The way wholesalers can really help sellers is to offer convenience in time.
I bought the home and honestly, anything that could go wrong did. The house needed way more repairs than we had thought. The house smelled like cat urine. It was awful. We found out later cats were living in the walls, which was sad. The first contractor we had taken my initial deposit and ran with it. He didn’t do any of the work and he ran. Still to this day, I haven’t gotten my money back. That delayed us several weeks because then we had to go find a new contractor to give us a new bid. We bid on three new contractors, so that took time.
Between the holding time, the holding costs, the headache, the stress, not to mention at one point, this property was vandalized. I wanted to unload this thing. I would have paid somebody to take this house. I did pay for it. I was stubborn. I went through the entire remodel and fixed it up. The house looked beautiful, but it took four months to get this all done. By the time I listed it to sell, I wasn’t getting the offers that I thought I would get. We even had to go through a couple of escrows because our first buyer backed out.
At this point, I had been holding onto this property for seven months. I’m a professional house flipper. I’ve done hundreds of these things and I still have found myself in the position to be a motivated seller. I looked back and I remember at that time, I go, “Why didn’t I just wholesale this to somebody else? I probably would have made money off of the wholesale.” Instead, I thought, “I want to take my luck on this and gamble on it. I’ll make more money.” I did what I did.
In the end, you wouldn’t believe it. I didn’t make a dime. In fact, I lost over $10,000 on that house. To illustrate, I thought that this would be a helpful story for you guys, that even the savviest investors have properties that we want to unload. This was a particular nightmare property for me. When you are talking to a seller who hasn’t flipped hundreds of homes, maybe this is the only house that they own or maybe they only own a couple, and this is one of the first sales they’ve ever done, that is stressful. Construction, managing everything, managing a home being put on the market. Not a lot of sellers have that type of time.
There’s also the situation and it comes up when the house needs a ton of repairs. The seller doesn’t have the money to repair the home, so a traditional market sale isn’t ideal. A lot of times in my market, in particular, we get homes that have repairs that are so bad that a lender would not lend on it. A traditional buyer can’t even buy that property. That seller needs a cash buyer like myself to buy the property in order for them to unload it.
That’s where the wholesaler comes in. The wholesaler is looking for sellers in those situations and we are helping those sellers get out of that situation. I’ve had so many sellers thank me at the end of the sale because they knew that this was the best option for them and I was able to facilitate their needs. They were able to sell their house at a price that they felt good about. I found an end buyer who was able to take that property, fix it up, and either rent it out or flip it on the market. It was a win-win. Us wholesalers do provide a lot of value to sellers and end buyers as well. There’s a place for us in the marketplace.
You need to really educate yourself about tenant laws in your state and get good at handling tenants as well.
You’re probably doing a lot of direct-to-seller marketing at this point, but let’s say that you are starting to get into your journey and you want to know what are the best types of scenarios where we are a best fit for a seller. I am not afraid to tell a seller that I might not be their best fit. If the house is already remodeled or it’s in fairly good shape and the seller has the means to list it on the market and they want the absolute highest price and they’re willing to wait for it, I am honest with the seller. I let them know, “I might not be your best option.”
If I have a seller who has any one of these scenarios, I know that I am probably their best option, and listing it on the market isn’t. It could be that the house needs a lot of repairs. It can be that this seller is going through some kind of financial situation where they need the funds in under 60 days. It could also be that the seller has a tenant in the property, and the tenant is being difficult.
I am good at handling tenants. I advise as a wholesaler, you need to educate yourself about tenant laws in your state, and you need to get good at handling tenants as well. Handling tenants is something that a lot of property owners are adverse to. They don’t want to do, and it freaks them out. They would rather sell their property at a discount, so you take that problem away from them.
The seller could also be maybe moving to a new area. Maybe they had a job transfer, and they needed to quickly move and sell the house fast. This is my favorite one because it comes up more often than you would think. I call it the freeloading family member. Sometimes sellers are super sweet, and they let family members live in their home, and they give them a break on the rent.
The family member takes advantage of it for a little bit too long. It gets to this awkward point where the seller doesn’t want to be giving those handouts anymore, but they also don’t want to look like the bad guy. It’s easier for the seller to sell the property to another investor and let us be the bad guys. That’s a situation that comes up a lot, so make sure that you look for it.
Another type of seller is the too rich to care seller. I’ve had sellers that are so well-off that little rental property that they have in the Midwest is not that important to them. Their time is more important to them, so they love someone like me to give them a fair offer. All they have to do is sign some paperwork, and they don’t need to deal with the home anymore. This is an example of the different types of sellers that we help. You can see that we do bring value to these people.
This is also going to help you when you’re talking to sellers, you’re going to be able to hear their situation and you’re going to know whether you’re a good fit, or be honest with them and refer them to a realtor. I hope you like what you’ve read. I hope it was helpful and insightful. If you want to learn more about virtual investing, go to www.VirtualInvestingMastery.com. I hope you guys follow my friend and me, request me. I want to hear what you think about this episode. Have a good one. Thanks.
About Lauren Hardy:
Lauren Hardy is a Virtual Investing expert and Real Estate influencer who owns multiple companies in the real estate industry including real estate investment, coaching, and software companies. She is also a Wholesaling Inc coach and co-host of the Wholesaling Inc Podcast.
Her experience in the last decade has been focused on real estate investing and creating products and services to serve the real estate investing community. If you are interested in investing in real estate virtually, house flipping, or virtual landlording, Lauren’s your girl.