Here’s an advice you’ll hear from this episode that can seem counterproductive: “If you want to win, you need to fail.” If you want to know why this advice makes perfect sense, you have to tune in to this episode!
In today’s show, Mr. TTP himself, Brent Daniels discussed in detail what the wholesaling process is from start to finish. Not only that, he also generously shared some of the most powerful wisdom and insights he has learned along his journey!
If you are still finding your way around the exciting and lucrative wholesaling world, this episode is exactly what you need to hear!
17 Steps to a Successful Real Estate Wholesale Deal
I am excited about this episode because I wanted to break down and go through every single part of the process of a wholesale deal so that you can understand, feel confident and be certain what the next step is. When we don’t know the next step, it prevents us from taking a lot of action because we’re worried about making a mistake.
Let me start with this. If you want to win in the wholesaling business, you need to fail because when you fail, you learn. When you learn, you grow. When you grow, you win. We need to go out there and take imperfect action. It is about progress, not perfection. With all of this, I understand if you don’t necessarily understand the ins and outs of each one of these steps, but as you’re going through it, it’s going to be more clear and you’re going to get a lot more confidence.
Find A List To Target
Number one starts with finding a list to target. We’re talking about a distressed property list. I highly suggest that you get the DealMachine app. This is the driving for dollars app. Use the coupon code TTP. You download that and start building your driving for dollars list. All that means is to find ugly houses on the streets in your community and neighborhood, click the app, add that to your list and then start reaching out to those properties.
You’ve got to find a list. We’ve got to go after a list. That’s the first step because we’re not going to go with a huge marketing budget. We’re not going to be on TV, radio or put up billboards. We’re just getting started. We’ve got to go specifically for distressed property owners. We don’t want to go after regular property owners. We’re going to waste our time.
When wholesaling property, you need two things: motivation and equity.
The second one is you have to make contact with the owners of these distressed properties. Isn’t this incredible? You need to have a quality conversation. A quality conversation comes down to you asking questions and listening to the answers. That’s what it is. It’s about having a great tone of voice and understanding how they communicate so that they feel comfortable opening up to you about their problem. Every distressed property owner has a problem. That’s without a doubt.
Number one is the list. Number two is to talk to them. TTP is everywhere. You’ve got to talk to them. Most people stop at getting the list, but I know you won’t. Go out there and have a conversation with them. I suggest you be proactive. Pick up the phone or go to the door and talk to them, but if you want to do marketing, mail, or do something like that, you can. Either way, you have to have a conversation. Every wholesale deal has that.
Number three is pre-qualify them. If you’ve never seen or heard of me before, then let me explain to you how I want you to pre-qualify every single seller every single time. There are four pillars of pre-qualifying. Number one is the condition of the property. What repairs does this property need? Is it beautiful or does it need a lot of repairs? Hopefully, they need a lot of love because those are going to be their biggest deals.
Number two is their timeline. When do they want to sell the property? We want people with the shortest timelines possible. That’s how we get them to make a decision. That’s how we communicate our value with them so that they can make a decision and shorten down that timeline. Number three is, what’s their motivation? What’s their problem? Did they inherit this property? Are they tired landlords? Are they in pre-foreclosure? Is the property too much to keep up and they don’t have the budget to be able to do that? There’s a ton of different reasons why people are motivated to sell their property at a discount. Remember, when people want speed and convenience, they will trade equity for that. Find out what that problem is.
Number four is, what’s their price? What price do they want for this property? We’ve got to get those, condition, timeline, motivation and price. Next is due diligence. This is where you do your research, where you go, check out what is going on with this property and where you find out first. Nobody ever talks about this but make sure that the person you’re talking to owns the property and on the title. You can look that up at your tax assessor website. Make sure that they have equity in the property. Remember, when we’re wholesaling property, you need two things, motivation and equity. They have to have equity in the property.
You need to make sure that you understand what the value of that property is. If it’s fixed up, what does it sell for? That is critical. You need to know what is considered ARV, After Repair Value. Depending on what area and market you’re in, you got to determine how much rent they get for the property. If it’s a lower-priced property or a multifamily property, how much rent do they get for the property? From there, you’re off and running. You’ve got the information that you need. How much repair does it need? That got into the pre-qualifying.
You do your due diligence. That’ll give you the numbers and analytics that you’re looking for so that you can go in, make sure and determine, “Is this a deal or not a deal?” Remember, that’s the biggest, scary monster when we’re starting out wholesaling. The second scary monster is how big of a deal it is because nobody loves getting paid $10,000 when you should’ve gotten paid $80,000. Just a thought.
Next, lead follow-up. You’ve got to follow up with these people. Rarely do you talk to somebody the first time and then all of a sudden, you’re sitting in front of them and they’re signing the agreement with you. We’ve got to lead follow-up. Let me give you some tips on lead follow-up. It’s very simple, do it. Pick up the phone and call them. If they don’t answer, leave a voicemail and a text message.
“How often do I do it?” As often as you want. It depends on what their timeline is. If their timeline is short, I want you to call them every single day and follow up with them. I want them to know that you’re thinking about them. You’re there and available to go see or send them the offer, get on some virtual conversation, Zoom meeting or FaceTime, whatever you want to do with these people. Get in front of them, but you’ve got to do your lead follow-up. You will not lose deals from excess lead follow-up. You will lose deals from not following up enough.
If you want to win in the wholesaling business, you need to fail. When you fail, you learn. When you learn, you grow. When you grow, you win.
Setting Up An Appointment
Next, appointment. Now’s the time. You’ve got your list. You had a conversation with them. It’s a lead and you have pre-qualified them. You’ve done your due diligence. You followed up and finally, you’re on the appointment. “It’s scary.” It’s not. You’ve already pre-qualified them. You know the condition, timeline, motivation and price. You’re meeting them and making sure that everything fits.
Going on the presentation is a natural progression of a good pre-qualifying and lead follow-up. You’re going there to meet them and feel good about things, so they understand that a human being is buying their property and working with them. They understand who you are. They get to see you and be around you.
The next step is you offer a presentation. This is when you sit down at the table knee-to-knee, belly-to-belly, face-to-face or if it’s virtual, you do this over the phone, but this is when you present your offer. Remember, offers and deals come down to three things, price, terms and you. You already know the price and terms, so it comes down to you, whether or not they like you and want to do business with you. You see if there are any further objections coming out of them and you want to make sure if they have any other thing that’s stopping them from moving forward with you. You’re presenting the offer, letting them know that the agreed price is there, the terms, you’re buying it as is, it’s cash, that you pay the closing costs and all of these things.
Next is the contract acceptance. They signed the contract or agreement and we are here. It started 7, 8 steps ago. It started from a list and then I got a signed contract. It’s not over yet because the signed contract doesn’t get you paid. The signed contract gets you the potential of closing and solving that homeowner’s problem. When you solve that homeowner’s problem, that’s when you get paid. It is just potential, but it feels good to celebrate it a little bit. I’m being honest. Don’t celebrate it too much.
Open Up Escrow And Deposit Earnest Money
Next, you’ve got to open up escrow and deposit the earnest money. Check your state and see if you need to put earnest money to make it a valid contract. I always like doing it. It shows that I’m serious. If anything gets sticky and the attorneys get involved, they’re like, “You did put earnest money. It looks better.” I like putting earnest money down and opening escrow immediately. I open escrow and my acquisition managers open escrow at the table with the owner. We have an app called TurboScan. We take a picture of it and email it to the escrow officer or, in some cases, your closing attorney. Make sure that you do and open that up.
Market To Cash Buyers
Next, we’ve got to start marketing this to cash buyers. You’ve got to market this opportunity to purchase this property to cash buyers. Remember, unless you’re a real estate agent and licensed, you’re not selling the property. You’re selling the potential to purchase this property, which is the contract that you got signed. Think about it. You are selling a piece of paper and the right to purchase that property. You’re marketing that and getting as many people as you can knowing about this potential opportunity.
Cash Buyer In Spectrum
From there, the next step is your cash buyer inspection. If your cash buyers need to see the property, they’re going through the house, checking it out and then giving you an offer. They want you to assign that deal to them. It depends. This is traditional wholesale, not a double close or double escrow. We’re talking about assigning the contract to them.
Pick Cash Buyers With Good Reputation
There are going to be people that are going to want to jump all over it, but they want to win. They can’t buy the property because they’re fake and don’t have money. When you assign the contract to a cash buyer, pick the one with a good reputation, isn’t an asshole, communicating with you, not trying to bully you and has money to purchase this property or a good reputation for selling it to a bunch of buyers that they work with.
A quality conversation comes down to you asking questions and listening to the answers.
Deposit Earnest Money
Step thirteen is to make sure after you assign that contract that they deposit their earnest money. We always require a $5,000 earnest money deposit on every single deal. This keeps them in it, nonrefundable. You’re not getting that money back. Close this deal, cash buyer. That’s where you want to be. Depending on the price point, if you’re under $100,000, I’m fine with that if you want to go $2,500 or $3,000. Anything over $100,000, you better go $5,000. I want skin in the game. I want them to prove to me that they will close in this deal and are committed to it. That earnest money needs to be in as soon as that title company opens. Twenty-four hours is a long time for me. I like it real quick.
I want that earnest money that’s made out to the title company or closing attorney. It’s not made out to you. That’s another misconception. Don’t let the title company organize and manage all the money. Trust me. It’s going to save you a lot of headaches down the road. Let the title company manage the finances or the closing attorney.
Behind The Scenes
After getting the earnest money deposit, the next step is behind the scenes this whole time. Remember when I told you that I pulled out my phone, TurboScanned and sent that to the escrow officer? Behind the scenes, the escrow officer is there and they’re pulling title. They’re sending things to the seller to sign identity statements, making sure it’s the right person, lien payoff information and all these things. They’re behind the scenes working to make sure that they can transfer the title cleanly to the next buyer without any clouds on the title. Don’t get stuck with it.
If this is confusing, it means that if they owe money on their property, if they have a lien that says that this has to be paid off before they can transfer that property, all those get paid off. It’s the same thing with a car loan. If you have a car loan, you can’t sell it for cash and not pay off that car loan. You can’t get a title for it.
This is what the title company does. The title company goes out and makes sure that all the liens and everything’s taken care of. They’re working behind the scenes, part of your team and doing it. Finally, they get what’s called a clear to close. That means everything’s taken care of, organized and ready. All the seller has to do is sign their closing documents. All the buyer has to do is sign their documents and send in the money.
Check Buyer’s Funds Are In
When you are waiting, your palms get a little bit sweaty, “When are the buyer’s funds going to be there? When are they going to wire it in? When are they going to bring it in? Are they going to close on time?” All of these things are going through your head. “I hope things don’t blow up at the end of this transaction.” Step fifteen, check that the buyer’s funds are in. Don’t go through that anxiety and stress. Check that the buyer’s funds are in and they’re wiring it in. If they haven’t called the buyer, “When are you wiring the funds in?” Put it in your contract that they have to get it in 48 hours, 72 hours before the closing date.
Now we’re talking. We’re not feeling nervous, stressed, anxious, almost depressed, worried about it, unproductive, not getting other leads and deals. It’s in the back of our head going on a different appointment. We’re screwing that thing up or making calls. It’s weighing on our minds, “I don’t want to do anything until I get this deal closed. I want to babysit, hold it and make sure that it happens.” Call the title company. Make sure that the buyer’s funds are in. Talk to the buyers and see when they’re going to come in. I’m telling you all this from experience. I’ve gone through all this.
Close The Deal
Number sixteen is close the deal. The buyer’s funds came in, paid the seller and the seller’s liens off. Paid everything there with the price. Everything is done and it’s over. It goes to the seventeenth step, which is everybody’s favorite and that is you get paid. This is a sweet little deal that maybe you didn’t know. You get to determine if you want to get a cashier’s check or wired straight into your account. I suggest the first one. It feels badass. You don’t have to kill trees. You could get a wire and it’s as good. Either way, it goes to the same place, but that’s it.
That’s the seventeen steps of every single wholesale transaction. The beautiful thing is if you’ve been taking notes, write down these seventeen steps. Use it as a checklist as you’re going through and then as you’re building your team, you are doing all these things in the beginning, but then you get to decide who on your team and business will do each of these steps. The only thing that I do on this is number seventeen and that’s get paid. My company does all the rest.
That’s where I want you to be, but you got to follow these seventeen steps. Go out there with confidence, start building your pipeline of leads, go on appointments and start working on this business because it is the most incredible business ever. You are going to have so much fun and it is so incredibly profitable. The ability to change your financial future is magical. I hope you go out and you’re taking action. I hope you take these seventeen steps. Feel strong, go out and get a deal. Until next time. Love you. See you.
About Brent Daniels
Brent Daniels is a multi-million dollar wholesaler in Phoenix, Arizona… and the creator of “Talk To People” — a simple, low cost, and incredibly effective telephone marketing program…
Also known as “TTP”… it helps wholesalers do more, bigger, and more profitable deals by replacing traditional paid advertising (postcards, yellow letters, bandit signs, and PPC) with being proactive and taking action every single day!
Brent has personally coached over 1,000 wholesalers enrolled in his “Cold Calling Mastery” training, and helped 10,000’s of others who listen to him host the Wholesaling Inc. podcast, watch his YouTube channel, and attend his live events…
A natural leader, Brent combines his passion for helping others with his high energy, “don’t-wait-around-for-business” attitude to help you CRUSH your wholesaling goals as quickly and easily as possible!