Finding buyers lesson (part 1) 21 posts by 16 users

Posted: 12/24/2006 at 09:11AM

I get email virtually every day from people who want to know where to find buyers for their wholesale deals. I see countless posts on here of people asking where to find buyers. So I figured I would put together most of the ideas that I have used or have seen used for finding buyers into a single post.

I am sure there are countless other places and ways to find buyers beyond what I am mentioning, so I will leave it up to other people to fill in the blanks that I have missed.

Keep in mind these are ways that I or my clients have actually used, so I know that they work because I have done it.

1. We Buy Houses Signs I call every single one of these signs that I see, I actually keep a note book full of numbers and info that I find out about these companies when I call.

I usually ask them whether they are still buying, what they are looking for, what percentage up FMV they are typically paying, and what areas of town they want to buy in.

While I have them on the phone I also ask them if they wholesale out any of their homes, if they do then I ask them to call me when they have something good. I tell them that if the deal is right I can close in less than 2 weeks with cash.(I can do this because I have other buyers already in place to buy their deals, sometimes these buyers could be other cash for your house buyers)

Here is a sample of a deal that I put together using this.

1. I called a we buy houses sign
2. Found out where they were looking
3. Put a home under contract for $52k in that area
4. Called them and let them know.
5. I signed a 6 month lease option with them for $64k
6. I closed the home.
7. The lease option started
8. He sold the home
9. We close this week, I make about $12,000 (I also made commission when I bought the house, because im a realtor)
10. He makes around $12k.
11. Were all happy.

2. Call realtors I call realtors and find out if they have any cash buyers that are looking to buy some wholesale deals. It varies on what I offer to pay them but typically I offer 10%-20% of my profit, or a flat 2-3% fee, each time the buyer they have given me buys a home. It creates a win- win, I get a buyer and they get paid whenever their buyer buys a home.

I offer the continuous pay because a realtors worst fear is that they give you a buyer and he buys from you, then when they have a good property to show their buyers they cant buy because they have already purchased from you.

If the realtors dont have cash buyers, I tell them that if they bump into any great deals, they should call me and if the deals good enough we can buy with cash and close in less than 2 weeks.( Often times you can use other realtors buyers to buy another realtors house and you can make money setting the two up)

An example of one of my clients deals that he ran this way.

1. I called my client about a great HUD deal
2. He liked the deal and put the home under contract for $115k (I made a $4800 commission on the home when it closed so I was happy)
3. We had 60 days to close the HUD home so he started calling realtors
4. He found a realtor with a cash buyer that was willing to pay $122,000
5. We assigned the contract (this is a secret)
6. We went to closing and his buyer brought $122,000 cashiers check.
7. My buyer left with a check for $7,000 ( he used none of his own money, and I found him the house so he was happy)
8. I left with my $4800 commission
9. The realtor who brought the buyer took no commission but got a commitment from his buyer that he would list the home with him when he sold it.

3. Newspaper ads I dont personally use this one, I have clients who have had great success with it though. They simply place a small classified ad that reads "Looking for buyers to purchase homes at 50-70% of true value"

I have picked up endless buyers with this ad though "Free List of 45 foreclosed/distressed homes" call or visit www.$$$.com. The reason that I have had so much success with this ad is because anyone thinking of buying real estate would much rather get a free list of 45 then have to call each individual ad. You can have a local realtor put together a list of properties for you and email them to you if you cant find your own. Then take the list that they send you and email it out to people that respond to your ad. Keep in mind you dont really care about the list that you send, you care about getting the name, phone number, and buying qualifications of responding buyers.

A real life example.
1. I placed my free list ad
2. I got about 30 responses for the month
3. Found one buyer who has paid me over $75,000 in commisions over the next 3 years on deals I brought him.

These were realtor commissions, but if you can find a buyer who is taking the kind of action he was you could seriously line your pockets wholesaling to him.

4. HUD homes this is my own technique that I started using to get buyers just for my realtor purposes. Watch for a great deal on a HUD home or any great deal for that matter, then park outside for a few hours and talk to the people going to check out the home. Most of the areas investors will find there way to the property and you can give them your card and be sure to get there info. Tell them that you run into alot of deals and ask them if they would like you to give them a call when you run into something decent.

A personal example.

1. I went to look at a good HUD home that I was going to buy myself.
2. The neighbor came over and wanted to see the home while I was there.
3. I showed him the home and he ended up buying it from me.
4. I ended up making $2500 in commission on it.

If I were not a realtor, I would have simply talked to him and found out what he was willing to pay, then wrote up a wholesale contract, then put the home under contract with HUD, then played the spread.

This was my most recent deal, but I have picked up endless buyers for other homes while parked outside of HUD homes. I call it hunting for buyers. Its kind of like deer hunting with a bait pile. The home is the bait pile and the buyers are all coming to eat.

4. Talk to your current buyers buyer typically know other buyers, ask your buyers if they know of anyone else who is buying (let them know you will only call the referal if they are passing on the property). You also might offer to pay your buyer for a referall fee if one of there people end up buying a house from you. This technique also works great if you have a buyer that only wants to buy in a certain area, then you can call their referall if you have a home outside that area.

Personal example.

1. One of my buyers had too many homes and could not buy.
2. I asked him if he knew anyone else who might be interested.
3. He gave me the number to a cousin who was an even bigger investor
4. I ended up selling 3 homes to his cousin this year, and paid him a referal for each one.

5. Local REI meetings If you have a local investor club join it, if you dont then start one. It kind of speaks for itself that this is where many great buyers will be. Just be sure you know a fair bit about what you are doing before talking to very many people about potential deals. The last thing you want to do is burn alot of bridges by showing your new found buyers a bunch of crap.

6. Birddogs for buyers Outside of having bird dogs look for homes for you, you can also have them look for buyers for you. Give them your cards and have them hand them out to people they might meet that are looking to get into real estate investing.

7. Brochure Boxes Just like realtors use brochure boxes you can use them to. If you have a property to move leave a brochure box that talks minimally about the property that it is left at, always be sure to leave out pertitant info like price, sqft, or bed/baths. If you give all the info away then people will never call you about the property. Focus the brochure mainly on other potential deals in the area or say that you are looking for buyers for properties at 50-70%FMV.

8. Out of towner and landlords Many people sell themselves short when they are dialing for dollars. Typically people call or mail out of town owners and other landlords to see if they want to sell. The funny part is if they dont want to sell then there is a chance that they want to buy, so ask them if they arent selling, then would they like to buy some more, or if your mailing then include buying info on your mailer as well.

I gotta go now, the wifes ready for shopping, I will add to the post with some of my other ways but this should be a start. Hopefully the big dogs can come in and fill in the blanks.

Eric Medemar

Posted: 12/24/2006 at 11:59AM

Excellent post, Eric. You gave me some new ideas.

Couple things I'll throw in there, too. I research HUD homes that sell to investors, and find out who bought them and for how much. You can find out by researching the public records about a week after it closes or the tax records once it is updated (it takes 6-8 weeks for my tax records to get updated). You can find out how much they bought them for on the HUD website. Since I looked at the HUD house too, I know exactly what that investor is looking for. Track down their phone number and find out if they are wanting more.

I do the same thing with investment properties that sell through the MLS.

I agree a realtor's fear is that they will lose their buyer, and it should be because I give better deals than can be found on the MLS. I'm not an agent and I don't like working with realtors unless I have to, so I normally go around them if they don't bring the deal or the buyer to me. I may have to explore what Eric pointed out because I like the idea of them bringing me their future investors.

This reminds me of something funny. The main realtor I work with, I'll call her with a couple deals I have and she'll rattle off a couple investors she knows that may be interested, and I have to tell her that I've already contacted them. I had already sold them deals before I started working with her so I don't feel bad, but the point remains that I have put a tremendous amount of energy into building my network of buyers. I have developed a very strong network, better than most realtors.

The point with building your investor buyer's list is that you have to get creative and be diligent. Being a successful wholesaler comes down to two things, finding deals and building your network of buyers. You will have to be consistent and persistent in doing both.

Posted: 12/25/2006 at 07:12PM

excellent post. but maybe you could give us some insight on how to find sellers.

Posted: 01/12/2007 at 12:35PM

1) Contact your local REIA and

2) MARKET the heck out of your deal!

Posted: 04/10/2007 at 03:10PM

Eric,

Thanks this is a really great post.

Thanks
-Henry

Posted: 04/20/2007 at 07:51PM

My ad:

Lease to own
10K down $3,100/mo
bad credit ok
4BR 2 BA
city, phone

This ad solved my problem I had only a few weeks ago of 3 homes I own that are now worth less than what I bought them for.

I love this sight!!

I am so in agreement that you must jump in. There is always a solution if you get in over your head as long as you search and communicate with those in the know like those who are on this sight!

Posted: 05/27/2007 at 05:54PM

No license needed, thats the beauty of REI no money and no expensive education needed, It can be the highest paying easy job in the world, or the lowest paying hard job in the world depending on YOU do things.

You cant be downsized, you cant blame anyone but yourself if you fail, its just you and what you know how to do, to me its the purest form of financial freedom in the world. Unlike most high paying jobs, real estate has a verrrry easy entry point for anyone that is willing to do what it takes.

I could go on and on. I think you get the point though.

Posted: 06/05/2007 at 02:36PM

Thank you, I hope it helps!

Posted: 07/14/2007 at 04:16PM

All the above advice is wonderful for a investor-want-to-be. But like many, I just don't have the funding at this point in my life. So wholesaling, and bird dogging, is of interest to me. You say you do not need a license to wholesale, right. Can someone like me get into trouble with the seller and/or buyer in some way, I mainly am referring to legal issues or anything like that?

By the way I live in Alabama if anyone out there needs a bird dogger or a wholesaler....

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