You hear me repeat this a lot: Wholesaling is sales. Our customer is the seller and we are selling them a service. That can be confusing since our service involves buying their house. So wouldn’t we be the buyer because seller is selling us on their home? Technically, yes. But YOU need to be the one selling your service.
I’ll say this, if you let a seller sell you on their home, you will probably offer too much. So no, you are not the customer.
In wholesaling, you need to focus on what problem you are solving for the seller. What you are bringing to the table. You can offer speed, convenience, no fixing anything, no cleaning, no banks, no appraisals, confidentiality, etc. Know your value proposition and be prepared to discuss it with them!
Dress Code for Wholesaling
Dress professionally. No suits, that’s overkill. We aren’t going door-to-door selling insurance. Business casual is fine. I will even wear shorts and a polo in the summer. It’s important to “look the part” and make a good first impression.
Bring your phone (or a camera) to take pictures. This is important and will be helpful later if you put the house under contract. Ask the seller if it’s okay to snap a few pictures. They say yes 99% of the time.
I don’t usually sit down with the seller right away (or at all). Most of the time they will give you the tour right away. Make sure you give yourself enough time in case they want to chat for a while, which is a good thing – it’s a great way to build rapport.
Every seller is different. Some talk more than others, others will be more reserved. Either way, you want to ask them questions and get them talking.
What do I say?
In sales, people buy (or this case, sell) from people they like and trust. Talking about the weather, current events, your family, their family, etc. It’s especially good if they initiate the conversation and want to talk about subjects other than their house. Be courteous, friendly, kind, and engage in informal conversation the best you can!
You have to read your customer. What personality type are they? Are they outgoing or more reserved? If they are introverted, they may not care much about small talk. They will likely just go right into the tour and talk about the house. That’s totally fine.
At some point in the conversation, you do want to talk about the benefits of working with you. I usually wait until I’ve made some small talk with them first. In fact, I prefer to discuss features and benefits at the end of the appointment. The same time I ask about price.
The Benefits of Selling Your House for Cash to an Investor
- You can close fast: If they are in foreclosure, have delinquent taxes, or are facing some other type of hardship they might want to close fast – and based on the state of their home, which was the key factor in contacting them – they are most likely facing some of these challenges. If their motivation comes from something else, they are probably good with a 30-60 day close. Mention you can close quickly, but also say that we can operate on your timeline. We are flexible, and we can close in 2 weeks or in 2 months. Whatever is best for you.
- You will pay all closing costs, including seller costs: This a big selling point and will save them $3,000 – $5,000 (assuming the purchase price is between 100-200k) in costs such as title insurance, transfer tax, closing fees, deed prep fee, etc. (closing costs will vary by county and state).
- They pay no realtor commissions: This is huge! If they elect to sell the traditional way and list their house with an agent, they can expect to pay 6% commissions in most U.S. markets. 3% to the listing agent and 3% to the buyer’s agent.
- Don’t worry about making costly repairs: We will purchase the house as-is. No need to fix anything. Remind them that when selling on the retail market most buyers will hire a professional inspector to go through and write up a detailed report about everything that needs to be fixed. This also gives the buyer a reason to back out. If the buyer thinks the repairs are too much, they can back out of the contract. In a traditional sale, the buyer will use the report to negotiate the price down even further. The seller doesn’t have to worry about any of that with us! (Disclaimer: we do have an out clause in our contract, but I’ll explain how to pitch that to the seller when the time comes.)
- No appraisals: If an appraisal does not come back favorable, that gives the buyer another reason to back out. You (and your partner buyers) are paying with cash so there’s no need for an appraisal.
- No need to clean: Leave the house a mess, we don’t care!
- You can leave your junk (or unwanted items): Have a bunch of unwanted items or junk? Leave it behind! We will take care of it at no additional cost to you. This is another big selling point, especially if they have a lot of stuff they don’t know what to do with. The truth is, it only costs $1,000-2,000 to hire a junk removal company. Just make sure you factor that expense into the offer if you think they will take advantage. (Be careful though and try not to call your sellers’ personal items junk!)
During the tour, try to see as many rooms as possible. If there is someone sleeping in a bedroom, no need to disturb them. Don’t worry if you miss a photo of a room. The most important rooms are the kitchen, bathrooms, living areas and basement. If possible, snap a photo of the furnace, water heater and electric panel.
What to Look For
Take mental notes (or physical notes if you might forget) of:
- Flooring type and condition (any sagging?)
- Wall type and condition (plaster vs drywall)
- Kitchen cabinets, countertops, appliances
- Windows and doors
- Light fixtures
- Bathroom fixtures, flooring
- Electric panel and wiring (usually in basement)
- Furnace age/condition
- Water heater age/condition
- Roof age/condition
- Foundation for cracking, water entry (if block foundation, look for cracking and bowing)
- Floor joists (termite damage)
- Plumbing (copper vs PEX)
- Exterior siding type and condition
- Exterior landscape
- Garage condition
It’s best to take written notes initially, but as you become more experienced, you’ll be able to estimate potential repairs on the spot. In the next step I will tell you how to calculate repair costs, determine ARV and come up with an offer.
Before you leave, always ask about price. It might seem uncomfortable at first. After all, we promised an offer after seeing the house. However, if they have motivation to sell they will usually give you something. Here is what I say: “So Mr. Seller, do you have a number in mind you were hoping to sell it for?”
A big part of getting a number out of them is your delivery and confidence. If you had a good meeting and they like and trust you, they might open up. Ask confidently, and then be quiet. Let them talk. You won’t always get a number, but it makes your job that much easier when you do!