Marketing Wholesales You Don’t Have Under Contract (Can You Really Do This?)

Ahhhh, the art of ambiguity.

It’s that uncomfortable place where things can mean the same or something totally different… and when it comes to your business and the business of making money, the uncertainty of ambiguity can be downright terrifying.

But I say ambiguity is the space where you can make something out of nothing, a space that has unlimited potential. And that, my friends, is why I say ambiguity is a beautiful thing, especially when we’re talking wholesale deals and marketing them without contracts.

Yes, you really CAN do it!

Yep, you heard me right. Pigs do fly and hell did freeze over. You CAN market wholesale deals that you don’t have under contract. And we’ll explain how in the awesome audio below.

But the key is doing it the right way. Ethically, honestly and with integrity.

Of course.

This is a topic that came up on one of our SIIC live monthly training calls recently, and it was just too hot to ignore.

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PS… if you’re not tuning into our Strategic Investor’s Insider Circle live training calls regularly, shame on you! They’re your chance to get any and all real estate investment questions answered straight from the mouths of 2 knowledgeable, charismatic and talented (I mean, have you heard us role play?) investment gurus… me and the one and only JP Moses. So be sure to tune into the next call!

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Aaaaaaand, we’re back.

trustAs I was saying, once you tune into this uber awesome lesson, you’ll get VIP access to JP’s tried and true technique known as the “ambiguous soft pass.” You’ll learn how to propose wholesale deals to cash buyers before you even have a contract in place.

You’ll discover the magic ingredients that make it okay to have ambiguous “back door” conversations by fully disclosing deal details, gaining confidence on the deal and earning the respect of your potential buyers – all, of which, are valuable to you whether or not you close the deal.

But the only way to get the 411 is to check it out… so get going:

Talk to Us!

So what do you think? No, really, we want to know! Remember, your thoughts, experiences, and knowledge can benefit everyone, so share away! Leave a comment below, and get engaged…to us!

Couldn’t hear the audio? Don’t panic! Check out the transcription below. (You’re welcome.) Happy reading and dealing!

Patrick:            Here’s a question we got from one of our insiders, Kenneth. Kenneth, great to have you on. It said, “Help! I came across a property I think is a good deal. Put the deal to a couple investors. One replied for the address. I don’t have it under contract. Will the investor be able to cut me out? The asking price includes my profit. Any help would be appreciated. This would by first deal.” Yeah, why don’t I just nudge on this thing first?

Kenneth, awesome! Awesome! Awesome! Love it. Love it that you’re taking action and coming across the deals here. For me personally, anytime that I am wholesaling a property, I always put it under contract prior to telling anyone about the deal. I mean, if you took the motivated seller and we think we could a good deal on that, we’re immediately putting it under contract and making an offer. And then, once the property is locked up under contract, we’ll then be passing that by any perspective investor buyers. Like, if you didn’t have it under your contract and you told some potential buyers, could they cut you out in the deal? Uh, sure. Yes, they could. They could make an offer directly to the seller and get the property under a contract.

Yeah, I think that from the start, it’s best to just make sure you’re working with people that you trust and feel that would do the right thing. But, I would highly suggest that if you think you’ve got a potential deal, put it under contract and also include in a state clause just as if you can pass on to do your due diligence and pass it by buyers. Like, if you’re just going in and planning on wholesaling it, you could put a clause in that says, “This agreement is subject to finding a qualified buyer within X days.” That’s just one example of a clause that you could put in there that will allow you to control the property by having it under a contract and also being able to walk away if you didn’t find a buyer. JP, any other thoughts on that one?

2015-7-28-signJP:                  Yeah, just a couple. Just to springboard off of the platform that you’ve already set up there. Let’s clearly establish that legally. Unless you are a real estate agent or unless you’re licensed to practice real estate in your area, then you have to have a contract to purchase or an option agreement in place before you market a property to sell, okay? So, you calling up people and talking to them about that property is iffy. Now, that’s not to say that there’s a letter of the law and there’s the intent of the law, in my opinion. And, I tend to go more with the intent than the letter and you got to have to choose your own comfort level for that.

 And, this is actually something where my partner, James and I here in Memphis diverge and have had not… I would call it conflict, but we just don’t quite see eye to eye on it. He always only ever wants to sit… Not even… He won’t talk to anybody about a deal until he’s got some kind of contract on it and I respect that. But I feel like, if we see a deal that we think is maybe a deal, but we’re not sure and we think we might know who on our buyer’s list it would be a good fit for. But, I think it’s iffy.

Do we want to take the time to really go out, get a contract signed and kind of jump through the hoops that you have to? Only to find out immediately that it’s just not going to work for us because our buyers aren’t interested. And ultimately, your buyers dictate whether or not it’s a deal if you’re a wholesaler. So, what I have always done historically is do an ambiguous soft pass and it’s kind of like what you did. But, you go armed with a little bit more ability to, I guess, buffer the situation that you don’t have it under contract yet. So, here’s how that might go. Patrick, let’s pretend that you’re one of my cash buyers and I call you up. Ring! Ring! And you say, “Hey! Hello.”

Patrick:            Hello there?

JP:                    Hey, Patrick! Hey, man! Listen, do you have a quick second? I just want to talk to you about a property.

Patrick:            Sure! Yeah.

JP:                    Okay. We are in the final negotiation right now. The deal hasn’t been signed officially. But, we are on the final negotiations of a property at 123 Philmont Street. Excuse me. Let me back up. I just gave you an address and I’m not supposed to give you an address. We’re on the final negotiations of a property in the Philmont area. And, I know that this might be something that’s a good fit for you.

You’re the first person I thought of. I can’t give you an address or anything yet because I don’t actually… We’re going to have it under contract shortly. But, I just wanted to run it by you and see if it’s something that you might be interested in. It looks us to like the after repair value is probably about $110 and I think the repairs based on what the seller has said… We stopped to confirm this. But, I think we’re talking it probably in the $10,000 to $15,000 in repairs.

Patrick:            Okay.

JP:                    We’re trying to negotiate this thing in the $70,000 range. Is that something that might be interesting to you if all those numbers make sense?

Patrick:            So, let me recap real quickly what you just said. That you may be able to offer it to me for $70,000, it would need possibly $10,000 to $15,000 in repairs. And then, it’s worth… What did you say? $110,000?

JP:                    Yeah. Yeah. We’re negotiating it. We’re going to negotiate it lower than that and build our profit too. But, I think we’d be looking to wholesale it at about $70,000…

Patrick:            Sure.

JP:                    …In that neighborhood.

Patrick:            Okay.

JP:                    We’ll probably have it signed up within the next 24 hours and those are the numbers that we’re looking at. Is that something that we should point to you first?

Patrick:            Well. I’m definitely in the market. I love that neighborhood. I’ve got a property right on the corner that we’re doing right now. So, if we’re talking $70,000 plus $15,000, we’re talking $85,000 and possibly worth $110,000 in the back end. Definitely, sounds a little tight.

JP:                    Okay, you can stop because the rest of the conversation doesn’t even matter. And actually, I just pulled those numbers right out of my rear end. So, yeah, they are tight. You’re right. That would not be a great deal to hope to grab but that wasn’t the point. The point was…

2015-7-28-printPatrick:            Sure.

JP:                    The point was…

Patrick:            I think not!

JP:                    No!

Patrick:            I think that’s not a good deal to tell you, man.

JP:                    Let’s assume that you’re a new investor, right? You just walked out of a hotel seminar. Now, answer me.

Patrick:            Yes! Yes! Woooh. Woooh. Woooh. I’ll take it!

JP:                    So, here are the magic ingredients that I think. In my opinion, they make it okay for me to have a conversation like that. I’m telling you right in front. We don’t have this signed up yet and I’m not going to give you an address until we do.

Patrick:            Exactly!

JP:                    But, here’s the area. Here are the numbers and they still have to be verified. But, if they verified that, is this something you’re interested in? So, what I gained there is confidence on the deal.

Patrick:            Oh, yeah.

JP:                    Right?

Patrick:            Well. And, like maybe, if you were to spit out some numbers that are typically in my range of what I look for in a deal, then… If I’m an investor and I’m active and I’m already doing a deal on that neighborhood. Most investors that are active have their core niche that if you’re talking to that investor and you run the deal by just like JP did and your numbers are still, you can actually verify him or ride on the ballpark of what you say, then gathering the information if there’s interest and then asking, if we guide         them on their contract and if we wanted to go ahead and close. How fast you could potentially close…

JP:                    Uh-huh.

Patrick:            …If you think that would work for you on this one? Then, you can go ahead and find out if they have the funds available to immediately close. Good stuff. All right.

JP:                    They love it because you’re giving them concierge treatment. It’s what it feels like to them. They’re obviously the VIP because you thought of them first. You called them first. And whether or not the deal happens, that in itself has value to you.

Patrick:            Oh, yes.

JP:                    And, I used recently on a deal that was a good hour away from Memphis. It’s still in the neighborhood where some people out here would consider it. But, I just don’t know if any of my buyers would be interested because I’ve never asked them if they want anything like that. So, it was iffy. Do I want to drive out there and sign it up? Rather, what I want to do is I want to call up maybe five of our top buyers and say, “Hey, we’re looking at a deal on this area. Here’s the number. Is that something you’re interested in if we sign it up?” It’s as simple as that.

Patrick:            Uh-huh.          

JP:                    So, hopefully that helps.

Patrick:            Good stuff!

 

 

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