Positioning Pt 1: Should Sellers Know You’re A Wholesaler?

questionHey there, Insiders. Today we have a fantastic question from an eager student who wants to know exactly what they should reveal (or, be entirely honest about) when it comes to explaining their role as an investor to the seller.

So let’s dive right in…

Amanda Finch asks:

“I L-O-V-E that you give us access to ask you our own questions like this every month. Thank you, and this alone makes it worthwhile to be a part of this with you. So wholesaling questions, I have lots of them. But here’s one to start with… Should my sellers know that I’m a wholesaler?”

patrickPatrick’s Perspective

That’s a really solid question, Amanda. So you ask, “Should you let your sellers know you are a wholesaler?” Well, there are different ways that you can position yourself to a seller…

First off, just the term “wholesaler” is definitely a term that we, as real estate investors, use and others outside of the industry don’t really understand. That word probably doesn’t mean a whole lot to them…

One way to handle this is to just let a seller know that you have a network of investor buyers. Tell them that the process you use when evaluating a potential property is unique with each owner, and you already know what types of properties and deals you network of buyers is interested in.

JP, whenever you’re talking with a seller and you’re in a situation like this, how do you position yourself? You do it a little bit differently, right?

jpJP’s Take

Well, yeah, there’s another way I do it…

I’ve been doing this since 2000, and my approach (that I kind of settled into after a couple of years) was to always try to just talk with the seller. I don’t use real estate jargon, I always try to keep things in terms that a 6th-grader could understand without any need of explaining the definitions of words.

So, rather than talk about wholesaling, like you said, they probably envision a real estate investor like those people on the reality flipping TV shows. So, I explain to them that that’s kinda sorta what we do, but sometimes we rent them out, sometimes we have other colleagues who we work with and match a property with them and so on. I always make sure they know:

I’m not your agent. So, just to be clear, I’m not looking to list your house or anything like that. I’m in this for an investment one way or another. And, when we get a contract on the property, it’s subject to approval of my funding partner. I have a number of funding partners who I work with at different times.

It all kind of depends on who’s the right match for the deal. I don’t know which one is going to be the right match for this deal. I might have to show it to two or three of them before we know that, but they’re going to have to approve it as well.

overshareSo, of course, “partner” is a word that they understand, generally speaking. Everybody knows what a partner is, and they understand what funding is. They know I’m going to have to get some money to do this deal or use some money.

So that keeps things very easy for them to understand (and truthful), because I can very easily say that a funding partner is someone who is bringing the funding to the table and who’s going to take title to the property as well.

And, if at any point, they (and it really hardly ever happens) ever look at the paperwork and say:

Who’s this guy? I thought I was selling my house to you?

You’ll say:

Well, we decided in this deal, it made more sense to go ahead and have my funding partner close.

It’s truthful. It’s honest. It keeps things in perspective without confusing them. If you try to sit down and explain to them what wholesaling is (from our perspective), you’re going to lose them. A confused mind says “No.”

patrickPatrick’s Picks It Back Up

And that just shows you there are a few ways you can say it and be clear about what you’re doing. You can just pick whatever matches your comfort level and your style. Use something that you know works. As you get more and more experience, you may end up developing your own kind of ‘script’ for it. But definitely start with what we know works.

Well, that question is a wrap, guys. But, Amanda did have another terrific question and we think our answer will certainly be helpful for you. So, stay tuned for our next Q&A lesson in which we answer “How EXACTLY do you close a deal?”

See ya then!

Holler at us

So, what kind of strategies work for you guys when it comes to being up front with your sellers? We would love to learn from your experience!

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