Positioning Pt 2: Should Buyers Know You’re a Wholesaler?

Hquestioney there investors, Patrick here. Welcome to Part 2 of a 2-part series concerning your role as a wholesaler.

In Part 1, JP and I gave some pretty thorough answers to this question: “Should sellers know that you’re a wholesaler?” So, make sure you check that out and jump back here to dig in to part 2.

The second part of the question that we’re answering today is: Should buyers know that you’re a wholesaler?

patrickPatrick’s Take on the Question

I think this question can be answered pretty quickly. Should my buyers know that I’m a wholesaler? And I just say heck yeah!

Your buyers are cash buyers. They’re investors themselves. Not only do they know exactly what a wholesaler is, but they need you and they realize that. They need to feel like they are the deal junkie and you’re their deal pusher. They come to you for their fix. (Well not quite, but you get the picture.) They need you, so they need to know who you are and how you operate.

I like to be clear and up front and say:

“Hey, here’s what you got the contract for. Here’s what we’re willing to sell it to you for. This is our assignment fee.”

I like that better than trying to juggle around on a double closing and hide what you’re making. I tell them right up front and give them that expectation – I build that in. That’s my preference, and you can definitely have buyers like that for your deals as well.

Having said that, I realize there are some buyers out there who do care. If they see you making a certain amount – even if the deal makes sense – they may walk away or be upset, etc. Personally, I try to work only with buyers who are okay with me making any amount of money on the deal as long as the numbers make sense to them.

jpJP Chimes In

I’m going to share a slightly different perspective on how we’re doing things…

However, it doesn’t change my answer to the question that they know we’re wholesalers and they know we’re making money… they do know. But, it’s whether we disclose how much we’re making and whether we care that they know. Right now, at this point in our business, we have both types of cash buyers – those who know how much we make and those who don’t know how much we make.

We have the old dogs, the big dogs, the guys who are players who we have great relationships with, who can get a text message or a phone call from us and make a decision right there. We love working with those guys.

On the other hand, we have some newer buyers who we either haven’t done business with yet or we’ve barely done business with them. These are international buyers, for example, on the Memphis market.

moneyWe have a buyer from Israel who we connected with the other day. These guys have the money and they’re actually willing to pay more for some of these properties than our regular players.

So it’s great to have the regular players on the short list. But, if we can make an extra $5,000 by working with somebody else who is newer in the arena, then we’re certainly open to doing that.

There have been times when we’ve been cautious about letting them know how much we’re making before closing. It’s because we don’t know if they’re going to have a problem with it or not. We don’t know if they’re going to feel like they’re getting the short end of the stick. If they’re going to end up making $15,000 after they rehab it, and we’re making $15,000 wholesaling it to them, they may have a problem with that.

In those situations, we have a policy that we’ve adapted… If we’re making $10,000 or less, we don’t worry about it because we think it will be okay and they’re not going to care. But if we’re making more than $10,000 on the wholesale, unless we absolutely know the buyer won’t care, then we do a double closing.

They could still find out after the fact how much we’re making, but at that point, the deal’s already closed and done with. We can then have a conversation with them about why they shouldn’t care.

Emotions are emotions. I don’t want to run the risk of somebody I don’t know, who is perhaps new in this marketplace, feeling yucky and backing out just because of the emotions. Emotions aren’t always logical.

This is we can be cautious about revealing that dollar amount to certain buyers. It becomes a judgment call based on what we feel we know, or don’t know, about our buyer.

Summing Up

So there you go. It’s like this…

Your buyer needs to know you’re a wholesaler and is connecting with you because you’re a wholesaler.

However, whether or not you reveal the amount of your fee might be another matter altogether.

Lemme Hear from Ya

Any other wholesaling Qs? Splat them out in the comments section below

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