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Wholesale Wholesaling

Responding to Seller’s Objections to Wholesale Offers

Caption: Image byAnnika Wischnewsky on Unsplash

You’ve made your offer to a seller. You did your due diligence and made a great offer, and they have some objections. How you respond could make or break this deal. Understanding the seller’s objections and how to respond is crucial to obtaining the assignment contract.

Making the Initial Offer

Having a thorough offer will help you justify your offer. Include a detailed market analysis that includes comparable properties in the area that have sold within the last year to back up your proposal.

Add a list of your transaction costs. Being transparent about your costs will help you justify your offer price and show them the expenses you pay within the purchase price.

Being upfront and honest will go a long way in making the seller see your offer as genuine and lead to increased trust.

Seller Objections

Sellers voice objections for multiple reasons, below are the most common. Your understanding and response to their objections can help persuade them in accepting the offer you have on the table.

  • I’m Just Not Ready

The seller is procrastinating. They want to sell the house, they just need a nudge in the right direction.

Suggestion: Explain you’re there to close the deal and be respectful. Do not be condescending! They were interested in selling and you wanted to buy the property. Remind them time is money for both of you, the sooner they sign the sooner they will have the money they need. Have everything they need to sign at that moment. As you speak, hand them the pen and the contract. Worse case, set a followup date with them.

  • Why Should I Trust You?

Sellers may need reassurance about your credibility due to all the online scams and warnings..

Suggestion: All you can do is be patient, be confident and perhaps share addresses you’ve previously wholesale.

  • I Need to Think About This a Bit Longer

The seller may not be serious.  Your number one goal should then be to find their “hot button” and what motivates them. Reinforce how selling the home will benefit the seller. Remind them about the contracted time agreement and you would hate to see them lose the opportunity to get the assignment. Be empathetic but firm.

Caption: Image by Bruno Guerrero on Unsplash
  • I Think You Are Low Balling Me

The seller wants the best price possible, but you do too. Ask why they feel you are low balling them. Go over the numbers in your proposal to justify your offer. Reassure them you are offering the best price you can. Use your transaction analysis as your proof.

Remind the seller that you can close quickly with no inspections or other delays. Again, focus on their motivation! You can even ask them, “Do you want to list with an agent and wait 6 months or close with me in 6 days?”

  • I Need to Run This By My Significant Other (or someone else)

They wouldn’t be this far into the deal if they hadn’t already discussed it with their significant other (or someone else. This is just another delay tactic for them to solicit other, hopefully higher, offers.

First, ALWAYS be sure to confirm who the decision-maker is before making an offer. You may even want to confirm this over the phone before setting an appointment. If they still stall, you may have to play hardball with them and tell them your offer is only good until you leave. 

  • There are Other Buyers Interested in the Property

Just another stall excuse to solicit higher offers.

Again, your options are to find their motivation and focus on that or play hardball.

  • What Makes You a Better ChoiceThan Someone Else

Sometimes sellers are emotionally attached to a property. Maybe they grew up there or often visited and have fond memories. The only way to overcome emotional objections is with empathy and establishing rapport. This can be time consuming, so be prepared. 

Keeping Your Eye on the Prize

At the end of the negotiation, you want to walk away with an assignment contract. Listening to the seller and using some psychology to understand a seller’s objections and how to respond can  help persuade your seller that the offer you made is exactly what they need. Being empathetic, respectful, and professional and having a thorough market analysis, can be the solution to your seller’s financial objections.

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Wholesale Wholesaling

Some Sellers Are ALWAYS Desperate: Tips To Wholesale Metro Detroit Real Estate in 2023

A hand holding house keys with a door behind.
Source: Maria Ziegler from Unsplash.

The market is constantly changing and in the real estate industry, so you have to adapt to stay ahead of the game. As a real estate wholesaler, you have to know what’s happening in the market you’re operating in—the market isn’t the same playground as it was last year.

In this article, we’re looking specifically at Metro Detroit’s real estate market scene. We’ve provided new tactics and strategies to help you leverage current market trends, allowing you to serve potential clients to the best of your ability—and, of course, make really good profits.

Real Estate Wholesaling in Metro Detroit 2023

Higher prices and mortgage rates make buying properties a little more difficult for buyers. They’re no longer in a buy-buy-buy state of mind, being more careful with their purchases this year. So the median home sale prices in Metro Detroit are almost 7% down from last year, and inventory has risen 36%.

Median home sale prices in Metro Detroit.
Source: Axios Detroit.

Still, even with property prices dipping overall, the Metro Detroit market is still hot in several cities, where prices are stable and properties are selling over asking price, according to Crain’s reports. These “hot markets” include St. Clair Shores, Westland and Ypsilanti Township. Other markets to look out for are also Canton Township, Wixom and Sterling Heights, Novi, and Ann Arbor.

Experts are predicting that the market will skyrocket in demand, competition, and property prices in the near future, especially if the market follows typical trends that we’ve seen in past years.

In other words, we’re expecting Metro Detroit to become a seller’s market this 2023, where the demand will exceed the supply. There’ll be many interested buyers, but the inventory will be low. That said, buyers will be willing to spend more for a property, and they won’t have that big of a negotiating power. There might even be bidding wars that’ll drive up the property’s price!

For wholesalers, this is both good and bad news. The good news is that buyers will clamor over the deals you get. They’ll have a harder time looking for properties to purchase, so they’ll look to middlemen like you to get the job done. The bad news, of course, is that the sellers will have the upper hand, and you might find it challenging to find below-market-price properties to make a wholesaling profit.

So, what can you do this year to continue reaping profits in 2023?

4 Expert Insights to Successfully Wholesale Real Estate This Year

With everything that’s happening in Metro Detroit, we’ve come up with our top tips you can do to stay profitable amidst the twists and turns. These are based on our own experience, being experts in Metro Detroit real estate for over two decades (and counting!).

#1 Prioritize All-Cash Buyers

There is one type of Metro Detroit buyer that you can’t do without in today’s market: an all-cash buyer.

Because of the rising interest rates, you’ll have a challenging time convincing buyers to purchase homes on credit. Metro Detroit is already one of the lowest mortgaged cities, with only 1,700 mortgages given in a city of 670,000 people in the previous year.

So look for liquid buyers who, when they offer all-cash, will likely win the homes they bid on. All-cash purchases often hasten the homebuying process and make a seller more confident in the transaction.

Cash is king, that’s why platforms like Knock, Opendoor, Divvy, Homeward, and Ribbon Home offer cash guarantees to prospective homebuyers. Prioritize all-cash transactions to turn a faster and easier profit.

#2 Focus on the “Starter Home” Market

Expand your buyer’s list with new audiences. For example, the City of Detroit is identified as one of only four large U.S. cities where renters could recently afford a property. Renters actually make 31% more than the income they need to buy a “starter home”, so there are a bunch of locals seeking to purchase instead of renting a property.

Bar chart about cities where renters could afford a starter home.
Source: Point2homes.

So have your pulse on the market to know which areas are affordable and perfect for entry-level housing, including the ones with distressed properties and foreclosed listings below market value. Having excellent “starter home” deals allows you to potentially capture a large pool of clients—especially since half of the city’s population is currently renting and dreaming of owning a property.

#3 Build a Solid Reputation

Wholesalers often get flak as meddling men. But the reality is that you’re a key middleman. Closing a deal on the market is not just about buying and selling—it’s about the finer details. When equipped with proper knowledge and skills, real estate wholesalers should be seen as expert deal-finders.

So, know your stuff when finding property and dealing with buyers. Don’t fall into the trap of:

  • Overestimating the ARV (After Repair Value): You need the skills and data to properly analyze comps. Avoid overestimating the retail value of the home, or buyers will either overpay (and never work with you again) or simply turn you down (and also never work with you again).
  • Underestimating the ERC (Estimated Repair Costs): You’re not a flipper, which means you might unknowingly work with dishonest contractors. Buyers could end up uncovering hidden property issues they didn’t budget for—staining your reputation.

Apart from brushing up on your technical know-how, get to know people in your industry and keep your name in the game by attending local REIA (Real Estate Investors Association) meetings. Keeping your network active will help you save time and money in the long run, allowing you to seal more deals.

If you have the resources, also build a website, social media presence, have targeted advertising, and keep sellers updated with the latest industry trends—anything to put your name out there and be top-of-mind. You’ll get way more visibility this way, building a good reputation in the scene.

#4 Restrategize Your Marketing Efforts

Following the earlier thought, develop a strong marketing strategy and personal branding for yourself. Nowadays, it takes more than pasting your name on a bus bench to get prospective clients.

General rule is to put effort into high value leads, such as individuals that want to buy or sell actively and aren’t casually browsing. Move your marketing money where you can regain and profit from it, too.

Imagine being a prospective seller who wants to get a property off his hands, and he begins by Googling “selling my home quickly in Metro Detroit”. Chances are, he will land on generic real estate websites. Some businesses might not even be in Metro Detroit. But if you come out with a unique value proposition and get straight to the facts, that’s cost and time savings on one lead. Same goes for buyers.

And don’t stick solely to online channels! Capitalize on your home court advantage.

Call up the Metro Detroit title office and see who has purchased or sold homes, preferably in cash in the last 5-10 years. Also attend foreclosed property auctions to scout investors that need guidance on the legwork involved, and keep an eye out for sellers that are renovating or flipping their properties.

Real Estate Wholesaling in Metro Detroit: Go Big or Go Home

We’ll likely see the market increase in demand, competition, and property prices this year. With Metro Detroit becoming a seller’s market soon, you’ll find an influx of interested buyers clamoring over deals, but you’ll also have to deal with sellers that have the upperhand.

So prioritize all-cash buyers, focus on starter home areas, build a solid reputation, and restrategize your marketing monies to ensure that you’re more than profitable this year.

Join us as a REIA member and attend our upcoming REIA meeting, and sign up for our newsletter and stay informed with the latest news—it’ll help you be successful in your wholesaling endeavor.

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Wholesale Wholesaling

Real Estate Wholesaling Contracts: What Should You Include to Guarantee Success?

Source: Photo by Romain Dancre from Unsplash.

The Wholesaling Contract is the bread and butter of real estate investment, and key clauses can make or break the deal.

Some key clauses in the contract serve as pillars that ensure the document is airtight and that you’re protected against sale issues—without these key phrases, the whole sales cycle could be ruined, and famed returns could be lost.

Whether it’s your first time handling a real estate deal or you’re looking to improve your current system, this article is for you. Here are the key elements real estate investors should include in their wholesale contracts for a successful real estate deal.

What You Should Include in a Wholesaling Real Estate Contract

A Wholesaling Real Estate Contract is a legally binding agreement that sets the terms of the sale between the wholesaler (that’s you, a sort of middle person) and the seller. Having a written understanding between parties helps avoid any disputes and misunderstandings.

There are two critical parts to a wholesaling contract: the assignment contract and the purchase agreement. Here are the roles they play and what you, the wholesaler, should include in each section:

Part 1: Wholesale Real Estate Assignment Contract

The Wholesale Real Estate Assignment Contract is the first part of the Wholesaling Real Estate Contract. It transfers your right to purchase a property to potential buyers. Once you and the seller enter an equitable conversion, you’ll draft an Assignment of Real Estate Purchase and Sale Agreement.

The Assignment of Real Estate Purchase and Sale Agreement is an assignment of ownership from the seller to the home buyer and outlines that the new buyer assumes ownership of the home and absorbs all responsibilities. The agreement should contain a copy of the original purchase and sale agreement you had with the seller and outline all the terms, conditions, contingencies, prices, payment terms, and stipulations involved in the transaction.

When this first part of the agreement is signed, the wholesaler typically gets a portion of the wholesaling profit as a deposit. So, only after closing the deal will you receive the remaining balance.

Part 2: Wholesale Real Estate Purchase Agreement

Now, the second part is the Wholesale Real Estate Purchase Agreement. The document is built of several moving parts, but don’t let that scare you—the Wholesale Real Estate Purchase Agreement’s purpose is housed in the basic information. Here are the crucial clauses you should focus on:

  • Who’s involved? List your name and the seller’s and buyer’s names.
  • What’s the asset? Give a description and address of the real estate being sold and purchased.
  • What’s the deed type? Specify the type of deed that comes with the real estate sale.
  • What’s the condition of the property? List the condition of the premises, including the physical state of the structure, existing damages, and areas that need repairs.
  • What’s the purchase price and financing? Record the agreed-upon price and financing terms, including where the deposits will be held.
  • When’s the closing date? Write the date when the real estate transaction is finalized.
  • What happens when the buyer can’t purchase? Include a financing contingency for the buyer to back out if they aren’t buying in cash and can’t obtain the required financing.
  • What happens when the buyer doesn’t like the property? Include an inspection contingency for the buyer to cancel if they’re not satisfied with the results of a property inspection.
  • What happens when the buyer can’t get title insurance? Include a marketable title option so the deal can be called off if the buyer cannot obtain title insurance.
  • What happens if someone breaches an agreement? Include buyer and seller default clauses that detail what happens if one of them defaults on the sales contract.
  • What happens if the real estate gets damaged before closing? Include a clause for risk of loss and damage to protect the buyer if the property is damaged while under contract.
  • What are the additional charges? Include accounts for utilities, property taxes, and other additional charges required by the state.
  • What property details should be disclosed? Disclose any information that challenges state and local laws or that you otherwise feel could be misunderstood. For example, if the property has lead-based paint, you can make a statement about it in the contract.
  • What are the legalities? Include the standard addenda or legal language at the end of the contract, and mention any additional agreements made after the initial signing.

Clauses and protections help to shield you from liability. Moreover, understanding what each clause means before signing off prepares you for any contingencies that may arise in the deal down the line, helps establish trust among parties, and improves your wholesaling reputation.

Of course, there are plenty of contracts that you can download online. But they aren’t foolproof—not until you’ve got a trusted real estate attorney to double-check them for you. Your contract must guarantee you’ll get what you expect from the deal without stepping on anybody’s toes.

Wholesale Contract: The Key Elements Unlock Success

By understanding the role of the Wholesale Contract and its key elements, you can protect yourself and ensure a smooth transaction for all parties involved. And, if you’re not sure where to start, we can help.

Join as a member today , and we’ll ensure you receive an invitation to our next meeting to learn more about wholesaling from us directly. And in the meantime, sign up for our newsletter to stay updated on everything happening in the world of real estate investing. See you soon!

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