When I first started in the wholesaling real estate flipping business, I was scared to death to tell the sellers that I was going to sell their house for a profit. I would go to every measure to hide the fact. When you’re wholesaling a house, there’s many factors that can reveal the fact that you’re selling the house to someone else.
Let’s review some of the fears that you may face if YOU’RE trying to hide the fact that you’re a wholesale real estate flipper.
First, you have to ask the seller for a copy of the key, so you can put a lockbox on the house. I’d tell them that I need to get my “partners” in the house. Sometimes I’d make them think that I was going to actually rehab the house, and that I needed to let my contractors come in and give me estimates before closing.
When it’s time to start marketing the property, you have to strategically put the signs out where the seller won’t see them. Sometimes the seller lives close to the property, which will kill your sign campaign all together. You won’t be able to put the property address on the sign in fear that they might see it.
If you use Craigslist or other internet methods to sell the house, the seller is sure as SHIT to see their house advertised online. If they don’t understand what you do, they’ll call you on the phone with major concern as to why their house is listed for sale online. After all, they thought that YOU were going to buy it for all cash.
Then there’s the closing table. Oh my God! What if they see how much money you make when real estate flipping? Are they going to say “Forget it” and walk away from the deal? Are they going to want some of your money because, after all, you did some hard negotiations with them? These thoughts certainly go through your head on the day of closing, and you’ll chew your nails down to the bone worrying about it until it’s closed.
This is not the way to live! This causes unwanted stress in your life. It’s much easier to explain to the seller what you do for a living, so you can rest your head at night. PLUS, there’s more benefits than not of telling the seller the truth and not trying to hide your wholesale real estate flipping.
So here’s how to explain what you do to a seller:
When you start negotiating with the seller, there’s no point in disclosing your real estate flipping business model yet. The most important part of this stage is to solve the seller’s problem and negotiate the best deal possible. Make sure that the seller is happy with the offer, and that you’ve created a win-win solution.
Once the purchase price has been finalized, and you start reviewing the closing process with the seller, you can then mention that you work with local investors, and that they’re going to be excited to see that we have a new house in the inventory! This is a good time to ask the seller if they’d be ok with a lockbox being installed so that your investors can come in and look at the house. MOST sellers aren’t going to have a problem with it. The only time they resist is if there’s personal property in the house. So you’ve got the hard part out of the way now. Wasn’t that easy?
Once you send the contract to the seller for signatures (that’s what I do), they have plenty of time to review the terms of the sale. My contract specifically states that I am going to assign the contract for a profit, and that I will need access to the house to show it to potential buyers.
So in two fail swoops, I’ve explained to the seller what i do, and what I need from them to get this deal done.
Still worried about the seller seeing how much money you’re making on the deal? DON’T WORRY! The assignment fee is a charge to the BUYER, so it doesn’t even appear on the seller’s side of the HUD. When the title company is reviewing the HUD with your seller, they don’t examine the buyers side, because they don’t care. They’re only concerned with how much money they’re walking away with at closing. SO STOP WORRYING.
In the last 15 years of wholesale real estate flipping, I’ve had ONE Seller who was pissed because I was making $4,000.00 on the deal. It was in the beginning of my career, and before I started disclosing to the sellers what I do for a living. He ended up signing the closing docs and everyone walked away alive. He was a real dickhead from the start, so I think I would’ve had problems with him now matter what.
So if you’re new to the real estate flipping business, or even if you’re experienced, but you still find yourself making stories up to conceal what you REALLY do for a living, then JUST STOP IT. You don’t have to. BE TOTALLY TRANSPARENT. Everyone is cool with this. Trust me.
Property M.O.B.: Your Guide to Flipping Houses For A Living
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