myEmpirePROQuestion: “Why do I have to sell my wholesale deal to a cash buyer?”
Basically we do teach that you should sell your wholesale deals to a cash buyer.
Why?
There are a couple of reasons, and there was one point that I kind of preach against that but things are changing up a little bit…
And also, nothing is impossible in this game.
It really comes down to the marketplace and what the market has to say.
So, Why do you have to sell your wholesale deal to a cash buyer?
You don’t have to, but depending on what kind of deal it is.
I just finished talking about short sales, that’s one.
Sometimes also you pick up a property… if you are savvy in this business you’ll pick up a property from REO, a real estate owned by the banks.
Basically these are foreclosed properties that are not listed by the bank with a realtor.
If you are buying those kinds of properties, they have title chain restrictions or deed restrictions as they call them.
What that means is that, when you buy the property right now or you closed on the deal…
You are not allowed to sell that property for a certain period of time.
Sometimes it’s 90 days, sometimes it’s 6 months.
It depends on what the bank wants, but for a certain period of time your buyer is not allowed to flip it.
The idea is to restrict people from flipping because flipping in it’s very essence, if it’s too much in a marketplace… it does devalue the marketplace.
It does kill the market in a very twisted weird way and I don’t want to talk about that right now.
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But you get the point, so the bank kind of discourage flipping because if it’s too much,
… just like anything that could be too much, it could devalue a piece of property.
So if you agreed to pay a bank $200,000 , they don’t want you turning around and then selling it for $250,000.
Ideally they want that $50,000 extra to themselves.
So that’s one situation where you won’t be able to flip to anything outside of a cash buyer.
If you want to flip to a cash buyer, it’s just a cash deal, then there are no rules.
That’s why I keep telling you, don’t worry about legalities because you have attorneys and title companies to worry about those kinds of craziness.
Worry about learning how to market and how to build a business, that’s what your business is.
Learn how to do that.
Learn how to market in a cost effective manner, that’s what we teach in 11DaysChallenge.com.
Don’t worry about the title or the contract.
All those things can be changed, on or before closing.
You can amend a contract all day long, it’s called addendum.
Don’t worry about those kinds of craziness.
You can go online and download contracts anytime you want… and you can change it around and say “just sign right here, we need to change it”.
If the homeowner is distressed enough, they don’t really care; they just wanna get rid of the property… if you are talking to the right people.
That’s one reason why we encourage dealing with cash buyers… because there is a way you pull the data, that they are proven that they can buy.
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They are the ones that can put down $3,000, $4,000 to $5,000 down payment.
Knows what they are doing,
And they don’t need to hire a bunch of inspections before they know if they want the deal or not..
they can see and know what to look for without spending additional $500 on inspection to know if they want the deal.
And they are ready to but as is.
See if you are selling anything outside the cash buyer, then you will have these questions:
“Can I do the inspection?”.
“Is it covered?”
“Will you fix this if I find that something else is broken?”
“Is it okay if I pull out of the contract?”
You have to deal with extra additional craziness when you are dealing with anything outside of a cash buyer.
If you are going to do this game, focus on finding deals that cash buyers want, so cash buyers can pick it up from your hand.
They close very quickly… 7-10 days after clear title.
And that’s the reason why I would say that so you can avoid all that.
Cash buyers also know what to do to a house to get it to pass inspection, to get it to get the certificate of occupancy and they deal with that on the other side of the transaction…
When they actually sell into a retailer.
Different Reasons Why you Have to Sell your Wholesale Deal to a Cash Buyer:
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- Deed Restrictions – you don’t have to worry about that when you are dealing with a cash buyer. A cash buyer will pay you a fee on the side without having to have multiple chains of titles. So if you are dealing with an REO or short sales that’s basically what you are dealing with.
- Down Payments – Secure the deal. Don’t waste time with people that don’t know what they are doing.
- Inspections – You don’t have to worry about people ordering inspections on a house that is clearly you are selling in as-is condition because there is equity in there and you wanna do that quick enough and do multiples of that because that’s how you do this business.