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By: Omar Johnson
Certain mistakes are so commonly made by new wholesalers entering in the real estate business that they are worth mentioning and highlighting. I have listed them below for you in this article in a problem/solution format because what would be the point of highlighting the common mistakes and problems without offering relevant solutions?
Problem: You're buying in the wrong area.
Solution: Talk to your buyers, find out where they're buying, and try to find deals in those areas where buyers are active.
Problem: You're agreeing to pay too much for properties.
Solution: Lower your offers. A good rule of thumb when you are new at making offers is that if your all cash offer doesn't embarrass you at least a little it’s probably too high.
Problem: You're working with the wrong real estate agents.
Solution: Find others who are more reasonable. There's never a shortage of real estate agents in any given area, and they tend to try to make themselves easy to find.
Problem: You're worrying too much about repair costs.
Solution: Let your buyer worry about this if you are uncertain. Make sure your seller understands that your offer is contingent upon certain inspections to verify repair costs. That way if you have contracted at a price that is higher than the offers you are receiving from your buyers, or that doesn't leave enough room for you to make an acceptable profit, you won't lose face by renegotiating a lower price with your seller.
Problem: You're not making offers because you don't have money.
Solution: If you're wholesaling it doesn't matter how much money you have. You will have money because you are making offers, not the other way around. Make lots of offers, you won't be using your personal funds to close on any of them. The more offers you make and the more deals you get in the middle of the sooner you will see results from your business.
Problem: You're not prescreening prospects properly.
Solution: Whether you're dealing with buyers or sellers, there will be many more who are unqualified than who are qualified. You need to spend as little time as possible talking with the former and as much time as possible talking with the latter. This is the art of prescreening.
It involves asking the right questions to make a determination as quickly as possible if you are dealing with a prospect or a suspect.
Problem: You're not making enough offers.
Solution: Make lots of offers. Making offers and negotiating is where the main value comes from in a wholesaling business, and hence where you create the bulk of your profits. Generating leads to make offers on and realizing the profits you create are equally important of course, but assuming these aspects are tended to properly then the more time you spend making offers the greater your profit will be.
Problem: You don't have an organized follow up system.
Solution: Design a tickler file or similar file system to keep track of EVERYONE you talk with and follow up with them as appropriate. Most of the time you don't do business with a buyer or seller the first time you talk to them, but only after repeated contacts. So stay in touch!
Problem: Your investors are offering too low a price for you to profit.
Solution: Renegotiate your price with your seller. If they won’t accept a lower price let them know you won't be able to buy the house. This becomes less of a problem the better you get at everything.
Problem: You're not getting any offers because the house is in a war zone.
Solution: Find out if your buyers are interested at any price. Target your marketing towards landlords who buy in the war zone.
Problem: You're not getting any offers because the property is in too bad of shape.
Solution: Find out if your buyers are interested at any price. If the house is a teardown tell the seller that you won't be able to buy it, unless you can get it for a discount from lot value and have buyers who will take it. If the house is not a teardown target your marketing towards investors who like very heavy rehabs. There are some rehabbers who specialize and thrive in this niche.
Omar Johnson is a successful real estate investor and author of the home study course "Renegade Stealth Marketing For The Savvy Real Estate Entrepreneur" For more info visit http://www.renegadestealthmarketing.com