If you're interested in wholesaling, you know that finding motivated sellers is the name of the game.
I'm documenting myself trying to get my first wholesaling deal and I'm going to show you guys why I've stopped driving for dollars in the new list that I'm targeting, which has had some success so far.
After house hacking my first duplex, I've now moved on to getting into wholesaling to build up my experience but also to build up my cash to use on my next investment property.
In this post I'm going to talk to you guys about my lack of success driving for dollars.
I started my wholesaling journey like most people by driving for dollars. This is where you're looking for vacant, distressed, or abandoned properties in your area. It was actually pretty fun.
I got my mom to go with me and when our eyes were peeled for those types of properties, we actually did find a lot of them.
There were overgrown lawns, holes in roofs, and we even found a property that had just sold for five thousand dollars just a couple of weeks earlier.
So we knew we were in the right area and I was able to gather a list of about 35 properties that I then went home and skip traced, which is basically paying for the contact information of those homeowners.
Then I started cold calling. If things had gone to plan with this strategy, I would still be doing it.
But I want to share a couple of things I learned with you guys in the hopes of two things: one that you'll understand why I'm moving to this new strategy, and two that it might help you get your own wholesale deals. So first off, I don't like cold calling.
It's hard, people are mean, they hang up on you, they cuss you out, you get disconnected numbers, you get the numbers for wrong people, you forget your script, you get tongue-tied, like it's just difficult.
I know it'll get better the more I do it, but to be honest after a day of cold calling I kind of just felt drained and a little bit discouraged. I hit it hard for a couple of days and I showed you guys the tally of how all of my calls went, from the ones that went to voicemail, to the ones that answered, to the people that hung up on me, etc.
I started to feel like, if this is how I feel after calling this list just one time, and I know that big wholesalers like Max Maxwell say that, “You need to be reaching out to these people at least three times,” I was like “This isn't gonna be fun.”
So that's reason number one.
If you like cold calling so be it, it's just not for me.
Reason number two, is that skip tracing properties costs money. This honestly isn't a big deal because it's really cheap to get this type of contact information.
It's just like 25 cents per phone number, but when I show you guys how I get my new list for free.
You'll see that it just makes sense to target a list that's free, rather than one that costs money, especially if the free list is more successful.
And the reason number three that I'm moving away from driving for dollars is that it's just so time-sensitive.
First of all, you need to have a car, which everyone doesn't have access to. And second, you have to actually get in your car, go out, drive around your area for a couple of hours, and then go home.
And that's the first time you're actually contacting those property owners. There's just a lot of upfront time that it takes to do this before you actually start talking to those leads.
You can be putting yourself in a sketchy situation when you're driving for dollars. I was lucky enough that my mom went with me.
But if you're alone and somebody doesn't feel like you should be in that neighborhood, or they're kind of questioning why you're driving around, it could just be a situation that you might want to avoid or it just might be a little bit weird.
Finally, and this is really the biggest reason for me to stop driving for dollars, but for me when you're driving for dollars and making cold calls those homeowners are cold. They're about as cold as you could possibly get.
If there's a spectrum of how open to the idea of selling their house someone could be, at one end you've got somebody who just loves their house, they're living there, they're not interested in selling their house at all.
And then on the other end, you have people who actively have their house for sale on something like Zillow or Redfin.
But with cold calling, we're very close to this end of the spectrum. Sure, the person might not be living in this house, it might be distressed, it might be vacant, they may be coming up on wanting to sell, but for the most part they're not out there looking and so they're pretty cold.
And that coldness is the reason that you get hung up on and cussed out so much, because those homeowners are not actively interested in selling their homes.
So driving for dollars is hopeless then, right? No, that's not what I'm saying.
I'm just saying that for me, I'm pressing pause on driving for dollars and cold calling.
Now I already paid for this list, and I already called most people on it about one or two times, but I'm gonna go back to it.
But for now, to get my first deal, to really lock in on a strategy, I'm gonna switch it up.
And that's what I wanna talk to you guys about now.
Rather than looking for off-market distressed properties that are not for sale, I'm now looking for on-market distressed properties.
Some people say that you can't wholesale properties that are on the MLS or properties of an agent, but you absolutely can. And there are a ton of people out there doing it and doing many many deals per month and per year. And because most people just automatically assume that there are no good deals on the MLS, that could mean that it's less competitive.
Basically, these distressed on market properties are ideal for wholesalers for two reasons: number one, they've been on the market a long time or they've even failed off of the MLS.
When you see a property that's been on the market for months, you know that that person wants to sell and they're having trouble selling to a traditional buyer. So if you go in as an investor with a cash offer, that may be something that they're willing to accept. Especially if that property recently failed off the market after six months or more of trying to sell.
You know that that person is probably at their highest level of motivation that they could be. Whatever the reason the property is not selling, we know that this homeowner is much closer to that warm end of the spectrum.
And the second reason that these on market properties can work is that they're in a distressed situation. Even if the property just came on the market yesterday, but there's a giant hole in the roof, no flooring, and it's infested with different rodents, like no one who is going to live in that property themselves is going to want to buy it.
It's an investor special. The only person that could buy this property is an investor, and just because it's on market doesn't mean that you can't make it work.
Another reason I like this strategy is that real estate agents are always happy to get your call. We all do it when we get a call from a random number. We look at our phone, we're like "Who's calling me from a 718 area code?"
But real estate agents, when they get a call from a random number, that's possibly a new client and a new opportunity for them to make money. So their mindset is completely different when you're cold calling them versus when you're cold-calling a homeowner who doesn't have their house for sale.
We already talked about how you can use Zillow or Redfin to find these deals for free. You can use a seven-day free trial from PropStream or you can pay $97 a month, but I think this is a much more cost-effective way than mailing out letters, driving for dollars, and skip tracing text message blasting.
It's gonna take some work to dive in and investigate these properties, but that's the name of the game when you're trying to invest.
Plus, in comparison to driving for dollars, it's much quicker for me to analyze properties on my computer from home and call the agent immediately and get more information than it is for me to go out drive around for a couple of hours.
And then start calling homeowners where I don't even know if I've got the right number I get disconnected people don't answer my calls. It's just much more time effective for me to do it this way, and I don't have to leave my house.
And if we think about it from a numbers perspective, I'm using my effort much more efficiently because out of the people that I'm contacting.
Let's just say I'm contacting 100 people I know with this strategy, and that 100 of them are interested in selling their house or were interested in selling their house recently. Versus if I have a list for driving for dollars with 100 people, I don't know if any of those people are actually interested in selling their house.
They might be because it's in distressed condition, but they also might not be. So I'm putting my effort much more efficiently by targeting these on market or recently on market properties.
All right time for the bonus tip. I've talked about Flipping Mastery TV before. It's a youtube channel run by Jerry Norton and I'm learning a ton about his wholesaling and investing strategies.
Now this is a strategy from him. I did not come up with this, but it's called the double dip and basically it gets an agent to work twice as hard to make sure your offer is accepted than anyone else's.
So if we think about a traditional real estate agency, you have a buyer and a seller and normally both of those parties are represented by a real estate agent. You got the buyer's agent, you got the seller's agent, and both of them would make a three percent commission each on the deal, but that's six percent.
The entirety of it is paid by the seller, not the buyer. If you don't pay commissions when you buy, you pay commissions when you sell.
That's just how it works. But as an investor, you're probably not going to be represented by a real estate agent. You're going to be doing all this work to investigate and contact agents or owners on your own.
But rather than just remaining unrepresented and not using an agent, you can tell the seller's agent, the listing agent, “Hey, I'm unrepresented and if you're able, I would love for you to submit the offer on my behalf and get both sides of the commission.”
That means that if they accept someone else's offer, the agent makes three percent. But if they accept your offer, the agent makes six percent. That's going to get them to work much harder for your deal than for anyone else's.
Again this doesn't cost you anything extra because you're not paying the commission. The seller pays the full six percent.
It's not costing the seller anything extra, because when you go to sell your house you know that you must pay six percent: three percent to the buyer's agent and three percent to the seller's agent.
If for both of those parties, the seller’s and buyer’s agents are the same person, they get the full six percent. But what this does do is motivate the real estate agent to work harder on your behalf.
Side note, the reason you want to say if you're able to do this to the real estate agent is because some states and some brokerages don't allow this double dip or dual agency for their real estate agents.
But you just want to check. Out of all the agents that I've talked to, all of them have been super excited, “Yes, I would absolutely love to do that. Thank you.”
And none of them have had any type of problem with representing both me and the seller. Now something to note is that you just want to make sure you say it's for this deal only.
You don't want that listing agent to become your buyer's agent whenever you're doing a deal. You just want to offer that particular listing agent the opportunity to be the buyer's agent for you on that one deal.
It's also going to mean that when they get listings and they see a property that they think might be good for an investor, they're going to call you first because they know they'll make six percent with you whereas they'll make three percent with someone else.
If you're a beginner in wholesaling, hopefully you found this post helpful.
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