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April 15, 2025 14 mins

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Transcript

Episode Transcript

Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:06):
let's talk about a dozen red flags that you need to
be aware of when you're lookingat doing a wholesale real
estate deal.
Number one seller will not geton the phone with you.
Now, this is coming from a guythat did hundreds, if not maybe
even a thousand plus deals justfrom SMS texting.

(00:28):
Okay, we're not doing SMStexting anymore for marketing
outreach.
So if we're reaching out tothem and they're refusing to get
on the phone with us andconversate, there's a chance
that this is a scam.
So, yeah, you can still lockthe deal up via text message,
but you need to be very leery ofwhy do they not want to get on

(00:50):
the phone with me?
If they're not willing to dothat, I'm not willing to send
them a contract.
I need to have a conversationwith them.
I need to make sure thatthey're the actual owner, that
they know enough about theproperty, enough details that
they can convince me thatthey're a legitimate seller.
Otherwise, we got to postponesending that contract.
Number two the deal seems tooeasy.

(01:14):
It's too good to be true.
This is where I like to talkabout the seller buckets.
The seller bucket of price isright.
There's no motivation If you'retalking to a seller and they
really don't ever explain to youwhy they're motivated to sell
this property for a discountagain.
You're probably looking at somesort of scam judgment, lien tax

(01:39):
bill, something that's going tokill the deal later on.
So if you don't identify anysort of motivation, just be
completely honest with theseller and say Mr and Mrs Seller
, I understand you're giving mea great price of this property,
but you've got to explain to mewhat's going on.

(01:59):
Why are you selling thisproperty to me for such a good
price?
Because otherwise.
Why are you selling thisproperty to me for such a good
price?
Because otherwise, too good tobe true is actually too good to
be true.
Number three title companytaking too long to process the
deal.
Man, one of the worst ways inthe world to lose a deal is by

(02:20):
the title company dropping theball and the seller blaming you,
the buyer, getting cold feetbecause the deal's taking too
long.
Listen, transactioncoordination is a vital part of
what we do as wholesalers.
The title company does not careabout your deal closing as much
as you should.
They're not there to coordinatethis transaction.

(02:41):
They're just there to processthe paperwork and process the
funds.
It's your job to stay on top ofthem, stay on top of the
communication with each andevery party involved in the
transaction and make sure thatthe title company doesn't take
too long where you end up losingthe deal.
Number four the buyer is shakywith explaining how they're

(03:01):
going to fund the deal.
What I mean by this, mr Buyer,how are you going to be funding
this deal?
Oh, I'm going to be using hardmoney.
Awesome, which hard moneylender?
How are you going to bring thecash to close?
Do you have a gap funder?
Are you using your own money?
My favorite is when the endbuyer says I'm going to be using

(03:22):
a private money lender.
Okay, what does that mean?
Do you actually have theprivate money lender?
Do you have to go raise theprivate money?
These are vitally important asa wholesaler to understand,
because the last thing in theworld that you want to do is
assign your rights to thatcontract to a buyer and they not
have the ability to perform.

(03:44):
So when you're doingdispositions yeah, I know it
sounds sexy when the buyer saysI'll take it at your asking
price, I'm ready to put earnestmoney down, but you want to make
sure that they can actuallyperform.
So if they cannot explain toyou how they're going to fund
that deal.
You might want to move on tothe next buyer.
Number five the seller is slowrolling you on giving you access

(04:07):
to the property.
Man, timelines are important.
We always put a closing date oneach and every one of our
contracts and it's vitallyimportant that we get our recon
aka pictures and access set upso we can get our buyers in
there to do their walkthroughs,so we can get offers.
One of the things that kills alot of wholesale deals is when

(04:29):
we get the property undercontract and then it takes us a
week just to gain access, to getpictures, because a lot of
times time is of the essence andtime kills all deals.
So if your seller is slowrolling you on giving you access
, you need to be firm in yourcommunication.
Mr Seller, if I do not getaccess in the next couple of

(04:51):
days, I'm going to have to sendyou an extension to the contract
closing date because of thedelays of gaining access to the
property.
This is why we also have accessinstructions on our contracts.
The seller agreed to give usreasonable access to this
property, so if they don't, wehave every right to extend that

(05:14):
contract.
Number six people start to ghostyou, man.
This gets scary.
I've had title companies ghostme, buyers ghost me, sellers
ghost me, jv partners ghost you.
Listen, you've got to put anend to this immediately.
And sometimes we're a littlebit afraid to be aggressive in
our communication when someonestarts to ghost us, because we

(05:35):
don't want to offend them.
We don't want to send somethingthat could potentially kill the
deal.
Listen, you're going to lose alot more deals by someone
ghosting you than being overlyaggressive in your communication
to get them to respond.
And what I mean by aggressiveis call, leave a voicemail and
send a text message, whoever itis.
Listen, I need you to respondto me because I'm feeling like

(05:58):
this deal is falling apartbecause the lack of
communication coming from you.
At the end of the day,sometimes life does happen.
But they should understand thatthe seriousness in your voice
is based around trying to getthe transaction finished, not to
offend them.
Red flag number seven Someonereaches out to you.
They say man, I've seen allthose deals you've been closing

(06:22):
online and I want to do a jointventure.
Awesome, send me over thedetails.
And then they send it over andthere's no contract and they say
just add your fee on top.
Listen, this is a huge red flagfor me.
We don't do that.
I need to see your purchase andsell agreement.
I want to see that purchase tosell agreement.
I want to see that you'redirect to seller and with.
The only way we are gonna dothis deal is we're gonna do a

(06:45):
50-50 split.
Now I understand there's otherpeople out there that will do
less spreads and that's fine.
I don't need the deal.
You reached out to me and yousaid you want my expertise and
dispositions and I will do thatfor 50% of the profit.
That being said, we are goingto have clear communication and
expectations of how this isgoing to go, and if the joint

(07:06):
venture partner will not be openabout everything that's going
on in the transaction, I runaway from that transaction.
Another huge red flag on jointventures is when you ask the
joint venture partner for thatcontract or any sort of
information and they say mypartner has that information.

(07:26):
Listen, I have a partner.
She's about 10 feet away fromme every single day.
What do you mean?
You've got to get thatinformation from your partner.
You should have it, whetherit's in a Dropbox, a Google
Drive, just a communicationbetween you, an email box.
If they can't get that, itscreams they're daisy-chaining
that deal.
I'm out.

(07:47):
Red flag number eight Anattorney has to be involved in
the deal.
That's the whole red flag.
Listen, I honestly cannot standattorneys.
I don't know how they get paid.
I think they get paid whendeals close and they just really
deep down hate money becauseattorneys are deal killers.

(08:09):
There's attorney states,there's some of the most
difficult states to get a dealacross the closing line.
Why?
Why, because of them.
And then when the other partymaybe a buyer or seller says I
need to get my attorney involvedon this, I need them to review
the contract Red line, changingthe language in the contract,

(08:29):
changing terms.
Listen, guys, we do simpletransactions, cash transactions.
I'm not talking about aNovation Sub 2 seller finance or
any of that mess.
I'm talking about a normalwholesale transaction.
Mr Seller, I'm buying your$20,000 shit box.
We don't need the deal-killingattorney to come in.
I hate attorneys being involvedin my transactions.

(08:54):
The largest red flag of them allRed flag number nine when some
party involved in thetransaction, whether it's your
end buyer or your seller, wantsto change the earnest money,
deposit or contract language,this is a huge red flag for me.
One of the things that I hateto see, especially with newer

(09:15):
wholesalers, is when they say mybuyer didn't perform't perform.
And I say, well, at least yougot that $5,000 non-refundable
EMD right and they said thebuyer said he could only do a
thousand dollars, or he was aknown buyer and so I only made
him put up a hundred dollars EMD.

(09:36):
See, this is a red flag rightfrom the beginning.
Mr Buyer, if you're seriousabout buying this property, why
won't you just put down theearnest money deposit that I am
requesting.
If language in the contractneeds to be changed, it needs to
be very clearly defined as towhy that needs to be changed,
and it's up to you to have theintuition and the wherewithal to

(09:58):
make the decision on whether ornot you feel comfortable doing
that.
More often than not, the answershould be no.
That's my contract.
I've written it that way for areason.
Red flag number 10 during dealanalysis, the house is big man
on the block because of anaddition or an enclosed garage.

(10:19):
This is a huge red flag.
One of the things we alwayswant to avoid is getting a
property that lacks actualcomparables.
What I mean by that is.
Subject property is 2,000square feet, but the entire
neighborhood is chock full of1,100 and 1,200 square foot
properties.
The neighborhood is an 1,100,1,200 square foot neighborhood,

(10:42):
so your 2,000 square footproperty now is big man on the
block and it's going to bereally hard to achieve the
necessary value that is neededfor that property to work out
for your end buyer.
Your end buyer is also going tobe scared off from this
property because what happenswith additional square footage
is more rehab is needed.

(11:03):
The other thing that you needto be aware of when it comes to
additions and enclosed garagesis was the work permitted
correctly?
A lot of times, homeowners willgo out and they'll do the work
themselves or hire a contractorthat doesn't pull a permit.
And then your end buyer thefirst questions they're going to
ask is was that additionpermitted?

(11:23):
This is a big red flag.
Honestly, more often than not,we like to walk away from these
types of deals.
Red flag number 11.
All right, this is a big one.
The seller starts to ghost you.
All right, this could happenfor a multitude of reasons.
A lot of times, guys, we'redealing with motivated sellers
and that means they have a lotgoing on in their life.

(11:44):
So sometimes we do need to be alittle bit understanding about
that.
So in our communications we doneed to be consistent and make
sure that we're alwayscommunicating with them.
What I've learned is, a lot oftimes newer wholesalers get
ghosted by sellers because oftheir lack of communication
initially with the seller.
So make sure you're constantlycommunicating, make sure that

(12:09):
every time you call, you'releaving a voicemail and you're
also following up with a textmessage.
The other thing is transactioncoordination wise, you always
want to be sending an email tothe title company and the seller
, making sure that everythingfeels warm and fuzzy.
That being said, when you areghosted by a seller, this is one

(12:29):
of the largest red flags and itcould end up leading to a dead
deal.
So you want to make sure thatyou get in touch with them one
way or another.
Red flag number 12.
When you reach out to the titlecompany and you ask them my
buyer said he was using saidhard money lender have you

(12:50):
communicated with the hard moneylender?
And the title company has notheard from the hard money lender
.
This is a massive red flag.
A couple of things arehappening here.
One, that hard money lender hasnot been notified of the deal.
Two, your buyer's probably notan actual buyer and they're
probably trying to daisy chainthe deal.

(13:11):
Something is amiss here,because I'm going to tell you
I've done hundreds of hard moneyloans.
One of the things that you'regoing to do every time you apply
for a hard money loan is you'regoing to give them the purchase
sale agreement, the assignment,and then you're also going to
give them the title company'scontact information.
The reason why is because thathard money lender wants to
immediately see that titlecommitment and start working on

(13:34):
preparing docs for closing.
Hard money lenders notoriouslymove very quickly, much faster
than a conventional lender onthese transactions, so they have
a process down.
So the best way to identifywhether or not your buyer is
moving forward with thattransaction is not to
communicate with them, but juststraight to the title company,

(13:55):
go to that third party sourcethat's unbiased and say, hey, is
this happening or is it not Allright?
Not alright, guys, that's thedozen red flags that you need to
look for in a wholesale realestate transaction.
Let me know if I missedsomething in the comments.
Show me some love, give me alike on the video.
We'll see you, guys, tomorrow.
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