All right, you decided that you want to wholesale houses for instant cash. In fact, you're down the road on the learning curve and you've done all the homework by having a strong buyers list already established. In fact, your specific marketing for wholesale deals is paying off and you're not only getting leads but offers that are getting accepted!
Now you just need to solidify that buyer contract and a BIG paycheck with your name on it is right around the corner. Let me be very, very frank with you and state that wholesaling properties is like being in the middle without being squashed! You're negotiating with both sides and most probably your buyer and seller would not need your assistance if they could get together in the first place but that is your job to facilitate the transaction while having a vested monetary interest in the property initially.
Moving right along here it is time now to get that buyer contract and initiate the closing process. The next question I ask you is the entire meaning of this subject and it can be quite delicate and may blow your entire deal:
How are you going to get your buyer into the property to look at it?
In my wholesale deals first off I simply don't make offers that I know absolutely would not work. By ‘work' means even in worst-case scenario I would be able to close with a hard-money lender if my wholesale buyer disappeared off the face of the earth within a matter of days. Even though I have that no-brainer deal my wholesale buyers want to SEE the property. Only a fool would buy the property needing major repairs sight unseen…..well, that is except for my few core group of buyers who I've wholesaled numerous properties to and they just want me to fax them the contract and that my friend is called a relationship and another story.
Now your buyer wants to view the property just to make sure it meets their buying criteria and you can't blame them.
Do you have access to the property to show your buyer the inside?
If you don't, then put it in reverse and let's back up to how you negotiated the deal. On ALL of my properties that I wholesale I will insert a clause similar to this:
“Access to property shall be granted to Buyer(s) with a key, solely for the purposes of showing property to interested parties pertinent to this agreement inclusive of Buyer(s)'s partners, contractors, property inspectors, and lenders.”
It has rarely been a situation for me that a seller balks at granting that stipulation. You ask why and the answer is my sellers are MOTIVATED! If they are accepting my offer making it a no-brainer can't lose deal then giving me a key to access the property is usually very minor. However, at times this can be an issue.
If your seller just won't relent, then you have a few options and one of them is to simply walk away. My personal opinion is it would be the ethical thing to do rather than to accept the contract without access to show your buyers. In all probability you may not secure a buyer since they can't see the inside and thus not close on the deal opening up yourself for non-performance contract issues.
The other option is to be very up-front with the seller and say something like the following:
“‘Mr. Doe I can certainly respect you wanting to be there at the property any time I need to access it. I simply can not amend my contract offer without access as my time is valuable like yours and the professional advisement on this property makes it absolutely necessary for me to have access at my convenience. However, I am associated with many other investors and if you would allow me an option to buy the property under the remaining price and terms of our contract then I would be glad to pursue this further.”
Lastly, as a wholesaler you will have MLS properties through Realtors in which you can locate some real gems. I deal mostly with independent sellers just because of the flexibility, however I do some deals with Realtors and it is a much different ballgame when wholesaling properties.
The true fact of the matter is that a significant number of Realtors are not that receptive to you wholesaling deals while you make a few thousand and they make a few hundred. I know there are many out there that may disagree wtih that statement, but after doing deals in this scenario I've had Realtors starting to deal directly with my buyers and/or doing the deals themselves. Nothing really unethical in my feeling on that as I don't have the only license to be the only wholesaler in my county (smile!).
The most important issue with that is that any reputable Realtor should not give you a key, lock box code, or any other access to a property….unless you're another licensed Realtor. That would be a total violation of their code of conduct and matter of law without the written permission of the owner. What if he/she does give you a key and in the midst of showing the property you forget to re-lock the back door and in the night someone comes in and vandalizes the house? What's going to happen then? This is a worst-case scenario example but serious issues to consider.
I simply do not know another way to deal with MLS properties that when you tie the deal the listing Realtors needs to know that you are wholesaling before hand AND they to be available to let your buyers in to look at it. If you do not address that situation contractually with your Realtor, then you may be setting yourself up for failure and/or legal consequences for non-performance or forfeiture of earnest money.
Just in closing, my hope is that you earnestly think ahead of the situation on how to get your buyer access into the property while you have it under contract. There are many situations of ethics that will arise continually around this issue and you will have to address them personally on the level of integrity in the way you want to run your wholesaling business. Make no doubt though….once you get the green light ‘GO' having that deal tied up at a great price and the key to the castle, then truly that big check with your name on it for all intense purposes is already in your pocket. Think through the obstacles that potentially could keep you from a profit and have a ‘gameplan' to address those issues.