By: Jim Zaspel
Have you ever had a deal fall apart at the 11th hour because your buyer couldn’t get their financing? I have, and it flat-out sucks! After learning my lesson the hard way, I realized that there are a few simple things I can to do prevent fake cash buyers from tying up my deals and costing me money…and you can do the same!
Here’s What You Should Do to Prevent Losing Deals
First of all, and this is the biggest thing to me when I’m wholesaling…collect a BIG earnest money deposit! How big? $5,000 – $10,000 big. Will you get some buyers that complain about that? Of course! But here’s what it comes down to: you want your buyer’s deposit to be big enough that if he/she backs out of the deal, they’ll feel the hit, and more importantly…you at least make a little bit of money!
Performing Due-Diligence on Your Cash Buyers
Ok, assuming that your buyer has put up a big deposit, you still want to make sure that they’re legit. In my opinion, a cash buyer is only truly a “cash” buyer if they’re using 1) their own cash, 2) a line of credit that’s already existing, 3) a private lender, and maybe 4) hard money. Regardless of which source of money they’re using, you want to get verification of it…whether that means a bank statement or whatever.
All this = $22,000 and a Smooth Closing
A little while ago I got a personal referral of a seller who was looking to sell a house in Bucks County, PA. Long story short, I got the house under contract and got LOTS of offers on it – offers that ranged from $75,000 to $107,000! I had offers from people who were “getting preapproved” by hard money lenders, and then I had real cash buyers…one in particular stood out!
After this guy saw the house, he called me and said, “Look, I’ve got a line of credit that I’m going to use to buy this house, and I’m going to make a full-priced offer, less the commission that you’re offering.” That’s a pretty exciting phone call! However…I knew from past experience that I wasn’t home free just yet. I told him that he had to put a $15,000 deposit (I was feeling a little extra gutsy that day!) in escrow with the title company, close in 10 days, and send me a statement for his line of credit.
He Sent $15,000, Proof of Funds, AND a Signed Contract the SAME Day!
THAT’S the kind of buyer that you should be looking for! Find someone who isn’t going to string you along with contingencies and all sorts of other junk. Find someone who’s ready, willing, and able to close very quickly.
The More of These REAL Cash Buyers You get on Your List, the Better-Off You’ll Be!
That’s just one example out of dozens and dozens of deals that I’ve wholesaled, but since my profit was $22,000 it made for a pretty fun example!
I’ve Figured Out How ANYONE Can Get 50 New Cash Buyers Every Week!
I created this step-by-step process for my inside sales rep, and then I realized that I probably ought to share this other wholesalers!
To YOUR Success,
Jim “JimmyZ” Zaspel