Why Traditional Wholesaling Fails in Pre-Foreclosures (And What I Do Instead)

What's up, Caden? How you doing, man?

Doing well, man. I'm hunting for deals and I'm excited.

I'm excited. Well, let's get after it. Well, guys, if you're popping in here, what we're going to be doing is I got Caden on here. He's about to go on an appointment with a pre-foreclosure that he knocked into. So we're going to do a pre-appointment call right now live so we can show you guys what to go over before you go on an appointment. Obviously, as you guys know, Batch Leads is where you can get pre-foreclosure data, pre-foreclosure leads. So that's what I've told Caden. I've told a lot of people I work with, hey, pre-foreclosures are motivated sellers that most— well, not everybody on the list, right? Because you got to filter through it. But that is an indicator of someone that has a problem that needs to sell. So what do you do? You call them, you text them, and if you don't get a hold of them, you go knock on them. Caden did that. He reached out to a guy. You can kind of tell the story a little bit of your experience, and you knocked on the door, bro. But before we get into your experience, I'm going to show people super quick how to get the pre-foreclosure data from batch leads. And so you guys can take action right now. Okay, so let me pull that up right now. So guys, depending on what market you're in, All you have to do— look, I'm in Canada right now, so it's got me located right here in Canada. Just zooms right in. Pretty crazy, huh? Okay, so let's just go to Salt Lake because that's where I was, and I don't think Batch Leads does Canada yet. So I'm investing in the States from Canada. So all you got to do, guys, is type in the area you want, and you just go to pre-foreclosure data, right? Right there, and it just pulls up all the information for you. You take the whole list, you select all, and you start working on it. Guys, can't you see that most majority of all the properties that are in pre-foreclosure, it looks like a lot of them are listed. Why? Because a lot of these people need to sell. You're right. They're taking— they're in pre-foreclosure. So a lot of them have decided to sell and people have taken action and started flipping these properties. If you don't want a specific city, you can just mark it on with a box like that. Boom. And you'd be like, hey, I want the pre-foreclosures here, 226. That's pretty simple. And what you do is you take the list, you skip trace it and you get— you take action on it. I can't show you guys too much stuff because this is live and YouTube usually like doesn't like the information that Bash shows. Like if you click on it, cause it's too much information, it's too good that YouTube's like, hey, don't be sharing that info with the whole world. So that's as far as I'll show you guys. But the real reason why we're here today is we're here to break down that appointment with, uh, Caden. So let's break it down, man. Do you want to tell everybody what happened? How'd it go down yesterday?

Yeah, man. I've been calling, I've been knocking doors for probably a month now here in the Utah market. And I knocked into this guy's door yesterday. And started talking with him. And, you know, he seemed kind of open to having the conversation with me. And then he kind of just threw out there that, hey, yeah, I actually already got an offer from somebody. And I said, oh, really? And so he already got a cash offer from— sounds like another wholesaler, right? Um, and I said, hey, I would love to talk with my team and see if we can maybe get you a better— not a better offer. And so I'm talking with, uh, trying to figure that out right now. I'm talking with Nate about how to best go about that process and I'm planning to get back to him this evening.

So let's do it. So you knocked on the door and you said, hey, let me get back to you within 20— let me get back to you within 24 hours. You got his phone number. I know he's got to deal with his mom. They're in a situation. A lot of the time, everybody that's watching, a lot of the times you'll see that a lot of people are in pre-foreclosure because someone passed away and the person that's supposed to be paying it, obviously, like, they're not, right? So it goes in pre-foreclosure. Maybe some people don't know, or which kind of sucks, is like the person that's— that passed away, like, has all the details to the bank and they pay they didn't have it on auto draft or anything like that. So they just like, it's very difficult sometimes for people to even make that payment to the bank because they're not like registered on the account. I know a lot of people have troubles that I've talked to have troubles with like getting in touch with the bank. The bank's like, no, we can't talk to you. And you're like, but hey, they passed away. I need to take care of this. And they're like, sorry. So it's kind of a weird situation with a lot of banks. But this does happen quite a bit. So they need to go through, usually you have to go through probate and stuff like that. But that's why we're there, right? We're there to help them through the situation. They usually don't know what to do. But anyway, so You get docked. Now you're going back, but before you go, you want to verify, you know, you want to make sure you're ready, right? Because this is pretty much your first like pre-foreclosure appointment that you're specifically going to see if you can solve their problems, right?

Yep. And to your point, the guy who answered the door I spoke with, his name's Travis. I knew that the name on the skip trace that I took was Larry. So I asked about Larry. Apparently it was his father that recently passed. And so he's living there with his mother. And I think his mom is— the home is in her name and she's going to be the decision maker at the end of the day, but sounds like he's helping her out through that process.

Yeah, of course, right? So they're going to make the decision together, right? But it seems like she has the ownership or she will, right? Not the son. So, you know, she's going to probably be like the ultimate decision maker. So you said you'd be back. Have you texted? Have you gotten a response from him? Because I know you said you were going to text him and then go over there. How's that going?

I haven't communicated with him yet. I wanted to kind of have my head around a couple things before I messed anything up. All right, bro.

Hey, I like you want to be prepared. You're taking massive and action, which is the key to real estate for everybody watching, guys. You got to go out there and just do it. You're going to have questions right now that you wouldn't have had a long time ago, right? Like in the beginning. So it's just take action and the questions come and you overcome them as they come. Can't be a master of pre-foreclosures or anything until you really get into it. So let's dive in. Yeah. What questions do you have, man? Let's, let's break this thing down and get you ready.

This is my first time. I've spent a little bit of time comping and doing different things when I lived in Maryland and I'm in a new market here. I'm in Utah now, just recently moved. And it's a non-disclosure state. And so it's a little bit different than what I'm used to. And I wanted to kind of just pick your mind on your thoughts on how to calculate ARV, comps, things like that, so that I can first establish value and then try to work that back into an offer price.

I love it, man. So, so check this out. You already have an offer, right? So that's your anchor. And that offer sounds crazy low. So I would just verify that he meant $330,000 versus $33K, right? I think, right? Probably meant $330,000 because $33,000 doesn't even make sense. That's nuts, right? The ARV, just from kind of doing a quick glance, it was like $450,000 to $500,000 in that area, right?

For the ARV. Yeah. I mean, that's what I'm saying. That's what he said, though. It's weird. He said $33,000 and I was like, "$33K?" And he's like, "Yeah." You're missing a zero.

You're not missing a zero, dude. Okay, so let me tell you how I do things, and I call it the painless way, bro. And I'm going to teach you the painless way. And everybody here, you guys can learn as well. So I used to really worry about ARV, and I used to really worry about like exactly where I need to be, and I'm making that final offer to the seller. But I don't really do that anymore, and I'll explain to you why. So when you go into that appointment, I don't want you to make an offer yet. You're going to hold it back because when you make an offer, look what happened to that other guy that gave the offer. He just gave an offer, and now if you're tactful, if we do this the right way, they're not going to call that guy. They're not going to worry about him. So making an offer, you lose, in my opinion, in a bad offer, you lose your leverage, you lose everything you got. Like, they don't have any reason to call you anymore. Because then someone else comes in and it's like, oh, I can beat that by a dollar. And sometimes they're like, well, I lost the guy's number. Sounds good, let's go. You know, so I don't like to make an offer until like I know they're ready to make a decision. Now that doesn't mean I don't give them like a range or like a place to where I need to be, right? But I don't give them just like, hey, I'm at $97,532.10, take it or leave it, you got 24 hours. Because people, they don't act like— they don't react like that, right? That's pressure. Does that make sense? Yeah. So I'm not too worried. Like, obviously you got to have a decent understanding if you have a decent, like, a deal or an opportunity. So what you're going to do when you go on this appointment is you're going to go talk to the seller and you're going to find out what options they've explored already to sell their house, right? That's the first thing you want to do. You're going to say, like, hey, you know, obviously, you know, unfortunate time that you're going through. I'm here to help. I have a lot of different options I can work with you. I'm just curious, like, have you considered listing the property, right? Because if they're, like, thinking about listing it and then you you come at them with a lowball offer of like $300,000, $350,000, most likely they're gonna be like, uh, let me just list it, right? So I'd rather find out before we start talking numbers, low offers, because everybody knows cash offers are going to be low, right? Investor offers are going to be lower. So I want to know if that's something they're thinking about, right? If they're like, no, I hate listing it, I don't want to work with any agents, agents are the worst, then it's like, okay, well, they've X'd that option off the table, right? So now it's not like when I make an offer at cash, they're going to come back and say, oh, well, I'll go ahead and list it. Right? Does that make sense?

Right. Right.

So you go in there and you find out what options they've explored. So, hey, what options have you explored right now to keep the house? And what options have you explored to potentially sell it? They're like, well, you know, they don't know what options they have to sell the house. Obviously, you have the information I've given you in the course that talks about like the different options someone can have to keep their property. They can call the bank and they can work a payment plan out. They can do refinance the property if they can and get a new mortgage on it. They can throw the fee or what they owe on the back of, at the end part of their mortgage payment and pay that on the backend. So there's a couple of things they can do when they work directly with the bank or go get a new mortgage. Unfortunately, a lot of the times is they're behind. So they're not going to qualify if they refinance or try. Yeah. If they try to refinance the property, because a lot of banks are like, you don't have the income, right? But we want to approach them and let them know about their options because we don't want people to feel like we're going in there and we're like, hey, $33,000, take it or leave it. Call me if you change your mind, right? Because that's not how we— how people— that's not how I like to work. Now, some people might like that, but that's just not— that's not me. So I like to go on there and I like to make it a win-win scenario. If I can help you out of pre-foreclosure, I'm gonna feel good about it, okay? I want you to keep your house. But if that's not an option for you and I've showed you those options and you're like, hey, we've explored them, bank won't work with us, we can't do a loan modification, then it's like, okay, well, there's a couple other options. If you can't keep it, then you got to sell it. And, you know, you don't want to list it, We've talked about that. Let's forget about that. You can't flip it. The house needs some work. You can't flip. You don't have the money for it. So then that leaves it selling to an investor, right? Because if you can't list it, if you can't flip it, you can't keep it as a rental. Now I'm here and I'm a good option for you at this point, right? So you've kind of backed into you're a good option for them versus just like, hey, I'm looking at the house, looks like it needs a lot of work, $33,000. And then it's just kind of— it doesn't work that well, in my opinion, from my experience. Does that make sense?

You come across as someone that's looking like you're legitimately trying to help them out and just talk through the process with them and help them figure out the solution that we already know that we have. They figure that out themselves as we kind of guide them through the process.

Bro, that's exactly it. We're there, in my opinion, as a good salesperson, you're like more of a consultant, right? Hard pressure tactics like doesn't work. Like you did door-to-door and I did door-to-door This is how my pitch and door-to-door would be. Hey, we got our trucks in the area. We're going to be here for like 24 hours. You got 24 hours to decide or the deal's off the table. And people are like, well, I want that discount. You know, try that on someone in real estate. Hey, I'll give you $33,000 for the house. You got 24 hours to accept it or I'm leaving. Or my truck's out of there. It just doesn't, it doesn't work, right? So you go, you go for the consultant route. You go for the win-win. You try to find the scenario that's going to get them a win. Now, if it gets them out of pre-foreclosure, you just help someone out. If it doesn't and they they can't do that, then you're there to provide options. And the great thing about this strategy is if it doesn't work out now, who are they going to trust in 10 months, 2 months, when they try something and it doesn't work out? They're going to go back to you versus the guy who probably made them feel lousy when he offered $33K, right?

Right.

They're not— I wouldn't call that guy back. First of all, it's a terrible offer. So I want your mindset to be on that when you go on that appointment. What is the solution? What is the problem? And let's try and solve the solution to get like— find a solution together. Let's try and make this a win-win scenario. Don't worry so much about ARV. We'll find that out, and I'll tell you exactly how we find that out. Like, you got to kind of know somewhat where you need to be. Like, $450,000 to $500,000 is where this property is worth ARV, just looking at it. So if they're like, hey, I want to sell it, right, right. So if they're like, hey, I want to sell this house for $500,000, you know that doesn't make sense just off the— you don't have to do any math. You're just like, yeah, guys, I totally get that, but, um, no, it needs work. And yeah, you know, it needs work. So you know it needs— just from, you know, doing a little bit of numbers, like just basic math— that you, you need get this thing obviously less than retail. You need to get it under $400,000. In the $300,000 low range is probably where it needs to be without me even seeing it for this to make sense. But again, we don't need the offer yet. Okay. So this is what most traditional wholesalers do. I don't do this. What I do is painless flipping, right? So the seller is going— usually wants an offer, right? And I don't like to make offers unless again, they're ready to make a decision. So unless I kind of know exactly where unless I make kind of a range, give them a range, and I'm in the money and they want to agree and I know it's a great deal, then I'll lock it up. But that doesn't usually happen where they're like, you know, you make them a 70% of ARV minus repairs minus wholesale fee, which most people do, and they're like, yeah, it sounds great, let's do it. Like, if you get that, lock that thing up immediately, right? Yeah, because you, you got a deal. But as you know and I know, rarely happens that someone's like, sure, I'll take it, right? So this is what you're gonna do. Is this making sense, by the way, or is it, is it kind of hard to follow?

I'm following.

Okay, you got it. All right, so when you go in the house, find the issue, find it, and then they're like, well, what can you offer? Then this is what you're gonna say. You're gonna say, you know what, your other offer was at $33K. That's not even something that makes sense, right? Like, obviously that's like giving it away. That doesn't— that's not where I would be. Now, according to like the other homes that we've done and the other homes we flipped in this area, you know, I don't mean to offend you. I'm not here to like, uh, you know, upset anyone here. That's not my goal. I'm just telling you where I would need to be in this range. Now, this is not my final offer, but this is where I would need to be around for it to make sense for me to do this. Okay, but it's not my final offer. Just, you guys got that? You want to let them know that this is not, this is not the end-all be-all, right? So then you can do the formula, right? 70% minus repairs minus air, you know, rehab minus your wholesale fee. So you're gonna probably get around like $280,000 to $300,000. So this is why I say, you know what, according to other properties we've done in the area, I would need to be in the range of $280,000 to $295,000. $285,000 or $280,000 to $300,000. You want to give a range of like $10,000, $20,000, right? And then you wait. And what are they going to say? Most of the time they're going to say, "Get out of my house," right? You're going to say, "Yeah, right, bro. Like, no way." Now, if they're like, "Okay," then I pressure back on that a little bit too because I'm like, "That's too easy." I don't say that, but I'm just like, "So, you know, so that makes sense for you to make it, you know, you sure?

Are you sure that works?

You sure you want to move forward with that?" No, but basically, easy come, easy go, in my opinion. If they're just like, "Let's do it." Then I'm like, I like to be like, "Okay, yeah, that's fine. But just before we come down to the solid offer, I just want to make sure I understand, like, are you guys ready to sign today if we can come to like an agreement on price?" And then you're just probing it again. "Is there anything that would get in the way from us going forward?" Right? Because if you get too giddy and you're like, "Okay, let's— here's the paperwork." They might be like, "Let me read this over really quick. I'll get back to you in a week." And you're like, "I freaking went too hard in the paint." So You give them that range. Option 1 is they're okay with the range and you don't jump and get too excited. You just start probing. You ask them about road— they call them like smoke screens or roadblocks or yellow lights. You ask them before you sign, like, hey, before we come to agreement, okay? So if they're not liking the price, which is normally gonna happen, you say, hey, no, I totally get it. That's not my final offer. That's just where we need to be. And a lot of properties I've seen have been in worse shape than yours. So I'm curious, is how close could you get to that number knowing that that offer was at $33,000 and I'm in this range? How close could you get there to that point? And you let them make the offer, right? You let them to come closer. So they'll usually be like, well, you know what, we were hoping to get $400,000, but we could probably— the lowest I could go is $350,000, right? Something like that.

Negotiating against themselves.

Yeah, they start negotiating. So you don't get too excited there either. You're not like, okay, well, let's sign. This is the painless way. This is how I like to do it. I like to say, look, If it's close, this is what I do. I say, "You know what? For me and my company, because we have a lot of overhead, we want to make sure that I got to feed my family, I got to buy it at a deep discount. Not because I'm trying to just take it from you. I just need to have that margin so I can be safe." Because I've gotten— you can explain this because I've gotten deals where when you start flipping stuff, it just— you find out more problems in the house, it gets more expensive. So, for me, that's usually where I'm going to be. But I actually know a couple people in my network that I think might be able to pay more than I can. I'm not sure, but would you— would it be okay if I just ran this by a couple of my— the cash buyers that I work with, that I partner with on deals? Do you mind if I just run this by them to see where they would be at, to see if maybe they might be able to pay more than me? Because I'd love to get you a little bit more if that's possible. They're like, yeah, sure, run it by your people. So that way I leverage the offers of my cash buyers to get them to where they need to be, because I know $350,000 is not there yet, but I know if I can get a couple cash buyers to go through, it's going to take the edge off, right? Now you don't need to do the painless flipping if you've already gotten the money. That makes no sense. Makes sense. You just sign it, right? But if you just don't want to like sit there and be like, well, can you haggle? Like, can you do $315,000? They're like, well, can you do $325,000? And you agree on a number that you know still doesn't work. So I leverage my buyers. So I say, let me get back to you, let's sign an agreement, give me a couple days just to run this by my cash buyers. I'm pretty much saying I'm wholesaling it. Uh, let me run it by— now you can do a wholesale agreement, you can do an offer, uh, option to purchase agreement, it's whatever you want. Sometimes I don't even sign anything because I can call a buyer and he'll let me know like within a sec, like a couple hours. So what we do at this point, you can get the agreement. We know we're a little high. So when we call our buyers, we say, hey, look, I got someone that this is a situation. I know they need to sell. I know this is a scenario. All I need is I need you to just come and tell me the best you can make an offer on it. Like the best you can do. And we'll see if we can get it done. I know I got to renegotiate it. You just tell them the situation. Then you hold a wholesaling, like an open house. You send everybody through 5, 10, 15, whoever wants to go. The seller knows what's going on. And, uh, At the end of that, you basically get the best offers and you go back to the seller and you're like, "Hey, look, I already told you where I was going to be. You know what the other offer was. We're getting a range of this." And you obviously give them the offer that has your wholesale fee in it, right? So let's say everyone's coming in at $320,000. So you'd be like, "Hey, we're getting a range of $310,000, right?" And then they accept $310,000, you wholesale for $10,000 to your cash buyer, right? Because you have to have your fee in there. So you'd be like, "Hey, we're getting a range of like $305,000 to $310,000. I know mine was at $280,000 to $300,000." $500,000. I got a couple cash buyers that we can partner on this deal and get in it for a little bit more. So why is this good? Because up to this point, it's just you. In my opinion, like, this is what I think that's going through their head. You go and sit in that house, they don't know who you are. They don't know if you're legit, if you really can do what you say you can do. Once you get your cash buyers through, 2, 3, 4, 1 person, they're like, okay, this guy, he knows what he's doing. Like, this is real. This is real Like, this is a real scenario. So it's just easier to negotiate when you have some leverage from cash buyers. Now, this doesn't have to be cash buyers that you know, like, are super tight with. You can go and reach out to agents using batch leads or any of the softwares, and you can say, hey, I have an opportunity, you mind just looking through it? This is not a strategy I would use to, like, blast out to the whole world because you don't know— if you send it out to 1,000 cash buyers you don't know, you don't know if they're just going to go show up at the door and be like trying to snake the deal. I'm talking about you're specifically talking to people you know, or you found and you filtered before you gave the information. Negotiation, like the agent or the specific cash buyer. So at this point, so I'm going pretty in depth with you, bro, but I'm just going to give you the whole story. So once this happens and you start the negotiation after they've walked the house, this is what you do. So, hey, you know, like we said, you saw some of the cash buyers I work with that I'm planning on partnering with come through. I think we can get you a little bit more money. We're looking, I know you wanted $350,000, but where we're at is the $305,000 to $310,000 range. Could you make something like that work so we you know, so we can get this done for you. Let's say they're like, okay, I can do $311,000. You're like, okay, fine, that works. If they're like, $305,000 to $310,000 doesn't work still, that's still too low, Nate, that your offer still sucks. Then you pivot and you say, I know it sucks. I don't blame you. I wouldn't want that offer either. I'm just letting you know that's where I was in that range, and this is where the cash buyers I work with are. If you want more money, we're gonna have to go a different route. We're gonna have to take this thing, you know, I'm gonna have to buy it on terms, right? And then you pitch creative financing where you can offer more. I don't like to pitch terms in the beginning especially like a lot of these pre-foreclosures they have, you have to catch up their loans and sometimes it doesn't make sense on paper. But anyway, so you go creative or you go the novation route where you're like, hey, well, we can get you more money, but it's just going to take a little bit more time. And I'm just going to have to open up the way I can market this deal and find a cash buyer to flip this property with. Whatever you want to say, there's a lot of different ways to pitch the novation, but that's the strategy I like to do when I go in these houses. I don't care. I don't have a solid number in mind. My mind is low, low anchor. If they're in it, let's go. Because you don't really need to do too much more math if you're at 70% minus repairs minus your wholesale fee of $15K, you're in the money. Because here in Utah, they buy like 85%, 90% of ARV. So that's why the 70% rule doesn't work everywhere because it's too low. But if you get somebody there, why not? So doesn't work. You say, hey, do you mind if I run this by a couple of my cash buyers that I plan— I flip a lot of properties with? Sure, sign paperwork, do it, walk them through, get the, get the offer range that you know is going to make sense because you have legit offers now. You didn't have to lie to them in the very beginning and say, okay, I can do $325,000, then blast it out, then tell them, hey, sorry, I can't do $325,000, I can do $310,000. That's just a crappy feeling in my opinion, and I don't think it works very well to tell someone you can offer like $330,000, $325,000, and then like hit them in the gut like 2 days later, you Yeah, yeah.

So no, I like it. You know, you get so much more credibility when you got all these people. They're literally coming to walk through the house. They've seen it and they're like, this is what I can do. It's not just me, just some guy they never met. It's all these people that look like professionals, know what they're doing, saying this is what I can do.

Yeah, showing up with the vests. I'm just kidding, they don't have vests like the construction vests. But, but the reason why I like it, it's, it's, it's painless flipping, transparent wholesaling, right? It's just like, hey, look, I can flip this for this, or I can flip it with some of my partners. Let's sign a contract. Give me like 2 days. So you're not saying, hey, give me 14 days. You can, right, if they'll give you 14 days. But I'm just like, I know my guys. I know who I can send, like who I work with. Let's just send people through. And it's not something that I feel slimy about because it's like, well, I didn't promise you I could do $340,000 and you start packing up all your stuff thinking you're about to move. The only way I'll do that is if I'm in the money. And how many times are you usually in the money? Not very often when you're just negotiating straight up. A way that I get in the money a lot is like I call the seller or I follow the seller and they've gotten the crap beat out of them by like 7 other people and they've gotten lowballed, lowballed. And I just come in and I'm like, okay. And they tell me all their offers, like $385,000, $370,000, $370,000. I'm like, well, would you be— if I can get you a better offer now, are you ready to sign right now? Yeah, sure. If I can beat the offer by $1,000, you ready to go? Yeah, let's sign. So that's usually when you find the low-hanging fruit, in my opinion, is they've gotten up. And then you're— but you don't want to rely on that strategy, in my opinion. You want to rely on the consultative route, being a consultant, helping, serving, and getting them to where they need to go. And it's a win-win. And ultimately, you get them more money because they have all the different strategies you can apply when it doesn't make sense for their situation.

Yeah, that's big time for this situation too, because they're already talking to somebody. They already have an offer on the table. So who are they gonna— if they have all these different offers, if these different people, they're gonna work with, who are they going to choose to go with? The person that feels like they're trying to help or the person that feels like they're trying to take?

That's exactly right, bro. The main way the painless flipping, like what I do, is that it beats out all their offers. Why? Because I'm not coming in trying to beat specific numbers, right? Like, I'm not trying to be like, okay, let me see if I can beat this guy's offer at $370,000. Because I don't even know if he's good at— if he's legit, a real wholesaler that knows what he's doing, or if he just threw out a number and he's just trying to lock it up. So what I say is, hey, give me the process. Like, this is where I would be. Give me the process. It won't take very long. Give me some time to run some of the cash buyers I work with through that I flip properties with. And let's see, let's see the realness. Now, if they send 10 people through, I'm like, hey, look, we're all around $320,000, $325,000 for this to make sense. You got that offer at $370,000. You can go with that, but I don't know who that is. I don't know how they're doing it. And then they might be like, yeah, I did feel a little sketchy about him. He seemed like he didn't know what he's doing.

Might waste some time and not make it to the finish Exactly.

Another beautiful thing about the painless flipping I'm telling you is once you get those people through, when you make that final offer, there's no more due diligence. There's no more worrying about, well, okay, now can I get 3 more days once you accept this offer to run people through? It's like, are ready to go, $50,000 of non-refundable earnest money, 0 days due diligence. So when you got all those $33K offers and all that other stuff on the table, what do they all have on their contracts. 7 days, 14 days due diligence, $100 for earnest money. And you come in, you're like, well, I'll put $100,000 of non-refundable earnest money. Do I use my own money? I haven't used my own earnest money in like years because you don't need to. You use your buyer's earnest money, right? That's the funny thing. There's a lot of these people are like, hey, we'll lend you EMD. And you're like, why is this a thing? Like, why do people need EMD? Why don't they just use their buyers who are buying the property's money? You don't need to use your own EMD. That's all I'm telling you. Like, you should have buyers that you leverage, or even if you wholesale the traditional way, the way that I usually don't do unless like I have a solid offer, you don't even put down your EMD until you have a cash buyer. The way I work, it's like, okay, you have 5 days due diligence, you find a cash buyer within 2, then you put the EMD down, which is your cash buyer's money because the seller wanted $5K of EMD. You've got $10K from your buyer, so 5 of his EMD went to the sellers to satisfy that. So yeah, you don't ever need to use anybody else, like your own EMD, if you can just use your buyer's money.

Love it.

I don't know if you knew that, but—

I've heard about that. Yeah. So one thing I wanted to clarify, when you say, when you're talking with the seller and say, when you said, let's just sign a contract and then let's talk to the cash buyers, you're saying let's sign a contract at the seller's number and let's talk to the cash buyers about what they think about that?

Yeah. So what you can do, so an option to purchase agreement, or a contract, obviously, you're going to have to put a number in there, right? So what I usually do is just, I just say, "All right, well, put down the number that you want, but I can just tell you right now, I don't think it's going to be there. And this is just so I can go out and reach out to, you know, the people that I work with, and I can do this the right way with equitable interest." And then you have 3 or 4 days of due diligence, right? And then they understand you're not putting down any EMD. This is not like, I've done this so many times where it's just like, hey, Hey, no, this is just giving me the right to go do this, right? Now, I don't need to do that if I can just make a quick phone call to like my boy Nate Worthen and just say, hey Nate, what would you— I'm over here, what would you pay for this? This is the situation. In this situation, this property, like we might not even need to get a contract just because we might be able to find out like super quick. But it doesn't hurt just to go through the process and try that. Does that make sense?

Yeah, for sure.

It's just setting the expectation, right? It's like, hey look, I know you want this, I'd want this too, but realistically I'm not— I think it's going to be closer to my number, but just so you understand. Now, this strategy I'm telling you about, this is not something you would do if they're at $450,000 and like up by ARV, and you're like, hey, realistically, it's going to be lower. And they're like, well, the lowest I go is $445,000. I won't sell. I'm not doing— I'm not moving. It's like, well, this— that would be a complete waste of my time to call my buyers and figure out what I could do. So you got to be smart about it. You can't just do it with like everybody. You got to make sure it's the right person. But I will also say a lot of people get shook here. Like when they start doing real estate investing, they're like, man, everybody wants a lot of money. Money. Obviously, who doesn't want exactly what Zillow says or more? I'm the same way, bro. When I listed a house in Salt Lake City, that's my rental I'm trying to sell, it's been on the market for 3 months. That's why listing is not like people think. When you list it, it's like the greatest experience, the best thing. My house has been on the market for 3 months right now. It sucks. You don't know when someone's gonna buy it. It's stressful. People come in, they dip out, you know, people are walking through. So listing isn't all like peaches, right? During the pandemic, like, stuff was flying. But that's just not how things usually work, right?

Right.

So listing, yeah, it's, it's not always going to get people the most, you know, it's not going to always be so fast and convenient. That's why they go for cash offers. I think that's what I was, you know, just going for.

If you go through that process of getting the cash buyers and everything, they need to be in the ballpark of where you need to be-ish.

That's, that's, that's it. Ish. Ish. Yeah, you don't do this for someone that wants retail. The reason why, where I would do this is if their situation requires them to sell fast, but they just haven't— it hasn't clicked yet. Like, let's say they're in pre-foreclosure. They haven't accepted it yet. They haven't accepted yet. I'll do this work if they haven't accepted yet. So if they have 2 weeks till they go to auction, they're about to lose their house, their heads are in the clouds, the house needs— is really worth $300,000, but they think it's worth $450,000, and they're like, I won't take any less, then— and I know they got 2 weeks— I'm gonna go through this process because I know 2 days, 3 days before, they're in trouble, and I'm gonna be ready. When you hear the situation, if the price isn't adding up, but the situation, like if the situation is right but the price isn't making sense, who cares what they want? Because I wanted $330,000 on my rental. It ain't looking like I'm getting that. And what that means is expectations change like this, right? Immediately when you don't get what you want, you're like, oh, okay.

It's like, yeah, we could make that happen, but not in 2 weeks.

Yeah, it's like, hey, yo, we can list your house and maybe get you $450,000. We fix it up, but that's 6 months down the line and about $40K of work. I'd love to get you that, right? That's the cool thing about being a consultant is like you're on their side. You're not like trying to like battle them out so they'll take your low offer. You don't even care if they take your offer because you know it's low. You're like, I get it, it sucks. My offer is terrible. Like, I wish I could get you more, but that's just what the market dictates. That's where I have to be. But this is what I can do to help you in the next step. You kind of give them the— you get them the offer the painless way and you understand where they need to be. They don't like it, it's still, then you say, hey, look, I know you want more. We could take it to the market or do an ovation, but we don't have the time. It's not going to work. We could do a sub-2, like a creative deal. That would work because we can close on that quick, but I'd have to catch up. You're behind on your payments by 6 months. I have to catch it up by $15K. I have to bring $15K. You want some money? I can give you this. So it's just really just realistically giving them the right information depending on the situation they're in.

Yeah, I love it. I love it. Yeah, I mean, I feel like people quickly associate these interactions as kind of contentious and us versus you. And if you can make that kind of a collaborative effort, it changes the whole dynamic.

I love it. You took the words out of my mouth, man. That's exactly what I'm talking about. Because I'm selling my house, right? Uh, I've said that multiple times on this call. It is stressful and contentious. It is. When someone makes an offer on your property, you just subconsciously, you're like, man, this person's trying to me. This guy's trying to— like, I went under contract to sell. So I have a couple homes. I sold my personal residence. And somebody— we would go under contract and I would be uneasy. I'd be like, I don't think this is gonna work. They're gonna come back and hit me with something. They're gonna ask for some repairs. After the— before the due diligence is over, they come back with their agent. They're like, well, we found this and this and this and this and this. So it's like, you feel like, hey, even if they offered $240,000 or whatever, they're going to try and ask for more. That's just the song and dance of real estate. Like, they say price and they try to get it lower. So if you can eliminate that feeling and make this experience like a good solid smooth experience, they're going to love it and you feel good about it too. That's like we did an $86,000 deal and the seller at the end was like, "Thank you so much. You made this so easy for me." And we told her, bro, we were like, "Hey, you should list this thing. You're going to make way more money than what we're going to be able to give you." And she's like, "No, I just want it done. I don't want to think about about it. We did this the painless way that I was telling you about. I thought we needed to be around $630,000. Offers were coming in around $650,000 to $670,000, and she was originally at $800,000. Okay, so that's a big drop, right? If I would have just walked in and been like, hey, I can do $635,000, take it or leave it, that's my offer, we wouldn't have made $86K. So how do we make $86K? Made the offer. I said, gave her the range, say let me run it by some people. Most of the offers were coming in around $650,000, $670,000. A unicorn buyer That means someone that no one knows how he's able to pay what he's got and what he's doing, but he just wanted the house. Paid $740,000. So that's way more than everybody else. So we were like, hey, you know what? The average offers are around here. We didn't tell her about the unicorn because it's a unicorn to us. It's a unicorn to her. Like, it's just crazy. So we're like, most offers that were the range is around $650,000 to $670,000. She's like, okay, if we can do this, like, I think we actually settled on like $655,000. So the range I was giving you is wrong, but she's like, yeah, if you can do $655,000, let's go. And we sold wholesale to the unicorn. So can you imagine like if I just the traditional way of just being like, hey, I ran my numbers and this is where I need to be, and then text me, or, and then you just give them the offer, they don't ever call you back, and you follow up for the next 6 months calling them to see if they're ready to take the low offer. Then I'm coming in and I'm saying, what, you got offered that? That's terrible. Let's see what we can do for you. And then I run through the scenario, the options, and we get them a win-win scenario. So I know I've been rambling a lot on a lot, guys, but basically I'm just trying to tell everybody and you, brother, is if you just make low offers and you leave it like, that's my offer, you're missing out on a lot of deals because then people like me will come in and just be like, I'm not going to make you an offer until I understand the situation. And I know exactly how to structure the offer that will help you out. And I do the due diligence, especially when I hear the situation. I hear that like, okay, there's something we can do to help this person. Now, if it's like, no, you called me, I'll sell because you called me. But if you don't give me $1 million, I'm just going to live here forever. That's not who we're looking for. We're looking to help and serve people that need to sell and not just make crappy offers. So that's the way, bro. So that's a long 43 minutes we've been going, but you're going to go in the house. You're not going to worry about giving a solid offer. You're just going to say, hey, you know, let's understand the situation. What are you behind? How soon do you need to sell? When's the auction date? Give me your mortgage. Ask for their mortgage statement so you can understand like their interest rate and everything. And you're going to get all the information. Then you're going to say, hey, you know what? This is where I usually would would be. Is that something you could see yourself around? Yes, get it signed. If not, say, hey, you know what, I think I can do a little bit better. I think I have some cash buyers that might be able to help us get a little bit higher on this price. You mind if I reach out to a couple of them? Sign it, and then we're going to get the deal done.

Awesome. So do you do all your agreements electronically?

I like to do all my agreements electronically. I don't think I can—

I can't remember to type up and just get done on the spot, bro.

I haven't been on a seller's appointment in so long. Um, so usually it's just over the phone that we're doing this, or on Zoom. But if it is in person, like you're going to do, you could say, hey, I'll write up the agreement and I'll send it to you. I'll send it to your email, or you can just do it right then. You can just say, okay, give me a second. You know, usually—

and say, I'll send it to you.

Yeah, because like, again, if they change their mind from you leaving that house to like 2 hours later, I think you're going to have more speed bumps along the way to close than— like, they're going to be more problems. So like a lot of people are like, oh man, I lost the deal there. It's like, bro, if you lost the deal because of that, you're going to have some more problems, right? They were talking to other people. You didn't do— you didn't uncover that there was a guy coming to their house right after you and he just got it done, right? So you want to have that open and honest conversation so you can be like, hey, is there anyone else you're talking to? If it is, it's fine. That's what I mean, like when you're in the money already and then you get all excited, you start filling this thing out and you give it to them. They're like, thank you, I'll take that.

You know, because then that next guy shows up and they're like, hey, I'll give that to the next 'Hey, I'll take this guy and we'll bump the price up even more.' And that's why I like this strategy because I mean, if you're just another offer, then they're just going to keep comparing offers and keep raising the price. And if you can really connect with someone that feels like you have their best interest in mind, then you probably have a good shot.

Exactly. And can you blame them? If you're going to be that bad at negotiating that you just give me your offer, I'm going to say thank you. Next, hey, this is what this guy gave me. What can you do? I can beat that. All right, give me your offer. Next, and I'm gonna get my price up. So, but the person that you'll win every time is, hey, I'm here to help. Let's see what we can do for you.

Love it.

That was a deep dive, bro. I wasn't planning on going that deep, but I gave you the sauce. And really what it does is just, it's repetition, repetition, practice, and truly in your heart, like, I'm trying to give you the best solution. You got to take out the money. You can't see dollar signs when you see the situations like this because it's not about money. You can make an $86K deal and the next day you could just Forget about it. Like you don't even, it's not like it changes your life. This is a business you want to be a part of and you want to like grow with. So you're trying to change lives and just help and be helpful, right? Make an impact.

Yes, sir, man. This is exactly what I needed. This is good stuff. I'm going to try to put it into practice. Like you said, get those reps and see if I can close a deal.

Love it. And let me ask you this before we wrap up for everybody. Do you feel more comfortable knowing that when you go on that appointment, you don't have to have like a solid number and get them to sign right then.

For sure. For sure. I mean, I feel like I messed up some deals in the past that I tried to get on contract before because I was getting too specific. And I'd push it out to cash buyers. And I feel like I made a mistake of trying to tell people exactly how much it costs to fix it up. I have no idea. I've never done any of that stuff. I don't know exactly what it's going to cost to fix it up. And people would just respond and be like, "Your numbers are way off." And I'm like, "Well, you're You know what?

Well, that's the beautiful thing, man. It's like Nathan Payne talks about this a lot, but that guy that paid $740K on the house, who made $86K, we don't know what his strategy was, bro. We don't know that maybe he was just going to live in it himself. Maybe he was just going to flip it as he lived in it. And he's able to pay $80,000 or $50,000 more because of his strategy. So like for us to like come up with a 70% rule and just say like, hey, like this is where people need to be. It's like, that's not every buyer. Some buyers I know in Utah, bro, they just have to keep their crews busy. So instead of buying, like, where it would make sense, the guy takes losses sometimes because he has to keep his crews busy or he'll lose them and they'll go work for someone else.

So, gotcha. Yeah, yeah.

Imagine all the deals that we've— you've lost and everyone's losing because they are going off of a specific number when they can just do it the painless way and find that guy who knows, that has that, that squad, and to be like, hey man, I got one, it's kind of tight, this is the situation, where would you be? And he's, he's grateful because he's I appreciate you. This is where I'd be. If it doesn't make sense on this one, hit me on the next one. That's business.

Yeah, you're exactly right. I've seen— that's been my same experience as well. Every buyer is different. Every buyer sees it differently. They'll determine a different rehab cost. They'll have a different strategy. They'll have different reasons behind. Like you said, some people just try to keep their crews busy. And you got guys like Jerry that are like, if it's not a freaking home run, I'm not touching it.

Well, and exactly. And there's guys like Jerry where it's like he doesn't have to touch a deal unless it's the home run, right? Because he's like, it's so many opportunities to thrown at them. But you get that one guy who's like, "Bro, I haven't seen an opportunity in 2 years. I need to do a deal right now." Right? So that's what I think gets a lot of people struggling in wholesaling as beginners is like they think it's just like this one fine line that they have to get something under a certain price when they don't really know. And on top of that, like the opposite end of the spectrum is like they'll just lock up crap and won't have the relationships or the people that kind of give them the feedback. And they'll just waste years and all their time just wasting time with bad deals. Right? And you've been on that end, I've been on that bad end. I used to just lock up stuff and be like, let's give it a shot. But that's not— and when you try to renegotiate, it's a sour taste in their mouth sometimes. And you're just—

so anyway, they're like, all right, let's just move on.

Yeah, exactly. So that was a deep dive into the situation, but it works with any case scenario. Like, it doesn't matter if it's pre-foreclosure, tired landlord, whatever. It's like you're going in there, giving them where it makes sense for you, sign it if it does, If not, run the process, run, run through the strategy that I showed you. And I have, for anybody that's watching this live, I have, uh, my process right here, and I'm going to send it to you too, obviously, of how I make these offers. And then we can wrap up, bro. I don't know how busy you are right now, but I'm good. Let me just show this really quick. So I call this the painless offer options. All right, now they don't always go in this order, but of what to offer, but you just go in there and you ask the questions that will get them the right situation. So what's got you What are you selling? And if they're in pre-foreclosure, you pretty much know. Have you considered listing this house? Have you thought about flipping it yourself? Have you thought about renting it? And all these questions are trying to push them away from a cash offer because cash offers are so low that, you know, you don't want them to take it, right? You want them to figure out a different solution. And if they do need the cash, then you're there for them. So if you don't get the price you want, is there an option to stay here? How much are you wanting to get for the property? Then obviously you need to know the timeline and the condition. And depending on how they respond to their needs, It tells you what offer to make. So depending on what they say, if they say, look, I need speed and I got no time, it's like, okay, well, you only have two options, creative and cash. If they say, hey, I want the highest price and I got all the time in the world, it's like, okay, well, you can renovate and resell it. That's kind of like an ovation, or that's like an option to like flip it with them if you wanted to do that. Owner carrybacks, seller financing, creative works pretty much every— no matter what. Or you can list as is. If the house is currently listed, you can't do an ovation. You can only do cash and creative. House needs a ton of repairs, cash, novation, because you can still get it past an inspection. And then minimal repairs but want speed and convenience, cash, owner carryback, and full service, right? So depending on what they say, this gives you the options what you need to hit them with. And then I, like I showed you, you start with the range. If they accept, move forward. If they don't, cash, painless cash buyer strategy, then you run them through that. If you come back and they still don't want those options, then you can hit them with creative or Novation. And then depending on if they have a loan, FHA tells you which ones you can do, VA loan, no loan, obviously it's free and clear, you can do seller carrybacks, which is the seller finances you. So you don't have to, you know, you just work with them directly. There's no mortgage in place. So I don't know if that was helpful for me to show you that, but it just breaks it all down.

Love that. Yeah, I need that.

Yeah, I got you. I'll send it to you. So yeah, man, I think this was good. Hopefully this was helpful to kind of break down how your appointment's going to go and like all all the avenues and how to attack it.

Yeah, no, I feel a lot more confident. This is great, great stuff. So I'd love to get that, that little, uh, the little printout and, uh, go over that as big time.

Yeah, I just sent that to you. So there you go, brother. You're gonna crush this appointment. Just from doing this for long enough, my only— I don't want to put out bad vibes, I'm just telling you what I think could happen— is just you go and the guy's like, I talked to my mom, she doesn't want to talk to you. Like, he just like was just BSing you and he just doesn't have any pull. And that's the only thing I could see this happening, right? That's what happens when you're not talking to the decision maker. And you know that you talk— that's why you have to be careful. Like, okay, am I going to spend 10, 15, 30 minutes talking to the wrong person when immediately they just come in like really lackadaisically or really bad? They're just like, hey, I talked to a guy who wants to buy a house. What should I tell him? Oh no, we don't have time for that. Oh, okay. And then you face this in door-to-door, like you're talking to the wrong person and you feel like they're ready to pull that trigger on that pest. And then their husband shows up and they're like, hey, should we get pest? That's like what they say. That's the pitch.

You want to bring your husband over here? I can talk to him because when you talk to him, it's going to sound terrible. It's good.

Hey, uh, you want to, you want to get pest?

Like $600?

No, I don't like to do that. Terrible. They just blew your whole pitch. That's, that's how people are doing when you put in the hands. Hey, this— hey, you want to sell the house? Some guy offered, uh, half of what it's worth on Zillow. You're like, no, that won't work. So, all right, man, go crush it. Stay consistent with the knocking. That's good, man. That's something that other bigger companies are not going to be able to compete with. And yeah, I love it.

Cool.

Is there anything else?

I realized half time, I realized you don't even have the right person on the skip trace. Like this guy, for example, he just passed away and I wouldn't have reached him. Wouldn't have reached the son or the wife. Their numbers weren't even on there.

So that's the thing that's really interesting with skip tracing too, is like when you're calling the relatives or numbers, sometimes you're just asking whoever pops up if they know the person, right? Like, hey, you Larry. No, I'm not Larry. Hey, look, your number came up when I skipped— like tell them like your number came up when I skip traced Larry Johnson. You're somehow connected to Larry. And they're like, what? Do I need to do something? Do I need to fix something? You're like, no, no, you're fine. Just you can do that if you want. I'm just messing around, but I'm just saying like if you can get them to acknowledge like, hey, I'm just trying to get a hold of this guy. Maybe they are related, you know.

Just trying to track him down.

You're like a detective. You're a detective, man. But that's where the biggest deals come from, bro. The biggest deals come from doing a little bit more, right? Doing the due diligence. And last thing I'll say, because I've been talking a lot, but last thing I'll say is the strategy I showed you will beat out every other offer because everyone just throws in their offers. But when you come in, even not— and I'm not always saying it will beat every other offer's price. I'm saying it will just beat everybody's offer in the sense it's just going to be a legit good offer. When you you're talking to the seller and you got $370,000, $380,000, $390,000, $500,000, and you're at $350,000 and everybody else has 14 days of due diligence, $100 earnest money, and you come in hard like hot with $350,000, I'm ready to close tomorrow, and I give you $100K earnest money non-refundable. If I don't go through with it, you get it. They're like, that sounds way more convincing to me than the $400,000 or $500,000 that guy who walked in here looking like like he's like kind of sleazy, or I'm not judging whoever that is, but I'm just saying, yeah, those offers beat— like the house that I just bought here in Canada, I beat other offers and I was lower by $50K. Why? Because like a couple days due diligence, tons of money down, and I'm the cash buyer, so I'm ready to act, right?

So anyway, the offer itself is more powerful and they like you. You have established a better connection. So yeah, you're right, man.

I'm here for you, brother. I'm here. I got you. And we got, we got Willie Willie— Willie Will Molyneux. Is that how you say Willie Will Molyneux? Can you send me that to me? Here, so everybody that's watching this, if you're watching this, I'm going to give everybody this. All you have to do— I'm going to send everybody this little information here. All you got to do is go to my Facebook group, Painless Flipping Free Facebook group, and just come in here and just say, hey Nate, I was on your live, can I get that mind map? Just post and I'll put a link in there, okay? That's all you guys got to do, alright? So just go to my Facebook group, ask to join, and I'll take care of you. Yeah, it's the best way I can get it to you guys. You get that, Willie? Willie Will, that's a good name. Willie Will. Alright, brother, anything else I can help you out with?

That's it for today. I'm sure we'll talk soon.

We will. Alright, everybody that's been watching The Batch, thanks for being with us. Thanks for being with us on the, you know, all the social media. If you like what I've said, like, subscribe, hit the bell icon, and yeah, let's help everybody get more deals. And the beautiful thing is, Caden— Caden's in Utah. When I'm talking to him, if you got a deal, send it to him. We'll work it together. Like, there's abundance here, baby. We can all do deals together. So network, and, uh, yeah, lots of deals to go around. All right, later, bro.

Thanks, Nate.

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