Can you wholesale real estate — and turn a profit — in hot markets this year?
I often get this question.
It is definitely doable…
Know this: People do business with people they like. So in a highly competitive environment, the more likable you are… the more the seller likes and prefers you over other potential buyers, the more likely they are to choose you as their buyer.
And I suggest that you lean into that when you are aware of it. That needs to be top of mind in all your conversations and all your correspondence and all your marketing.
I’m telling you… it helps.
Now, you might say that all sellers care about is getting the most money they can get. And, there is some truth to that, but it’s not the end all…
I don’t even know if I could count the number of deals I’ve done where I bought the house and a competitor didn’t, because of the relationship I had with the seller.
We just clicked, we connected, we hit it off. And, the seller even knew that they were selling the house at a discount. They had no choice but to sell it at a discount because it was in need of repairs…
And their question was: How much of a discount might we get?
Well, a little more from Mr. Investor over here or a little less from Mrs. Investor over there… but at the end of the day, they really just wanted to feel good about who they sold it to, knowing that that person was going to make money on their house, which they couldn’t make themselves.
Part of that is to inject humanity anywhere and everywhere you can.
So, sending an email is fine, but maybe send an email with a video of you telling them something… asking them something … whatever it is: use video. Put your face in front of them.
Even if you’re like me and you have a face for radio. :/ Video works.
Just be human. Inject humanity into it because people are starved for that…
After 2+ years of COVID and being isolated and having our faces three-quarters covered, people are starved for humanity.
Now, of course, there are investors who are moving at a high pace and throwing out offers as take it or leave it… and then moving on the next deal — sure, that works too. But you can compete in hot markets with those investors by using humanity.
One more important thought…
Make sure you have reviewed your numbers and that your offers aren’t lower than they need to be.
Obviously, we’d always like to pay less, but there’s a point of diminishing return where you’re pricing yourself out, getting beat out by competitive bids. So make sure you’re paying the most you can in a highly competitive market.
And consider this too: marking up the after repair value.
Let’s look at an example…
So, based on comps, let’s say you’ve calculated the ARV to be $300,000. Well, I’m going to use an after repair value of $330K.
See, when you run the formula and you come up with your maximum purchase price… if you move the after repair value up, your offer moves up with it. Assuming you’re staying true to the formula, and you’ve got your margin and you’re happy with that — your offer moves up with the after repair value.
They are in tandem, sort of like a tandem bike, they both move if either of them moves.
So, there you go…
It is absolutely doable to have great success in hot markets — you can certainly compete by knowing that people do business with people they like and injecting humanity wherever and whenever you can.
Now go make a video and scoop up some deals!