How to Spot Red Flags When Wholesaling a Property!

Want to work directly with me to close more deals? Go Here: https://www.titaniumu.com
Want the Closer’s Formula sales process I’ve used to close 2,000+ deals (FREE) Go Here: https://www.kingclosersformula.com/close


If you’re new to my channel my name is RJ Bates III. Myself and my partner Cassi DeHaas are the founders of Titanium Investments.

We are nationwide virtual wholesalers and on this channel we share EVERYTHING that we do inside our business. So if you’re looking to close more deals - at higher assignments - anywhere in the country… You’re in the right place.

Who is Titanium Investments and What Have We Accomplished?

Over 10 years in the real estate investing business
Closed deals in all 50 states
​Owned rentals in 12 states
​Flipped houses in 11 states
​Closed on over 2,000 properties
​125 contracts in 50 days (all live on YouTube)
​Back to back Closers Olympics Champion
Trained thousands of wholesalers to close more deals

_________________________________

With over 2,000 Videos, this is the #1 channel on YouTube for all things Virtual Wholesaling. SUBSCRIBE NOW!    https://www.youtube.com/@RJBatesIII

_________________________________

RESOURCES FOR YOU:

If you want my team and I to walk you through how to build or scale your virtual wholesaling business from A to Z, click here to learn more about Titanium University: https://www.titaniumu.com

(FREE) If you want to learn how to close deals just like me, The King Closer, then download the free King Closer Formula PDF: https://www.kingclosersformula.com/close

(FREE) Join our exclusive FB group community for real estate investors and wholesalers: https://www.facebook.com/groups/titaniumvault/

(FREE) Click here to grab our Titanium fleet free PDF & training: Our battle tested strategies and tools that we actually use… and are proven to work: https://www.kingclosersformula.com/fleet

Grab the King Closer Blueprint: My Step by Step Sales Process for closing over 2,000 deals (Only $37): https://www.kingclosersformula.com/kcblueprint

Grab Titanium Profits: Our exact system we use to comp and underwrite deals in only 4 minutes. (Only $99) https://www.kingclosersformula.com/titaniumprofits

Want to know what the best markets to wholesale in are? Grab my breakdown of all 50 states here: https://www.titaniumu.com/markets

Chapters

• 0:06 Welcome and Episode Introduction
• 0:59 Inspection Periods: Red Flag or Reasonable?
• 4:54 Lower Earnest Money Deposits
• 6:34 Changing Title Companies
• 8:51 Evaluating Buyer Intentions
• 10:00 Episode Conclusion

Transcript

Speaker 1: 0:06

Welcome back to Wholesale and Red Flags. Today we're going to be talking about end buyers trying to renegotiate some of the terms inside of our transaction. Now let's fast forward to where we are in the process. You've done lead generation. You've taught the many sellers, gotten all those voicemails, hangups and you finally get a property under contract. You've taught the many sellers, gotten all those voicemails, hangups and you finally get a property under contract. You do recon, you get pictures on it and now you do your marketing for dispositions and you get an end buyer to finally go out and make you an offer. But there are some terms that we need to discuss, and so today I'm going to talk about three specific renegotiations and why it could be a red flag on whether or not you should go with that in-buyer or, if you ask the right questions, why maybe you should accept that renegotiation. Now. Number one is your in-buyer is willing to sign an assignment or a contract if you're doing a double close, but they want an inspection period.

Speaker 1: 1:10

Now, inside of the majority of wholesale transactions, we do not allow an inspection period. Right, it's? Please, buyers, please do all of your due diligence before making an offer or signing a contract. However, there are some scenarios where you should allow your end buyer to have an inspection period. Why is this important One? An end buyer is truly a wholesaler's customer. They are someone that you should try to sell 100, 200 deals to, not one or two deals to. So you want to make sure that they end up with a great deal. It ends up being a profitable transaction for them. So, yes, as much as we want to say buyers, do all of your due diligence up front, sometimes there are certain things that just can't be done, and also understand this. We as wholesalers have our process. The end buyers also have their own processes, and so sometimes it's very important for us to understand why would you need an inspection period? Now take, for example, inside of TU, we have Travis Wells. On every single deal that Travis Wells buys, he gets a formal inspection done of that property. Why? That's his process, and so he is not going to want to sign an assignment, put down non-refundable EMD unless he could get that inspection done. Now, as soon as the inspection is done and nothing comes up, of course he's willing to put down non-refundable earnest money and sign that assignment. But he is a great buyer and can be a repeat buyer for you.

Speaker 1: 3:05

So here's how I would suggest navigating this. One ask the end buyer why do you need that inspection period? And here's the red flag that you're really looking for in this you wanna verify that they truly are an end buyer, and whatever explanation they give you as to why they're doing this signifies that it is all with the intention of purchasing this property and protecting their investment. What you're really wanting to look for is make sure that they're not daisy, chaining your deal and trying to wholesale it to someone else. Now there's even scenarios in which you can sign an assignment with another wholesaler and give them an inspection period, for example, new Western Acquisitions. There has been numerous times where we have gone out and the highest offer that came back was New Western Acquisitions. All right, how many inspection days do you need? I need three days. Okay, we're going to give you three days. We'll put our other buyers on ice, keep them in the wings, see if New Western could actually perform. There's many times they have. There's many times they haven't. When they haven't, we go back to the other buyers that had the lower offer, and when they do perform, we make more money. So, understanding this scenario and understand the thought process and the reasoning. That's why you should or should not except your end buyer have an inspection period. It's not a deal killer, it's just a business transaction and making sure that you're setting everyone up for success.

Speaker 1: 4:46

The second renegotiation term a potential red flag is they want to deposit lower earnest money. Now, again, this goes back to what is the reason. Why do you want to deposit less earnest money? Now, what I will tell you is if I do a deal with someone that's inside of Titanium University or someone that I know, someone that I've done quite a bit of business with, then I absolutely will lower the earnest money deposit. It's about establishing a winning relationship for the long term. It's not really about this one individual transaction. However, if it's a new buyer that I've never done business with and I don't know if they actually can perform, then I will not renegotiate earnest money. In fact, this is one of the largest red flags as to them, signifying that they might not have the capability to perform. Now, one of the other things that I absolutely look out for as well is if there's ever a mention of I'm going to be using a gator lender or a transactional funder for my earnest money, because that is a massive red flag in the fact that if you cannot even deposit earnest money, how are you going to be able to fund this deal? Going back to the first episode of Wholesaling Red Flags what is your funding source and do you have the cash to close if you are using a hard money lender? So if there's ever a mention of a gator lender or an earnest money deposit lender, that is a massive red flag for me and I'm kind of running for the hills and trying to find an actual legitimate buyer.

Speaker 1: 6:26

The third term that can be renegotiated and is very common is I want. The end buyer wants to change the title company. Now, again, this is one of those areas where the thought process is very important and sometimes it does make absolute sense. The end buyer can say listen, I'm actually the one that's paying for the closing costs here. It's coming out of my proceeds and I want to be able to choose who I'm spending my money with. And a lot of times, what the end buyers will tell you is Well, I'm doing a lot of transactions with this other title company or this closing attorney. I've already negotiated lower fees, escrow fees, title costs, and so I would rather go here and I'm more comfortable closing with this attorney or this escrow officer, and that makes sense.

Speaker 1: 7:20

However, you as the wholesaler need to protect yourself. However, you as the wholesaler need to protect yourself and the fact that you don't want to go ahead and open up title and potentially spoil that relationship with that title company by then saying, hey, we've got to move this to another title company. Or end up with an invoice in your email saying, yeah, you asked us to open up title and then you moved it to another title company, but we had already done the work, we had already pulled a title commitment. Here's an invoice for two $300. You don't want that to happen.

Speaker 1: 7:52

So when this is presented to you ask what is the reasoning? And if it is purely based around the dollars and cents, say, well, why don't you send over your most recent settlement statement or your HUD and let me send that over to my title company and see if they can match those fees that you have at the other title company? Many times the escrow officer or that closing attorney will say, well, yeah, I would rather have some dollars than no dollars. So, yeah, I can match it on this transaction so I can keep this deal. Sometimes they won't. I can match it on this transaction so I can keep this deal. Sometimes they won't. That's all about that relationship and their willingness to be able to build that relationship with that other new end buyer. So in each one of these scenarios, the context and the thought process from your end buyer is important, but it could also be a potentially massive red flag Having an inspection period.

Speaker 1: 8:51

Why do you want an inspection period? Are you a daisy chainer? Are you trying to get funding? What is the thought process and why you need an inspection period on a wholesale real estate transaction? Lowering the EMD Is it because you don't have the money? Is it because you're afraid that you're not going to perform, because you don't have the funding yet and you don't want to lose a lot of money? Or is it because, truly, you just don't want to have tens of thousands of dollars sitting inside of escrow at all times because you do volume? That makes sense.

Speaker 1: 9:22

And then the last one changing the title company. Is it because you have a relationship, because you close 10, 15 deals every Friday at your title company or with your attorney? That makes sense. Or is it because you want to go with that title company because you know that your communication is going to lack. You have a tendency to terminate deals at the last minute and that other title company will cover for you, because you have the relationship and we don't. Each one of these is a red flag. Each one of them can be acceptable. Do your job and communicate with these buyers and find out what's going on and take control of your transactions. All right, guys, that's our episode of Wholesale and Red Flags. Let me know if you like this new series. If you do, give us a like on the video and we'll see you next week.