Dale on the Daily

Buying Where End Buyers Buy: The Key to Successful Wholesaling

• Dale Kerns • Season 1 • Episode 9

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Ever wonder why some wholesale deals attract multiple offers while others can't find a single buyer? The answer isn't just about having the right buyers list—it's about understanding what end buyers truly want and structuring your deals accordingly from day one.

I recently locked up two properties that seemed promising but ended up canceling both contracts after failing to find buyers. The first property in North Carolina had fire damage that was far more extensive than the seller initially represented. My mistake wasn't talking to the wrong buyers; it was failing to ask the seller enough questions during acquisition. Had I dug deeper, I would have discovered the true condition required a price point far below what I had negotiated.

The second property was a seven-bedroom house in Cleveland with rooms rented individually. The numbers looked fantastic—100% occupied with strong cash flow. I assumed investors would jump at the income potential, but I overlooked crucial factors that end buyers consider non-negotiable: equity and renovation needs. Despite the impressive income, the property was priced above market value and needed work. Investors weren't willing to overpay, even for great cash flow.

These experiences taught me that successful wholesaling requires balancing action-taking with strategic acquisition. While beginners should focus on talking to sellers and getting contracts, long-term success demands understanding the complete ecosystem of your market. Ask meaningful questions about the seller's situation rather than just property details. Consider all factors that influence buyer decisions—not just the obvious ones. When you truly buy where end buyers buy, you'll set yourself up for larger assignment fees, faster closings, and a reputation as someone who consistently brings value to the market.

Have you experienced similar challenges in your wholesaling business? Share your experiences in the comments and let's learn from each other's journeys!

Speaker 1:

What's going on everybody Today I want to talk about one of the most important things when you're acquiring and trying to dispo contracts, and that is buying where end buyers buy, so that when you acquire them, you're doing the right things on that side and when you're disbowing them, you have properties that people want to buy. Otherwise, you're going to run into canceled contracts, lower prices, smaller assignment fees, which it's not necessary if you understand where the end buyers buy and you're setting yourself up for success in the beginning of the acquisition process. This is a pretty broad statement, but essentially what it means is putting together a good deal so that your end buyers will want to buy your deal. Now, in the past I've talked about taking action. Don't worry about end buyers. Talk to sellers, lock up contracts and all that is still important for taking action, building momentum or progress in your business. But the flip side of that is knowing how to structure a deal with good comps, accurate in the ballpark renovations estimates uh renovation estimates and buying deep enough so that your end buyers will want to buy and you can make money as well with your assignment fee. So recently I had two contracts locked up. We marketed the deals. I was JVing with some Dispo partners on it, the deals I was JVing with some Dispo partners on it and in the end I had to cancel the contracts because we couldn't find a buyer.

Speaker 1:

So looking back on this, I didn't acquire the deals correctly on the acquisition side, knowing where the end buyers buy, so that they were good deals on the back end for dispo. The problem was I didn't have a buyer. The problem was I was in a market that I hadn't done deals before. I've looked at deals there and have talked to sellers there but hadn't actually dispo deals in one of the states, but none of that was the issue. So when I talk about, just talk to the sellers, lock up the contracts, don't worry about the end buyers. That's all still accurate information and will help you take the action in the beginning. But that wasn't the problem here. The problem was the deal wasn't acquired and structured properly so that regardless of who the end buyer was whether I had one or not they didn't want to buy the deals that I had set up and structured.

Speaker 1:

On the acquisition side. My Dispo partners marketed the deals, I acquired them, passed them off to my JV partners for Dispo. I got the pictures, sent it to them, sent them the details, they marketed the deals and on both sides one deal, we really got no feedback. On the other one, we got some no feedback. On the other one, we got some, but in both cases no bites for end buyers and I had to end up canceling the contract once we marketed for a week or so and I didn't want to waste any more of the seller's time and waste any more of ours marketing deals if they weren't selling. So I want to quickly run through each kind of give some details and the lessons I learned and hopefully can help some of you out there in the future and definitely help me on my acquisitions in the future.

Speaker 1:

So the first deal was in North Carolina. The property had fire damage. I knew this going in Once we got the pictures. We didn't. The extent of the fire damage was way worse than what was anticipated and what the seller had presented. So for me I think I failed on my side in the acquisitions not asking enough questions, not going deep enough into the actual property and what the situation was, why he hadn't sold it, why it was still on the market and all those kind of questions, diving deep into his situation to really find the extent of this property I mean, this one was trashed, it's like probably needed a tear down when his my perception of the property was that was only one area of the house that was damaged when in reality that one area was pretty much burnt to a crisp. So in this case I didn't acquire it and ask enough questions on my side to get the full scope of the issue and the property condition in this case and we could have known this had I dug a little deeper with the seller and really saved a bunch of time this owner thought that his property was worth a certain amount in his head. I don't think he would have gone lower looking back, but I probably shouldn't have gotten this locked up at all for the price that it needed to be at. We did get some feedback from buyers in the area and they were well below where we had this locked up. So this was a case that I didn't go deep enough. I didn't ask enough questions. I didn't ask the right questions to get the full scope of the issue and the situation with the seller to properly set it up for the end buyers. Had I done that, we could have negotiated the price up front or not contracted it at all, and that way, for my end buyers it would have been a good deal. For my end buyers it would have been a good deal, whereas the way I did it and marketed it it was not. So this was a huge lack of not asking questions, not getting enough information on the acquisition side to properly set expectations for the seller and the end buyers to make it a good buy. So the result was this canceled contract. So some lessons for me on the acquisition side and something for you to take into consideration when you have similar deals.

Speaker 1:

The second was a deal in Cleveland. This was a deal where the seller was renting out rooms. He had a seven bedroom house renting out each room month to month. This is a very niche kind of situation where someone coming in would buy a deal where they were renting by room, obviously something that I took more into consideration after the fact that we'll moving forward. But he had really good income on the property, had all rooms occupied, so 100% occupied, very good income, low expenses, not much expenses. So, on paper, this deal, the cash on cash return and the percentage was super high, even for the price that we were trying to ask for it and had it under contract for A couple of things that came up during the due diligence was the paperwork was a little spotty.

Speaker 1:

Was the paperwork was a little spotty, which nothing we could do really about that on the seller side, but it really hindered us from getting an end buyer and an end buyer feeling comfortable about the situation because the paperwork was a little spotty from the seller. Paperwork was a little spotty from the seller. The second thing was that the contract price and the asking price was over market value based on comps in the area. The property wasn't in terrible condition but definitely would need some work. However and it's as it's conditioned, it's 100 percent occupied had good rental income, but that was another hindrance that I didn't take into consideration on the acquisition side is the real importance of equity in a deal for an end buyer.

Speaker 1:

And then the repairs that would have been necessary or could have been necessary. Maybe is good income, but the price we were asking was above market value and it needed to have some repairs or could have used some repairs. Even though it's fully rented, the end buyers were still looking for all these pieces to make a purchase. My mistake here was taking for granted that the end buyers would want the property based on the income alone. When I went into it like this is great income, this deal is going to sell. Someone's going to want this because there's so much income on this side, I really took that for granted that it would be one-sided and not taking seriously enough what the end buyers would want in terms of buying below market and taking the repairs more into consideration. Yes, buyers want income, but they also want equity and they don't want to over leverage themselves if they are going to buy a property, if they are going to buy a property.

Speaker 1:

So we did get some more action on this one, some feedback based on the income, based on the repairs. We had some offers below the contract price. We tried to go back to the seller for a price reduction but he declined. So it could have been a situation where he wasn't as motivated as I as I thought he was when I talked to him before. He did have an asking price on the acquisition side. We did get him down from that asking price originally, but in the end he wasn't willing to go any further. You know he was making money on it. He had other projects he wanted to do but didn't need to sell. So his motivation wasn't 100% there to do another price reduction, even though we did have an offer close to that that could have made a deal. But he declined and the result on that one canceled contract. So we ended up canceling that one as well.

Speaker 1:

Now we all know our contracts aren't going to close 100% of the time and, looking back on these, I think I was too quick to get them under contract and didn't take all the necessary steps for proper acquisition and buying where end buyers buy. Not to say I wouldn't have got them under contract, but had I asked some more questions, dug a little deeper, taken into consideration all the aspects of what an end buyer wants when they're buying a property, I could have got it lower. We could have taken a different route to negotiate with the sellers. We could have taken a different route to negotiate with the sellers, used more real world comps and rentals and things like that to get the prices where we would need to be beginning for the end buyers. Trying to dispo these and my JV partners really setting them up for failure to dispo something, to try to dispo something that wasn't going to work. The takeaways for me in these two situations are asking enough and appropriate questions on the acquisition side to get all the information.

Speaker 1:

Now, since these situations and since watching my videos and trying to learn and grow, I've tried to talk less about the property, condition and those type of things and more about the seller what they want, how they got where they are, what price's something they've been working on for a while and really get more information about them and their situation, their mindset, their goals, and not so much about condition and property. Now, with the fire damage property kind of contradicting myself in that way but if I had talked about more of his situation, why he hasn't sold it, why he's looking to sell it, maybe I got deep, deeper into the actual condition of the fire damage, not just, oh, it's one room, and then find out it's pretty much the whole house. So if you do that dig into the seller, their situation, how they come up with the price, things like that you'll get them talking and all this information will come up. You need to ask about their situation, care about them, care about the problem they have, the solution they're trying to come up with and if you're that solution, then they'll talk about their situation, they'll open up, they'll trust you and then all that information will come out. You also got to remember, depending on the type of leads that you're getting, if they're vacant absentee owners they're probably getting calls from a ton of other people. So by caring more about them and their situation, you're going to differentiate yourself from other people that are calling that are just what price do you want? What's the condition? And just kind of going through the four pillars and not really building that rapport and that trust with the seller to help them make a decision to and provide a solution.

Speaker 1:

So another takeaway is make sure that I'm taking into consideration what my end buyer wants in a property. If it's a rental, they need equity and the income. One or the other doesn't work, they need both so they don't over leverage themselves, they get that cash flow and they can buy the property where it best suits them, not just taking one or the other into consideration and not giving the end buyer what they need for, specifically a rental. If it's a flip, making sure you get all the information, you have accurate comps, you have accurate ballpark renovation costs, you have the spread in there for holding cost, realtor fees and those such, obviously, your assignment fee, but you're getting the property deep enough so that you can solve a problem for the seller, be their solution but also solve the buying for the end buyer and what they need to make money on their end as well buyer and what they need to make money on their end as well.

Speaker 1:

Even though these contracts didn't get to the finish line, going through the process talking to the sellers, the negotiations, the contract, the pictures, marketing with my JV partners, going through the whole process step to step can really boost your confidence, help you understand the process, make sure win whether it closes or not. Now in these situations they closed for the wrong reasons because I didn't do the acquisition side correctly and not make those mistakes, moving forward and have the correct setup acquisition-wise so that my dispo and end buyers are chomping at the bit to get these properties. Let me know in the comments some of your pitfalls, the lessons you've run into, lessons you've learned, what you're going to take in the future and comment below. Let's share it, help each other and we'll see you on the next video. Thanks you.