The discussion covered multiple methods wholesalers can use to determine the correct offer price for distressed real estate properties, emphasizing the importance of understanding different buyer types and exit strategies.
Real-world examples illustrated various formulas for calculating the wholesale offer price based on the buyer’s intended use (flipper, landlord, retail buyer, or creative finance).
Networking, researching cash buyer activity, and direct engagement with buyers were recommended as best practices for accurate deal analysis and pricing.
Several tools and resources for wholesalers were mentioned, including deal analyzer calculators and property data platforms.
Action Items
Network with experienced wholesalers: Reach out to top-performing wholesalers in your market to understand current exit strategies and buyer pricing.
Research cash buyer activity: Use free tools like PropWire to analyze recent cash transactions in your area and track buyer habits.
Ask buyers for criteria: During every conversation with a cash buyer, inquire about their current buy formula and criteria.
Download and use deal analyzer tool: Access the free calculator for fast deal analysis at mydealanalyzer.com.
Watch linked videos for advanced strategies: Review additional resources on repair calculation and creative deal structuring as referenced.
Determining Wholesale Offer Prices: Methods and Formulas
The wholesale offer price should be based on the exit price (what buyers are willing to pay) minus the wholesaler’s desired fee.
Flippers generally want to be all-in at 70–75% of ARV (After Repair Value) minus repairs; formulas and math were provided for both scenarios.
Landlords (buy-and-hold investors) can often pay more than flippers, using criteria like the 1% rule (monthly rent should equal 1% of total investment).
Creative finance deals can allow buyers (especially landlords) to pay full value or more, as they prioritize favorable terms over price.
Retail buyers (do-it-yourselfers) typically buy at as-is value and may be reached via MLS using strategies like novation agreements.
Hedge funds (in previous market cycles) sometimes bought above as-is value, illustrating the diversity of buyer exit prices in changing markets.
Understanding Buyer Types and Exit Strategies
Flippers: Price-driven, need large discounts for renovations and profit, follow strict buy formulas.
Landlords: Cash flow oriented, spend less on repairs, often pay more for properties.
Retail/DIY buyers: Looking for homes to live in, may pay near or at as-is value; accessible via novation strategies.
Creative finance buyers: Seek advantageous terms, driving up potential exit prices for wholesalers.
Tips and Tools for Wholesaler Success
Network with other wholesalers to learn about trends, effective exit strategies, and active buyers.
Research cash buyer activity with tools like PropWire to identify and study serious buyers and their purchasing habits.
Always ask cash buyers about their buy criteria after closing deals, and reverse engineer your offers using their formulas for better alignment in future deals.
Use available deal analyzer tools to streamline the math and ensure accurate, quick analysis on all opportunities.
Decisions
Emphasis on multi-strategy approach for pricing offers — Rationale: Leveraging more than one buyer type or exit strategy maximizes deal opportunities and potential profit.
Open Questions / Follow-Ups
Are there any recent changes in local cash buyer formulas due to market conditions?
Should the team prioritize certain buyer types (e.g., creative finance, landlords) in the current market climate?
Is there interest in team training on the novation method or creative deal structuring?