Justin Wilmot discusses how you can vet your cash buyers by asking them for proof of funds.
This will weed out non-serious buyers and ensure they can perform for you.
Mike: Welcome back to the FlipNerd.com REI Classroom, where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.
Justin: Hey, guys, Justin Wilmot here, AKA the 10-Hour Wholesaler, and I’m going to be your host of today’s REI Classroom. Today, we will be talking about vetting your cash buyers list, something people don’t typically do.
Today, I want to talk to you a bit more about vetting your buyers list. So when you’re wholesaling properties, not only there’s quality over quantity matter but you need to have these people vetted. We spend a lot of time, energy and resources in providing inventory for these particular people. If you’re using a script and you’re asking them what it is that they want, then we need to be making sure that they indeed are able to perform on what it is that they are telling us they want. All too many wholesalers do the opposite.
They just think that having a big list and just having a name on an Excel sheet or your CRM is going to make a difference. Well, it doesn’t. Take it from me. Been there, done that. Ask anyone who’s doing really well in this space. They’re going to tell you they know their cash buyer really, really well. The best way to start a relationship off right on the right foot is to make sure that they provide you with a proof of funds letter.
That’s right. That’s vetting our buyers. Getting them to provide a proof of funds just as a bank would do when we’re making offers on their properties. I’m on both sides. I still fix and flip and I wholesale and I joint venture so I understand all realms, all paradigms. By vetting our end buyers and our investors, we have found that we lose some, a very select few, in that vetting process when we go through the script.
My team goes through the script and then at the end of the script, we go, “Hey, thank you very much for your interest on getting on our list, but now I just need to let you know some criteria in order to get on our list.” Now we’re not selling ourselves anymore. Now, we’re selling the idea of them being allowed to be on our list. Then we just hit them with the truth, “Look, here’s the criteria to be on our list. And by the way, we can’t put you on the list until you provide a proof of funds letter.”
If you get any resistance in that, one, try to help them. Some of the more retailer people are not seasoned. They’re going to go, “I don’t want to provide you my bank statement or personal information.” It’s our job to tell them, “I don’t want to know any of your personal information. I just want to know that you are going to have the availability to perform on what you just told me you wanted. We put a lot of time, energy, resources and marketing dollars into getting what you want. So it only seems fair, right, Bob the Buyer?” What we find is some drop off there, which is great because you don’t want them on your list. You don’t want to focus on getting inventory if they really aren’t going to perform.
Also, you just don’t want to focus time on thinking that you have a good buyer, but you really don’t. That can be catastrophic. With that said, you need to focus on vetting your buyers, getting a proof of funds letter and upload that proof of funds into your CRM if you’re using a CRM so that when that buyer is there, you can click on a button and see that their proof of funds is there and that they’re ready to rock and roll.
If they’re having trouble giving you a proof of funds, do what you can to explain, “Look, I just need a letter that explains that you can perform. If you don’t want to produce this particular letter or bank statement where you can white out your personal information, that’s no problem whatsoever. I’m glad that we got to speak on the phone for this couple of minutes and good luck to you.”
That’s exactly what we do in our business. It works for the best and you gain respect from these buyers because now when you vet them like this, they know that you are real. It gives you an opportunity, especially if you get questioned, “Why do I need to give you this?” It gives you an opportunity to provide, once again, explain the value that you are creating in the relationship. Having the proof of funds letter is critical in your real estate wholesaling business.
Mike: HomeVestors, the “We Buy Ugly Houses” folks, is a franchise system of hundreds of real estate investors that have purchased over 65,000 houses. If you’d like to learn more about the most powerful real estate investing system in existence, whether you’re a pro looking to take your business to the next level, or whether you have no experience at all but a burning passion to be successful in real estate investment, please visit FlipNerd.com/ugly to learn more.
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