Want to know how to explain how to do a Novation or retail buyer program? Whatever you want to call it to a wholesaler that has the deal. That’s not a deal because it’s not low enough, but you want to explain how they can bring it to the market and get a higher asking price not only for you but for the seller. Check out this conversation I just had with this wholesaler.
Hey, Amber, how’s it going? This is Nathan. From my cell phone. Yeah, I’m good. Do you have a couple minutes?
Yes, I’m in mom mode right now. So sorry, if you hear some kids?
Oh, no problem. Cool. I wanted to call and kind of get some feedback on or not feedback, but find out what’s going on a little bit further, the buyer that has like, yeah, I want it but they’re like, not willing to go at the price that you need. So it’s just kind of, I just wanted to see if your buyers gonna go through or what’s, how I can help or what’s gonna happen, you think things like that.
They need longer to get funds in place. And I just don’t think that we’re going to be able to push it.
Do you think? Do you think they’re like a legit buyer? Do you think they’re like, like a secret wholesaler that’s trying to find someone else?
I don’t know. I feel like when I talked to new Western, they said that this is one of their like, more frequent buyers. Okay, because the last one, I was like, they don’t know what they’re doing. Right? Like, it was very clear, because I buy enough deals on my own. And I’m like, I’m not disappointed that they couldn’t vet that out.
You know, well, also, like, if you’re a real buyer, you can usually get funding within like two days, like at most, like, if you have legit, right?
Yeah. And then like, why do they keep meeting extensions? Like if I need to, if I need to call them something? I called them 14 hours, right? Of course, at this point, like, I want to remain hopeful and optimistic. But I’m also trying to be cautious. I don’t know, like, my trust is there with new Western. That’s just kind of where I’m at right now. Like, I don’t know. I mean, they’re saying everything’s good. You know, they can get it all in writing, making up their earnest. I don’t want to be in the same position. So I’m just kind of trying to weigh out options. Yeah, I did send over the gal that I work. I’m not a realtor, but my girls in my network she is. And sometimes we tag team stuff, you know, people just busy. So me her tag team, this one. And she’s so I kind of sent her over, like what said, and I said, Hey, this is just an option that we might be able to do. Like, if we fall out of contact with them, then maybe we can just go like fresh start and try this strategy.
So I kind of presented that to her as well to see, you know,
have you ever done that strategy before? Like, did it make sense?
No, I haven’t done that. So I was in it, you know, run it past her and then just see if she wanted to like jump on a call. And you could kind of like explain it.
Yeah, totally down. Yeah, time. Well, that that would be my best. Like, that would be the strategy I would pick because like, let’s say new Western says they can do this. And then the people go in, they’re like, Yeah, well, let me just make sure my hard money lender will fund it. And then you know, if they don’t like the numbers, then they back out without really having anything, you know, any consequences, right? And then you look bad. So I like I said, I can get on the phone with the seller, and we can kind of help you guys navigate this. I’ve, you know, I’ve done I have one in Texas that’s closing I’ve done you know, I’ve seen a lot of them be done. And that’s just kind of like the way people are moving now is just talking to the sellers and saying, Hey, let’s just take this to the open market, and we’ll take care of pretty much the whole process. You don’t have to worry about anything.
Okay, do you mind if I checked with Sabrina and for me, McGraw I’m working with see if she can also just kind of speak to you.
So that course yeah, I’m totally open everything. Yeah, I’m totally open to this. Because, you know, if this works, then, you know, hopefully we all can make a lot more on it than just, you know, 350 or whatever.
Yeah, exactly. I’m going to try to get Sabrina on the call. Right now. Is that okay? Perfect. I’m ready. Yeah. Okay, one sec. Already. Nice. And are you there?
Yep. I’m here. How’s it going?
Sabrina, are you also there? I turn around. Okay. I told her a little bit, Nathan, but if you wanted to kind of tell her what the strategy that you’ve been doing?
Yeah. For sure. So Sabrina, I don’t know if you’ve ever heard of the strategy. It’s called like Novation doing innovation or other people call it like a retail buyer program. Have you heard of that retail buyer?
Yes. But I thought the Novation was a typo is like what is she talking about?
Yeah, so Novation is just specific. It’s just different paperwork that gets done so you can get paid but Novation retail buyer program. Essentially what it is, is you’re listing the home of the seller in their behalf so you have them sign like a power of attorney or an attorney, in fact, and it allows you to list the house for them. It allows you to get paid if someone buys it with traditional financing. So like if you wholesale a property, the only way to get paid is through like a hard money lender, right that can pay you but like if someone gets like a conventional loan or FHA loan, you can’t wholesale a property to that because the bank won’t pay you. So this is like the workaround where people are putting properties on the MLS In finding, you know, retail buyers, and still being able to get paid when a retail buyer buys a distressed property or property that like just you had to do a little bit of work to get it qualified for FHA or conventional financing. So that’s, that’s what a lot of people are doing to get higher prices. So I was just suggesting that like, it seems like my buyers, they all came in at like 330. And like 335. And obviously, you guys have a 335. So you’d even have to get lower. But if you were to take this to the open market and tell the seller, hey, like, you know, we’re going to put this in front of more people, more investors, you won’t have to pay any Commission’s any fees, we’ll take care of all the calls, we’ll even vet all the people that are interested in the property because we just don’t want a bunch of people that can’t qualify or don’t know what they’re doing to walk through. And yeah, so that’s kind of essentially what it is. It’s just putting in front of more people and listing it for the seller, so you can get them a higher price when people come with conventional or FHA financing.
Okay, so how does the rehab this one definitely is gonna need some work to get there. Yeah.
So do you think it needs a roof in order to qualify for conventional or FHA?
Okay, yeah. So I think the rest of it is in good shape. Sabrina, like I thought it was inside decent shape, roof, roof shape, right. Yeah, roof. And then I mean, conventional, I think roof is going to be the biggest thing. And then FHA, VA, like, there’s quite a few things, systems Windows.
Yeah. Right. So you would have to probably get a conventional buyer. But so what a lot of people do in this situation is like they’ll pay. So since they’ve signed in the behalf of this, the seller is allowing them to list it, they also file what’s called the notice of interest or affidavit memorandum, which protects them if they start doing work on the property. And the seller just isn’t like, Hey, forget you. Because you know, if you’re gonna put work into the house, you want to be protected, especially if you like, start fixing up the roof. So that’s an option as well. Like, if we put this out there, and you know, we have an FHA buyers, like, hey, I’ll pay this, but you need to fix the roof, then, you know, we could look at and say, Okay, it’s totally worth it to fix the roof out of our own pocket, because we’re gonna get an offer like 400, or 410. And we just back that out, we fix the roof, they don’t have to come out of pocket for any expenses that enable us for it to qualify for the higher offer. Does that make sense?
Yeah. So outside of what? Our, like, Where does the profit go? So what is the great question?
So for example, like if we were, I have to run the numbers to make sure it makes sense and what we could think we can sell it for if we took it to the market. But if we talked to them, and you say, hey, look, I know 335 is the cash offer, we said we could give you we’re having a hard time, blah, blah. But if we take this open market, we I think we can even get you more, we could probably get you 10k. More like let’s just say 345. So then you would list it at, let’s just say I have to run the numbers again, but 390 and then you know, you would subtract the commissions from the buyer’s agent that is most likely going to be like 2.5 or 3%. And you would subtract closing costs. And then hopefully, we could find an agent that would do it for like really inexpensive. So save us for the listing, then you make the difference between of the profit between like your expenses of what you sold for minus expenses and what you agreed to them on to give them. Does that make sense?
Yeah, so like anything above in that, in that scenario, anything about 345?
Exactly, yeah, again, if I ran my numbers, let’s just say there’s like a 20k spread in there, for example. So that’s what you would be able to get. And then at closing, you could release your affidavit, a memorandum or your notice of interest, whatever you want to call it, and you release it for that the profit, you say, Okay, I’m gonna release my cloud. And that’s in a lot of times, they don’t even people don’t even cloud the title, they just do that if they put money into it, but a lot of other times they just use it as a concession. And they just say yeah, if you want the roof, we’ll just give you that concession for the roof. And sometimes that works for you don’t have to put any money into it.
So how does that differ from a net listing that I’ve heard the net listing but tell me what that is.
Thing is, is kind of basically that thing that we set a benchmark say I’m going to net you at least 345 Anything above that I keep, and that that’s illegal in Utah.
How is that different than a net listing? I’ve actually never been asked that question and that’s a great question. It’s just I guess it’s the way that it works where you get you sign the power of the paperwork, it makes it work where you where you sign the power of attorney they allow you to list it and then you you know, sign the the right paperwork with the notice of interest to release your cloud for the fee.
Right, right question. I have heard scenarios where agents will you know, say hey, I’ll come in and rehab it and then you know, I get my commission but then I get a certain percentage of anything over whatever X dollar amount, whatever and if I if my broker, of course, this is a unique scenario where there’s six siblings involved and it’s an estate situation
and about the the net listing the reason why a lot of people do this investors is because they’re not agent That’s right. So they, they just sort of like, hey, how am I going to be able to make money on the deal and bring it to the MLS? Where I’d not to have a license? Like, for example, in Texas? Well, you would list it with an agent there, and you’d say, Hey, this is the situation, and then they, they would list itself. And then if you were to do it yourself, I don’t know how that works for your broker. But I have agents that would do it here as well. So you know, if you’re worried about you listing it, we don’t necessarily need you to list it, I can list it for like, one of my people could do for like, 1000 bucks. And then we would obviously handle the calls and, you know, vet the people and be like, Okay, go see it. But, you know, if you were worried about you doing it, you wouldn’t need to do it.
Yeah. Find out on the net listing for me. And then I mean, from what I’m understanding is Amber, we get it under contract. And then, you know, I could be the agent of record, but it’s more so well, yeah, I don’t know. I guess I would just need clarification on that. Yeah,
I’ll just tell you how it works. So you sign a real estate purchase contract with the seller that you’re going to get them you know, you’re gonna buy a for 345 or whatever. And then you sign an attorney in fact, and innovation that allows you to list it, and that’s the paperwork that you would, they would need to sign and then you list it, you get the offers coming in, people come in, say hey, you need this or that to qualify, or maybe not just giving concessions, and then at the close, they take care of everything on getting getting us paid. So it’s really just if they’re open to putting on the market and not having to worry about commissions fees, and you know, dealing with a real estate agent that doesn’t know how to deal with investors, then you know, we’d be the next best fit. Interesting.
Okay. No, that’s, that’s super interesting. Okay. Amber, let’s chat about it. Let me give the seller a call back and hopefully, he has some good news.
All right. Well, it’s nice talking to both you and you know, hopefully we can do some deals in the future. This one doesn’t work out. Thank you so much. And by the way, if you liked this video, smash that like button so more people can see it, and we’ll get you more content like this, where we show you exactly how to do it step by step.
