26 Oct The Importance of Flexibility
October 23, 2020
The real estate market is currently a seller’s market. Inventory is low, and investors keep bumping into each other trying to get into the door of properties.
What if you could offer a seller more money than other investors, but make a larger profit on a wholesale transaction?
“Not possible,” you say.
Except that it is, if you structure the transaction a little differently. And best of all, it’s legal and may be an even better option to help out the seller than a straight wholesale deal.
The problem many wholesalers run into these days is that sellers want a certain amount out of their property, but you know you can’t offer them that and have any hope at making a profit. So you leave, hoping they will call you later, or you may have never called them in the first place due to the situation.
What if you could offer them more money, or more time in the property, or other concessions they need and still get the property under contract?
It can be done using a Novation agreement. Essentially, a Novation allows you to control the property, market it for sale, and receive the profits upon sale without taking title. Think about the savings you gain simply by avoiding that first set of closing costs.
In a typical wholesale transaction, you buy the property (A to B), and all closing costs, commissions, taxes, title, etc. are paid. Then you sell the property to another buyer (B to C), again paying closing costs, commissions, taxes, title, etc. A Novation removes the first closing, changing the transaction to A to C, with you in control of the property.
But how does this get around laws against excessive commissions, etc.? Because under a Novation, you take on all responsibilities of the seller: You make any necessary repairs, you pay the mortgage, are liable for all the disclosures, etc. By assuming the responsibilities of the seller, you stand in the place of the seller, just without an expensive closing taking place.
So knowing you could save $5,000, $10,000 or more in closing costs, you can increase your offer to the seller above what other investors can offer. Not only that, you can sell the property on the MLS or privately instead of at a discount to a flipper or another wholesaler. So you can maximize the profits on the back end with a smaller front end investment.
We call this the Brewer Method, named for Eric Brewer, who has used this technique in hundreds of real estate transactions successfully. And we’re teaching it to you, complete with all the forms, sales techniques, and monthly training you could ask for. Visit www.BrewerMethod.com to sign up and take your business to a new level of advantages and productivity.