How to Qualify Investor Buyers

A hot topic in a lot of the Facebook groups I’m a part of, run, or help moderate, is the issue of deals being “daisy-chained.” Most of the people in those groups have no idea how to qualify investor buyers.

How to qualify investor buyers

To understand why that’s a sensitive issue with wholesalers and agents let me first explain what a “daisy chain” is.

A “daisy chain” is where someone (typically a wholesaler) takes the information of a property and then markets that property to their list of investor buyers.

This becomes troublesome for two reasons.

  1. This person does not have the consent of the person (wholesaler or agent) to take the information and market it to their prospective buyers.
  2. It is 100% illegal in the state of Florida to do this without a license.

So this is where everyone gets frustrated.

The wholesaler or agent who actually has the deal under contract, the person who did all the hard work to get the house under contract (marketing, negotiating, etc.) is now getting their deal sent to hundreds, if not thousands, of buyers (many of which might also be wholesalers pretending to be real buyers). No one other than the original contract holder is allowed to do that unless you’re a licensed real estate agent without a joint venture agreement in place.

Now, if that deal is being sent to buyers who are actually wholesalers, those wholesalers send the deal to their “buyers” who inevitably have wholesalers on their list and then the deal is then again sent to hundreds if not thousands of more “buyers.”

Are you seeing the problem now?

This problem is easily fixable if you’re willing to actually put in the work of qualifying the investor buyers who actually make it on your list.

Most wholesalers (especially the ones just starting out) are too lazy to actually vet the people they are working with. It’s the main reason I despise most wholesalers. They don’t do their due diligence on an “investor buyer” and then they wonder why the deal falls apart at or before the closing.

They sometimes don’t even realize that their “buyer” is not the end buyer and that the deal has been daisy-chained down the line 7 times.

One of my former (keyword there: former) students actually had this happen to him and the deal, which would have been his first one, fell apart because the end buyer got cold feet and there was no deposit in place to keep the buyer on the hook.

Here are some tips to make sure you’re dealing with actual end buyers and not someone who is going to daisy chain your deal. Before you add them to your list of investor buyers make sure you have ALL of this information:

  1. Basic Personal Information
  2. What kind of buyer they are (investor, retail, wholesaler)
  3. What their investment strategy is (fix and flipper, landlord, home builder, or developer)
  4. Experience Level
  5. What exact area they are looking to invest in/currently investing in
  6. Price Range
  7. Purchase Method
  8. POF (Proof of Funds)
  9. Must be OK with putting down a $5,000 non-refundable deposit
  10. Non-Assignable Contract

If you’d like a great place to find real, true, and honest investor buyers be sure to check out our favorite local REIA (real estate investment association) TBREIA. They have over 7 meetings every single month for you to meet with like-minded people just like you trying to buy, sell, and invest in deals.

If you’re an investor yourself and would like to be added to our investor buyer list please check out our page here. We’d be happy to go through those 10 steps with you above and find out exactly what kind of deals you’re looking to purchase without having to go through the daisy-chain process. We’re direct to seller on almost every single deal we do. The ones we’re not we have joint ventures in place with the direct contract holder.

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