What is Whole-Tailing in Real Estate Investing?

I’m not sure if we developed the “full tail” originally, but one of our student mentors named it on our behalf. This retail property sale is the combination of the wholesale and retail names and is specifically targeted at conventional end buyers who pay retail prices for their homes.

Basically the only properties that are bought to fit this selling technique are those where repair quantities are limited to a week or two of patching and painting, without any major work. If major work is required, the property is repaired and painted and sold as “Handyman Special.”

While I have been doing this type of limited rehab since 1975, I didn’t realize its importance until a student mentor approached me with the proposal: “Is it possible to buy properties at 80% – 85% of the listed price on the MLS? And resell them at full market value? ”He’d done it for years looking for expiring listings because homeowners almost always blamed the realtor for the lack of buyers.

In reality, it was often the realtor’s fault because he “sold the listing” by promising too high a market price and the owners would not downgrade the listing price as expected by the property agent. And there are many times that an owner would be totally at fault for not reducing an unrealistic price that they wanted. The other complaint from the owners was that the property agent never brought a buyer to the property and would never do an “Open House”.

The most successful realtors don’t sell houses, they sell listings and allow other realtors to find buyers; that’s the reality of the industry. They also do not usually do open houses because they do not work very often. Of course there are smart real estate agents who use Open Houses to build their buyer list, but this is tedious.

We recently put a mentor student’s first property up for sale in an exclusive neighborhood of $ 300,000 homes. He had bought it in bulk from the owner and had it remodeled. The weekend we had your sale there was a real estate agent who had an open house about 10 houses away. The real estate agent had posted a score of red and white Open House signs throughout the neighborhood. We put up fourteen posters and waited to see what happened. As expected, the traffic started in ten minutes and at the end of the first day, the realtor who was doing the open house came to see our property.

He explained that he had been through two couples and neither made an offer. We showed you our ledger of record and 104 people signed the ledger and four offers on the property. He said it was impossible, but fell silent when he saw the offers, but still said he couldn’t believe it. On Sunday, at the close of the sale, we had 173 people who signed up and about 20 who did not leave their contact information. The real estate agent came in again and said he had 8 people for the whole weekend and there were no deals.

This real estate agent saw our signage, saw traffic jams come and go in front of our property, and still didn’t believe it. He even complained that his ad was in better shape, was bigger, and was offered at a lower price than ours! I gave him the address of our internet sales system, but I know he didn’t bother to look at it because I looked later to see if he had bought it.

This was an example of a “complete” deal for the student and he earned more than $ 80,000 for his effort. I must tell you that the biggest problem was getting the local lenders to believe that this was not a fraud. A loan insurer spoke to me and asked, “How much did you have in repairs?” I explained that it didn’t matter because the only thing the lender should be concerned with was the borrower and the current value of the property.

Finally he said, “I don’t think a seller will give away his house below market value!” I kindly explained that motivated sellers don’t care about price, especially when they may need to invest more money in the property before they can sell it. Even though the borrower / buyer had a no-contingency letter of commitment from the lender, they declined the loan.

This process of buying “slightly deteriorated” properties that are no longer listed on the MLS and patching and painting them works very well. The student I mentioned made five of these deals with me as a partner in a one-year period and still makes tons of them in this depleted market. His key to getting so many things done involves using the proprietary sales system I developed and even when the property sells the first weekend, he resells it over and over again. Additional buyers become contingent buyers in the event that your previous buyer is unable to obtain financing or changes their mind. All the people who leave their contact information are alerted to the next sale you have and become part of your “Preferred Buyers List”. Then you have buyers waiting for your specials, and then you have time to work with buyers with credit problems.