Jun. 1, 2006 Edition

Wholetailing: A New Option In Selling

Earnings can be greater than retail sale
By Gregg Stengel

Terry and Cyndy Bartelli wholetailed a house to decrease days on market and increase earnings.

If you’re passing up buys because you don't want to close on the properties, retail them, and sell them, or you’re making too little money after rehabbing, or not enough money when you wholesale you may want to follow the example of many franchisees who "wholetail" properties to decrease time on the market and increase earnings.

The term wholetail is defined in the HomeVestors glossary as: A hybrid or potential rehab that falls in between a retail and a wholesale. In a wholetail situation, the franchisee closes on the property, completes some repairs (i.e. exterior paint, new roof, or cleaning up inside), and sells the property "as is" to an investor or landlord or consumer as a "fixer upper" that is priced under the market.

In San Antonio, Terry and Cyndy Bartelli of Bartelli Properties recently wholetailed a house that was nestled among many other cookie-cutter neighborhood houses. "We had renovated a house in the same area a few months earlier and had a hard time selling for a worthwhile profit," Cyndy explained. "This time, we decided to wholetail it and market it 'as-is.' We did service the air conditioner and had a foundation company certify that no foundation work was necessary. We had it cleaned and put on the market, but the house still needed lots of paint and caulk."

The After Repair Value (ARV) of the property was $129,000, but the Bartellis listed the house in MLS for $109,000. "Within two days, we received eleven contracts with five contracts for $115,000 or more," said Cyndy. "We accepted a $119,000 offer with no real estate agent involved and sold the house 'as is' for 91.5 percent of the ARV." The Bartellis' anticipated profit: more than $25,000.

"Obviously, this does not happen with every deal, but usually we can make almost as much on the bottom line by wholetailing instead of retailing on certain homes," Cyndy explained. "Because of the number of investors now in the market, realtors are indicating that consumers are scrambling to get properties for themselves."

The Bartellis paid a flat fee to a realtor for the house listing on MLS, along with verifying with the buyer's lender in advance of signing the contract that they would not have a problem financing an "as is" contract.

Real Estate Investors Hour Now On The Air

Focus is on generating investors and sales for local franchisees
By Gregg Stengel

President and CEO John Hayes hosts HomeVestors Real Estate Investors Hour.

While everyone knows that HomeVestors is America's #1 Home Buyer, over the radio airways in Dallas-Ft. Worth, the main focus of a new radio show is selling homes. The HomeVestors Real Estate Investors Hour debuted on Sunday, May 7, and airs every week at 8 a.m. on WBAP-AM, News/Talk 820, the most powerful radio signal in North Texas. The radio station has one of the top listener bases in the Southwest USA.

HomeVestors' President and CEO John Hayes hosts the show, featuring guests and industry experts who provide information and insight directed at helping first-time real estate investors build wealth. Mike Blatney, director of franchise systems support, and Ken Channell, VP of team development, are weekly guests, along with local franchisees. "Our radio show tells our story to potential investors," said Hayes, "and it's purpose is to connect them with our franchisees."

Director of Franchise Systems Support Mike Blatney (left) and VP of Team Development Ken Channell lend their wealth of knowledge to radio listeners.

During the show, two local franchisees call in each week with a home that they have for sale. After the second week's show, one franchisee received two calls immediately after he was on the radio.

"This is a live show and listener calls are encouraged and answered on the air," explained Mark Hagen, HomeVestors' VP of marketing, who negotiated with local radio stations to air the program, which is a joint financial effort between HVA and the local Ad Council. "We are hoping to interact with the local investor community. Once we work out the kinks, we plan to syndicate the show in other HomeVestors markets. In the meantime, if you want to listen to the show, you can go to Homevestors.com and click on the radio show icon, and listen live. Remember, it's 8 a.m. CST. Podcasts of previous shows are also being posted on our Web site."

To promote the show, the DFW Ad Council has approved billboard additions/extensions, ads in the local business journal and a radio schedule on the host radio station.

. . .Gregg Stengel is the marketing/publications manager for HomeVestors. He may be reached at 972-761-0046, ext. 189

Neighbors Protect Rehabs For Gallop Solutions

This idea can save you money and generate leads!
By David Hicks

Tom and Becky Bohlen

Randy Murdzek, the rehab manager for Gallop Solutions, St. Paul, MN, has developed a system that helps secure the houses he is rehabbing, and has even generated some additional leads.

When his crew starts a rehab, Randy takes a specially designed postcard and introduces himself to all the neighbors. He hands them the card and asks the neighbors to give him a call if they see any problems – if his workers leave any mess in the yard, if they see someone in the house, or if they have any concerns. Randy says, "Since we have started this process, vandalism on our properties has decreased."

They use the HomeVestors postcard: "Making your neighborhood nicer. One house at a time." (Available through Sir Speedy.) The franchise phone number is printed on the front of the card.

After his crew takes care of the major problems and cleans up the house, Randy invites the neighbors to look at the house. "They want to know what is going on, so I encourage them to walk through. While they are there, I ask their opinion: 'What do you think of the floor? How about the cabinets?' The neighbors know their neighborhood, and give great advice on how to make the house fit the standards of the neighborhood. The neighbors may also be a source of leads for a potential buyer or another property we can buy."

Tom and Becky Bohlen, franchise owners of Gallop Solutions, say, "We have actually had neighbors call us when the doors were left open on a house, or tools left in the yard. We know this idea has saved us money."

. . .David Hicks is HomeVestors' senior director of operations. He can be reached at 972-761-0046, ext. 201.

What Our Franchisees Are Saying

Words of wisdom from your colleagues

Rickey Williams

"We have bought seven houses already this month and we think we will buy ten. Since the convention, we have bought more houses than we did our first eight months. Our retail has been very solid. Just tell all the newcomers it can be done if you put your heart into it!"

-- Rickey Williams, WFI Properties, Houston, TX

"We came into HomeVestors without a real estate background. One of the reasons we do well is we follow the system. We do not know anything else, so we just rely on the system. We have seen others not follow it here, and they have failed."

-- Tom Bohlen, Gallop Solutions, Minneapolis/St. Paul, MN