What Types Of Buyer Financing Are Acceptable In Wholesaling?

In today’s economy – especially in the housing market – you want to be as risk averse as possible; that is, you rarely want to take a payment type that carries any risk towards cancelling the contract. There are several funding sources that used to be easily obtainable but now carry too much risk to be considered viable payment options.
Equity Lines

Equity lines used to be a regularly used payment type in the wholesaling industry. Good buyers used to have several equity lines they could utilize to pay for a particular new piece of property. However, with banks in a state of disrepair and equity dropped considerably, many of these equity lines have dried up –sometimes even without the knowledge of the buyer.

If the buyer wishes to pay with an equity line, ask them first if they have an additional form of payment that they can use instead that carries less risk. There is a high probability that buyers that have been in the industry for a long time have alte
ate funding sources they can use. If not, you can contact other buyers.

If this buyer is the only one interested in the property, you have to weigh the risks. If you believe you can find a new buyer, you may want to do so. But be prepared to make a tough decision and go with the equity line, because you may not have any other options.

Acceptable Payments

That said, there are a number of payment types that are always acceptable, regardless of the state of the economy and the housing market. Cash, for example, is always welcome in wholesaling and rightfully so, because it is the only payment type that is completely guaranteed.

In addition to cash other acceptable forms of payment include:
• Cash in a retirement accountn • Private lendersn • Partnersn • Bank lines of credit

All of these are essentially cash in hand, because they are all virtually guaranteed payment types. While cash in a bank account is the ideal way to receive payment for a property, when that is not available, these other forms of payment are always welcome.

You want to avoid personal loans, standard mortgages, equity loans and any lending type that is currently affected by the housing market and economy, as these funding sources are drying up even for the most affluent members of society. But good buyers will usually have other funding sources available.

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