What is Real Estate Wholesaling? Wholesaling is when someone, the “wholesaler”, finds an under market value property and gets the property under contract. After the property is under contract, the wholesaler will begin looking for buyers, sell the contract and make some money! Wholesaling is one of the best short-term investments, which does not require significant capital to get started. For people who are just getting started with Real Estate investing, this is a great place to start!
Below are some steps for the Wholesaling Process!
Find a motivated seller with a distressed property!
I know you’ve all been driving around and seen a boarded up house or a vacant property that needs work. WRITE THE ADDRESS DOWN! Do some research on the property and find out who the owners are, reach out to the owners and see if they are interested in selling the property.
Negotiate a deal with the seller!
Make sure when doing this, you are confident with your numbers (AS-IS PRICE, REHAB AMOUNT, ARV) Remember, you will need to negotiate your price low enough to be able to collect a “Wholesaler Fee”. Not only that, but you need to be sure this is a good deal or it is going to be rough finding a buyer! Be sure to let the seller know that they will not need to make any repairs or spend any money. Try to make an offer that will be beneficial to both buyers and sellers. Once a price is agreed on, sign the contract! If you don’t have a contract and need help getting one without spending a fortune, REACH OUT TO US! (719) 569-0464
Find a buyer!
Once you have the property under contract, it’s time to find a buyer! You will market the property for a higher price than you have it under contract for! The “end buyer” will most likely be an investor or maybe a contractor, someone who wants to buy and repair the property. Market your deal ALL OVER! When doing this, make sure to keep track of all the people who are reaching out to you. It’ll make this step go a lot smoother the next time you wholesale a property. We call this a “Buyers List”. Remember you need to do this quickly, as there is already a closing date on the contract with the seller.
Negotiate with the buyer!
You may have received multiple offers and now it is time to choose the offer that is most beneficial! Don’t forget, the closing date needs to be as soon as possible. Let’s say you have the property under contract for $20,000 and this buyer agrees to pay $30,000 you will make $10,000 (you may have some fees that will need to be paid out of this). Still a good deal though!
Assign the contract to the buyer!
Let’s not make this more complicated than it needs to be, you will sign your contract and all of your rights from the contract with the seller over to the buyer. You are basically selling the contract to the buyer and collecting a Wholesaler Fee.
Close on the property!
This is when you, the seller, and the buyer all meet at a title company, fill out documents and transfer the property to the new owners. Typically, you and the buyer will pay all closing costs. This is when the seller will get paid, you “the wholesaler” will get paid, and the buyer will get the property.
NOTE: When doing this, make sure you read the rules and regulations of wholesaling in your area.
Please reach out to us if you have any questions! We’d love to help!