Wholesaling Real Estate

The Basic Steps

Find Motivated Sellers: Wholesalers don’t search the typical “for sale” market. They need sellers motivated to sell fast, often below market value. This could be due to financial distress, properties needing too much repair, inherited properties they don’t want, etc.

Get It Under Contract: The wholesaler doesn’t BUY the house. Instead, they sign a contract giving them the RIGHT to buy the house at a set price within a set timeframe. It usually includes a small (refundable) deposit called earnest money.

Find an End Buyer: This is where the hustle comes in! The wholesaler has to find another investor willing to purchase that contract at a HIGHER price than what the seller agreed to. These end buyers are often rehabbers or landlords.

Assign the Contract: The wholesaler doesn’t buy the house then resell it to the end buyer. Instead, they transfer (assign) their contractual purchase rights to the end buyer and pocket the difference.

Why Wholesale?

Little Money Needed: Traditional real estate deals require big down payments and loans. Wholesaling’s main upfront cost is usually just the small earnest money deposit.

No Owning Headaches: The wholesaler never becomes the legal owner. They avoid property taxes, maintenance, and tenant issues.
Quick Potential Profit: Since wholesaling transactions can often happen in weeks, not months, it’s potentially a fast way to make money.

Important Notes

People Skills are Key: Success hinges on building relationships with both motivated sellers and investor buyers.

Market Knowledge is Vital: Wholesalers need to know what deals are truly good so they don’t overpay in the contract, leaving no profit margin for an end buyer.
State Laws Vary: Some states have stricter regulations on wholesaling than others.