What Does the Phrase “Wholesale Real Estate” Mean?
The term “wholesale real estate” means that a distressed home is put under contract. This is done by a real estate wholesaler who has the intention of assigning that new contract to another buyer. In other words, the wholesaler does not plan on actually fixing up the property themselves before putting it up for sale. Instead, they will market the home to potential buyers at a higher asking price than what they have it under contract for.
When it comes to wholesale houses, there are a few critical steps that need to be followed in order to make this process as successful as possible.
Finding the Right Kind of Property
Distressed properties more commonly known as fixer-uppers are generally the best kind of property when it comes to wholesaling because they can be purchased under market value. Properties of this nature are those that need a lot of work even to be considered safe or properties with owners who are motivated to sell quickly.
Once you have found a property and you are convinced that it is a good deal, there is something absolutely essential that you have to do and that convince the property owner to sell the property to you. You need to get the homeowner to sign your contract. This step is critical because it will be how you secure properties to wholesale and make it a successful investment of both your time and your money.
Make an Offer & Get a Low Price
Once you have contacted the homeowner and they have agreed to meet with you, you will want to discuss what the benefits would be to them, if they sold their home to you. The majority of wholesalers tend to focus on the idea that by a homeowner selling the property to them the seller will be able to avoid having to deal with any real financial issues that have gotten them to such a point – i.e., someone defaulting on their mortgage and facing foreclosure.
Prior to making any sort of offer, it is also important to tell the homeowner about any updates or repairs that the property needs to fix up, rent or resell the property. Doing this is a critical step as it will help to justify the offer you make to the homeowner.
Signing the Contract
When the time comes for the contract to be signed, you as the wholesaler have the option to use local attorney or realtor. That said, many wholesalers actually take the task into their own hands and either write their own contract or alter a relatively basic real estate purchase contract. Some even use what is called a wholesaling agreement template. This is done so that they are able to add their own clauses and do not have to necessarily adhere to the many provisions in a standard Agreement of Sale.
Finding the Right Professionals to Work With
This is where a real estate wholesaler needs some contacts in the real estate world, in order to make the sale take place you will need to work with a contractor, a title company, and an