Find a motivated seller, acquire the contract, then find a buyer to close the deal. That’s the wholesale process in a nutshell. Seems simple enough, right? But there’s more to it than that, as knowing the process is just the beginning.
If you want to close deals, you need to learn how these steps are done. That’s what will determine if you’ll succeed in the real estate investment strategy or not.
In this wholesaling syllabus, we’re going to break down the process into 7 steps. This will be a lot of information to absorb in one go, so be sure to bookmark this article for your future reference. Think of this as your handy reviewer whenever you need to brush up on your real estate wholesaling knowledge.
The Real Estate Wholesale Syllabus
We will provide videos as a learning aid as we go through each step. Just like when we were in school, all you need to do is read and listen attentively. This time, however, you’re not working for high grades, but high gains. Are you ready for wholesaling class to begin? Let’s get to it.
1. Conduct a Market Analysis
How To Analyze A Real Estate Market | Wholesaling Real Estate
Watch from 0:45 to 5:55
Some places provide more wholesale opportunities than others. When choosing where you want to conduct your wholesaling business, these 3 factors will help you determine if the market in a given area is profitable:
- It’s a Metropolitan Statistical Area: Large areas like Metro Detroit have a crazy amount of people, which will likely translate to higher real estate activity. So aim for areas with at least a million people to ensure that you have enough buyers and sellers to look for.
- There are Many Older Properties: These properties sell for a cheaper price, since expensive maintenance and repairs aren’t factored in. But it also opens great opportunities for you to seek out properties that only need minor repairs and touch-ups before wholesaling to buyers.
- There’s High Supply and Demand: High supply means there’s a lot of seller activity while high demand means there’s a lot of buyer activity. High real estate activity suggests an abundance of leads, providing more opportunities to close deals.
Take your time to carefully analyze the different areas you plan on wholesaling, as choosing the right market is paramount to your success. With all 3 factors present, you can bet there are deals out there waiting for you to close them.
2. Build a Buyers List
How To Create The Best Cash Buyers List [Hack Strategy]
Watch from 1:23 to 7:20
Flipping Mastery TV’s Jerry Norton looks for two capabilities in wholesale buyers: They can pay in full and preferably in cash, and they are willing to close deals “site unseen.” These are ideal qualities any wholesaler would look for in a buyer, but where can you find them?
Rather than going to different places to find these buyers, Jerry makes it easier by narrowing his search to the spots where you can easily find them. With Jerry’s auction and property foreclosure hack, you’ll be throwing your rods in an ocean full of fish.
Here’s how it works: For buyers to participate in an auction and property foreclosure, they need to have the qualities Jerry Norton stated—they’re willing to close deals site unseen and can pay in full. In these property auctions, buyers don’t have a chance to view the property. And as soon as a bid’s accepted, the buyer has to immediately pay for the property being auctioned.
You can find these auctions online, at your county courthouse, or through third-party sales agents called trustees. Attend these auctions early for a chance to mingle with the buyers before the bidding starts. Some buyers stay after the auction, which can be another opportunity for you to get more contacts. Your goal here is to gather as much contact information as you can.
You can use this method for reverse wholesaling, too. Opposite of the traditional wholesaling process, you first find a buyer and then the seller. Attending these auctions also provides insight into what kind of properties ideal buyers look for. A surefire way to close more deals is by focusing on hot properties in the market and networking with capable buyers.
Although Jerry gives an effective hack to find and grow your buyers list, it’s always better to have multiple methods to choose from. Other strategies to grow your wholesale buyers list that you can try are cold-calling or partnering up with a real estate agent.
3. Find a Motivated Seller or Distressed Property
How to Find the Best Motivated Seller List using Propstream in Wholesaling Real Estate
Watch from 0:53 to 8:16
In wholesale real estate, time is of the essence. Therefore, it’s important to have methods in place that allow you to quickly connect with motivated sellers. How can you connect with more leads in a shorter time? Jerry Norton suggests a combination of inbound and outbound marketing so you can find and attract motivated sellers simultaneously:
Outbound Marketing
Actively seeking out motivated sellers with wholesale real estate lead generation strategies like cold-calling or driving for dollars are classified as outbound marketing methods. With outbound marketing, wholesalers generate leads by finding them.
Inbound Marketing
On the other hand, inbound marketing methods aim to bring these motivated sellers to you by means of attracting them. Leveraging networking and online marketing tools such as Facebook or Google ads is a great way to be visible, providing motivated sellers opportunities to approach you.
There are also motivated sellers who aren’t so active online, so you can catch them with traditional inbound marketing methods like bandit signs.
4. Put the Property Under Contract
How To Put A House Under Contract – You Ask, We Answer 🙂
Watch from 0:50 to 5:12
Getting the property under contract signifies half the job is done. Once you get the property under contract and have control over the property, you just need to find the buyer and finalize the deal. Here’s how David Dodge gets properties under contract:
- Send the Sample to the Seller: Sellers can better assess whether they’re making a good deal if they have a copy of the contract they can review.
- Get the Contract Under Escrow: Assuming you and the seller have finalized terms, clauses, and signing, you then have to get the contract approved by a title company and pay a fee.
- Send the Receipt back to the Seller: Once your contract is processed and recognized, you send the receipt back to the seller to show that you are legally bound.
Remember to carefully set the terms of your contract. For the deal to go smoothly, all parties must be in full agreement of all clauses and conditions.
5. Find a Buyer
How To Find Cash Buyers Made Simple! [Wholesale Real Estate]
Watch from: 0:08 to 7:20
Lili Thompson is a 25-year-old YouTuber that shares internet-based wholesaling techniques. For finding cash buyers online, she uses websites like ProStream and Zillow. However, access to these websites comes at a cost, but Lili suggests it’s worth it to close deals.
Her process starts by using ProStream, an online software that helps you find distressed properties. The software lets you highlight an area on a map and shows you properties for sale, auction, foreclosure, vacant, and other real estate classifications. More importantly, ProStream also provides a tab that shows all the cash buyers in the selected area.
Lili specifies her search by choosing the filter “flippers” on the Quick List Choices options of the filters. She says she looks for flippers since they need wholesale properties to flip. To find matches with the current properties she needs buyers for, she also puts a filter for the property type and price range.
After her specified searches provide what she’s looking for, she saves the results using the listing tool of PropStream. She ends the PropStream portion of her process by using the Skip Tracing feature to extract all the contact information from her saved list.
In reference to the video, she got 17 contacts priced at $.25 per contact!
With the property and contact information she extracted, she begins the next part of her process using Zillow, an online real estate market software. She inputs property information from her PropStream list and assesses these on Zillow. If she finds the types of deals she’s looking for, she makes contact using the contact information of the corresponding property.
Her process can be daunting for first-timers, but it’s a fast way to find the cash buyers you need in just a few clicks once you get the hang of it. Lili shares a great method, but remember that you should always have different lead generation marketing strategies to grow your buyers list and market your wholesale properties as well.
6. Assign the Contract
Real Estate Wholesaling Explained: How an Assignment of Contract Works
Watch from 2:02 to 4:24
There are two ways wholesale deals can happen: First, you buy the property from a motivated seller and then sell it for a higher price to a buyer. Second, you work as a middleman by acquiring the contract from the motivated seller and then assigning it to a buyer for a fee.
Of the two options, the second one doesn’t require money out of your own pocket, making it preferable for wholesalers. Although margins are small, if done properly as a business model, this can provide a constant stream of income given you put in the time and effort.
In addition to the contract made with the seller, you’re going to add your part. The additional page states your transference of the contract to the buyer with a fee. For instance, the contract with the seller states the sale of the property for $100,000.00. Your part of the contract states a total of $115,000.00, making your fee $15,000.
Wholesalers in Oakland County often use contract assignments, but different states have different regulations for this method. REtipster warns that in other states, contract assignments are allowed only by licensed real estate agents. If you’re in one of these states and you’re caught assigning contracts, you can be imprisoned for practicing without a license.
REtipster gives a reminder to carefully check the terms, clauses, and liabilities stated in the contract (like this one from Quora). Creating a contract that protects your well-being is a security step you cannot miss in real estate wholesaling. You can use these contracts as leverage in case other parties aren’t fulfilling their obligations or withhold necessary information.
When everything is clearly communicated and all parties are in agreement, it’s a win-win for everyone.
7. Close the Wholesale
Watch Me Get The Title Company To Close My Wholesale Deal
Watch from 3:33 to 5:57
Once all the wholesale real estate contracts are finalized and signed, the last step to closing the wholesale is to get it approved by the title company. Take note that the state of Michigan uses title companies, but other states may use escrow agents or closing attorneys. Regardless of the different names, these entities all serve the same function.
Assuming all goes well and your contracts are recognized and processed, the title company will either wire or send your fee to you. They will also be the ones to transfer the money from the buyer to the seller. After you receive your fee, consider your wholesale real estate deal closed.
Congrats! You’ve Graduated in Real Estate Wholesaling
You’ve reached the end of our free online real estate class on wholesaling. Whenever you feel like you need a refresher, you can always come back and review the 7 steps to successfully closing wholesale real estate deals.
Now that you have a deeper understanding of the wholesale process and some methods you can use, you’re ready to build a successful wholesaling career.
Is there anything else about wholesaling you want us to take a deeper dive into? Leave a comment down below and we’ll catch you next time!
