As a real estate wholesaler, you always look for the best deals to offer your clients. But how do you know how much to offer on a wholesaling agreement? And what factors should you take into account when negotiating with the motivated seller before they lose interest?
Let’s discuss what you should consider when deciding how much to offer on a property.
Cost Considerations for Real Estate Wholesalers
In general, wholesale real estate investors should aim to offer around 50-70% of the property’s “After Repair Value” (ARV). By doing so, you leave room for them to make a decent profit after necessary repairs and improvements.
However, you also have to consider:
The market conditions in your area
The condition of the property
Your own investment goals and objectives
The costs of repairs and improvements can vary widely depending on the scope of work required. In some cases, getting away with a lower offer may be possible if you are confident that you can complete the repairs yourself at a low cost. Conversely, if the property requires significant work, you may need to increase your offer accordingly.
Ultimately, the amount you offer on a property will come down to your risk tolerance and goals.
For example, if you’re looking to make a quick profit, you may need to offer less than 50% of the ARV. However, if you’re willing to take on more risk (and potentially hold the property for a more extended period), you can offer a bit less. It’s up to you to decide what works best for your business.
4 Tips on Wholesale Real Estate Investing
To wholesale a house, you need to find a property worth more than what you offer to pay for it. Here are 4 tips to go about wholesale real estate investing:
Do your research. As we mentioned, it’s essential to know the local market conditions and the estimated ARV of the property before making an offer. This will give you a good starting point for negotiation with the motivated seller.
Don’t get emotionally attached. It can be easy to get emotionally attached to a property, especially if it’s your first deal. However, it’s important to remember that this is a business transaction and you should approach it as such.
Know your numbers. To make a smart offer, you must know your numbers. Have a clear understanding of the estimated costs of repairs and improvements, as well as your expected return on investment (ROI). Once you have all of this information, you can start to play around with different offer prices until you find one that makes sense for your business.
Be prepared to walk away. If the sellers are not willing to budge on price, be prepared to walk away from the deal. There’s no point in overpaying for a property, even if it started as a potential opportunity to reap great returns.
Making an offer on a house can be a tricky business, but if you follow these tips, you should be able to negotiate a fair price that works for both parties involved.
Offer the Right Price for the Right Real Estate Wholesaling Business
When wholesaling a house, it’s key to find the balance between offering too much and not enough. You want to make sure that you are making a profit on the property, but you also don’t want to scare off potential sellers with an unreasonably high offer. By doing your research and understanding the market conditions in your area, you should be able to come up with a fair offer that leaves everyone happy.
Become a REIA member today! Join our upcoming meeting and sign up to our newsletter to stay ahead of the real estate wholesaling game in your area. Equip yourself with the knowledge that’ll bring you to wholesaling success—one property at a time.
Empty land is a valuable commodity. In some parts of the country, it’s worth more than homes—simply because there’s always a market for land for building a new structure or something else.
It’s also easier for wholesalers to find buyers for vacant land than for houses, as there is less competition in the market for land deals. As a result, you’ll find better deals on properties ripe for development than those with established homes.
So, if you want to learn how to get into this small real estate niche, we’ve got tips to get you started in the wholesaling process.
5 Steps to Wholesale Empty Lots
We’ve all seen those empty gravel lots in our neighborhood. But now, you’ll see them as more than just a pile of dirt. Instead, they’re an opportunity. While the land is valuable everywhere, some lots are worth more than others—highly sought after by the buyers you want to attract.
So, here are 5 ways you can start wholesaling land:
1. Look for Developing Areas
Look for areas that are being developed or zoned for development, as it’ll give you a good sign of where the market will move to in the coming years.
You can attend city council meetings to get a sense of which areas are being approved for rezoning or development variances. Search online for local land auctions—being good indicators of where the market is moving, and scan MLS listings for “raw land” or “vacant land” to identify hotspots.
2. Research the Title and Zoning
Do your due diligence when researching a piece of property. Check the title to see if there are any liens or encumbrances, and ensure that the property is zoned for the type of development your buyers have in mind. It’s also essential to determine if easements or rights-of-way could affect your prospective buyer’s development plans.
3. Get a Professional Opinion
Before making an offer on a piece of property, it’s always a good idea to get a professional opinion. Have a real estate attorney look over the contract, and have a land surveyor assess the property to determine its potential uses. You can also use the information to market the land to potential buyers.
4. Make an Offer
Once you’ve decided that a piece of property is a good fit for your portfolio, it’s time to make an offer. When making an offer on vacant land, it’s important to be realistic about the value of the property and the costs of development.
Remember: It may take longer to sell vacant land than it would to sell a finished home in some areas, so you’ll need to take the additional waiting time into account.
5. Close the Deal
With a buyer now confirmed, close the deal using a professional team to help with the process. Ensure that all the necessary inspections have been conducted and that the property is free of any environmental hazards, secure the appropriate permits for development from the local municipality, and verify that the title is clear and there are no outstanding liens or encumbrances on the property.
Turn Empty Lots into Enticing Deals
Next time you walk by an empty lot, remember that it’s more valuable than you think. By following these steps, you can successfully wholesale vacant lots in no time. Just remember to be patient, do your research, and work with a professional team to get the best results.
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Are you interested in real estate wholesaling? Great!
But are you ready to start now?
Many would-be real estate wholesalers are afraid of the risks that this industry is notorious for. After all, who would want to pour their time, money, and effort into a project that’ll take months or even years to see returns?
Well, you’ve come to the right place because, in this article, we’ll walk you through the whole process of how to get your first wholesale deal in just 30 days. From finding the property to negotiating its price and closing the sale, we’ll give you the exact steps you need to take so you don’t waste any time committing rookie mistakes.
Ready? Let’s dive in!
1. Find a Property: 8 Days
The first step to landing a wholesale deal is to find a property you can acquire at a discount. This stage of the process will usually mean finding distressed properties that have motivated sellers, which you can easily find via the following techniques:
“Driving for dollars” or going around your area to spot vacant and abandoned properties
Checking tax lien or foreclosure records to find homeowners that are desperate to sell
Placing bandit signs in high-traffic areas that contain a short message and your contact details
Direct mailing or sending out postcards and flyers to potential sellers
Leveraging your network by joining real estate investment clubs and associations
Checking expired listings for properties that weren’t sold by the date specified in the contract
Finding distressed properties and motivated sellers will take some time but don’t let this challenge stop you from trying to succeed in this industry. Keep in mind that real estate wholesaling is all about generating leads––the better and faster you get at doing so, the more you’ll become successful.
2. Negotiate for the Right Price: 5 Days
Once you’ve found potential properties, negotiate with the seller to determine a good price.
As a real estate wholesaler, the money you make will depend on how well you negotiate. Moreover, you can’t be too selfish while negotiating. Instead, you have to create and reframe the situation for the seller to see the benefits of agreeing to a lower price.
Your goal is to find the sweet spot price that’s low enough for the seller to approve, but high enough for you to generate a hefty fee without struggling to find a buyer.
If you aren’t confident in your negotiation skills, consider taking a seminar, reading books on the subject, or working with a trusted friend who has experience in real estate wholesaling.
Pro tip: Pay close attention to your tone of voice, body language, and behavior throughout the entire transaction, as it’ll indirectly affect the property’s selling and a purchase price as well—tampering with your potential profit.
3. Find Buyers for Your Property: 10 Days
Once you’ve got a good price with the seller, it’s time to find potential buyers. Doing this may seem like an insurmountable challenge, but thanks to the Internet, it’s now easier than ever. Here are a few tips:
Create a website: Showcase your past work and customer testimonials so it’s easy to get new sellers and buyers to trust you. You can create simple websites with WiX or WordPress, or get in touch with a web developer friend to help you out.
Scan forums and social media: Online forums, wholesaling Facebook groups, and social media platforms are also rich sources of potential buyers. So join groups dedicated to helping people find their next home, and establish your trustworthiness and expertise as a real estate wholesaler there.
Work with agents: Ideally, you want cash buyers that wouldn’t need a loan to purchase a home, so the transaction is quicker and easier for you. The best way to find them is by working with real estate agents, as they’ll usually have a list of financially capable buyers.
Cold calling: In the real estate industry, cold calling is one of the most effective ways to find potential buyers. Reach out to your current connections and find out if they know someone on the market for a new property. Then, give those prospects a call to explain your deal.
Put up bandit signs: Another popular method of lead generation, bandit signs are poster-sized signs that contain an attention-grabbing message and your contact details. For a better shot at success, place them in high-traffic areas, like shopping malls and busy streets.
As challenging as this stage may be, know that there are many tried-and-tested strategies that will help you out. By leveraging your existing network and being creative with your methods, you’ll have a list of potential buyers in no time at all.
4. Close the Deal: 7 Days
After receiving confirmation from your buyer, you can now officially start closing the deal. Now, real estate wholesaling relies on short-term funding and compressed timelines, which means you’ll have to pay close attention to every part of this process to make sure that nothing goes wrong.
There are two types of contracts in real estate wholesaling. The type of contract you choose should largely depend on your risk tolerance and how fast you want to close the deal:
Assignment Contracts: Find a buyer and sell them the contract without buying the property yourself, so you won’t have to put down any of your own money. This entire process can take as long as a week to complete.
Double Close Contracts: Buying the property and immediately selling it off to a buyer will give you bigger profits as the two parties won’t know what you bought and sold the property for. This process usually takes longer and can even last a few weeks.
Each type of contract has its own set of advantages and disadvantages so evaluate your situation before picking which one to go with. For instance, assignment contracts may be simpler and quicker but they also mean that both parties will know how much you’re making on the deal, which doesn’t give you a lot of negotiating power.
On the other hand, double-close contracts may mean more anonymity and privacy, in terms of the profits you’ll potentially walk away with. However, the process takes longer, is more complicated, and involves financial risks. With this type of contract, you’ll have to pay closing costs two different times—-when you buy the property and when you sell it off.
There isn’t a right or wrong type of contract to execute. Rather, the best option will depend on your risk appetite, financial assets, and how much you ultimately want to earn on the sale.
One Month Richer with Real Estate Wholesaling
Real estate wholesaling relies on short-term funding and compressed timelines, which means you’ll have to pay close attention to every part of this process so nothing takes too long. Ultimately, your goal is to have strong negotiation skills and the determination to find people looking to purchase the property.
If you can do these things fast and effectively, you’ll be reaping significant wholesaling profits within 30 days—we guarantee!
If you want more tips on navigating the world of real estate wholesaling, subscribe to our email newsletter. You can also check out our website, where you’ll find the date of our next meeting and an application form to become a member of REIA.
Many people in the real estate industry frown upon wholesalers. In general, it seems that wholesalers have developed a bad reputation because many investors and sellers think they can find each other without an expensive middleman pocketing some of the profits.
But the reality is far more complicated than just that…
The truth is real estate wholesalers make everyone’s lives easier, helping sellers to actually sell their unwanted homes and connecting buyers with properties they actually want. In a way, they fill a gap in the real estate investment game that nobody else can, providing genuine value to both seller and the investor.
Still, not everyone thinks that and so we wanted to address the question: Are wholesale real estate transactions ethical?
Let’s take a closer look at the issue.
When Is Real Estate Wholesaling Unethical?
Here’s how we see it: Real estate wholesaling is only unethical if someone conducts their business for the wrong reasons. After all, real estate wholesaling is legal in all 50 states—although with many local and state rules governing it.
Here are two situations where real estate wholesaling becomes unethical:
#1 – Deceiving the Seller
If a wholesaler deceives the seller into thinking that their property is worth less than it actually does, they’re effectively tricking them so they can earn more profits. But if the wholesaler tells them the actual value of their home and is clear about the extra cost they’ll pay for their expertise, then everything is done ethically.
As a wholesaler, the goal is to convince the seller that your list of buyers and connections will help them greatly, so they can sell their homes as soon and as easily as possible. After all, most sellers have the following problems:
They don’t have access to interested investors or buyers.
They don’t have real estate knowledge to handle the transaction.
They don’t want to take care of the property anymore and would rather liquidate it.
They don’t have the time and finances necessary to repair the property.
They don’t have time to waste as the property is near foreclosure already.
Another situation is if the property is already in foreclosure and the bank just wants to liquidate it. A real estate wholesaler can then step in, offer their expertise and knowledge, and get the job done quickly and efficiently.
#2 – Deceiving the Buyer
Another example of an unethical situation happens when the wholesaler underestimates the repairs needed and oversells the property to a buyer.
Sure, the wholesaler will certainly gain a hefty profit, but that effectively pushes the problem to the investor—where they have to repair and renovate the property at a much higher cost than expected. With a bloated after-repair value (ARVs) and inaccurately estimated repair costs (ERC), they’ll have lower their profits and struggle to bring the home up to standards or find another exit plan before they sink too deep.
Unethical situations like these are what fuel the negative reputation wholesalers have today.
Instead, you want to be known as an expert deal finder. Give accurate ARVs and ERCs, and put in the effort to build your experience, knowledge, and reputation in the community. The more you do this, the more buyers will see your added value to their investments—becoming an irreplaceable asset to them.
Ultimately, it boils down to the quality of deals you provide. If you offer pathetic deals for hefty profits and push problems to other parties, you’re only fueling the negative reputation that wholesalers already have to deal with in this industry.
Wholesalers = Real Estate Pawn Shops
Pawn shops also have a bad name, but they also fill a niche in local economies. Someone in need of quick cash chooses to sell their item at a pawn shop, usually for less than they could get by selling the item on Facebook Marketplace, Craigslist, etc.
Doing Real Estate Wholesaling Ethically
Many real estate agents look down on wholesalers as predatory, when they should actually look at them as another avenue for a quick sale in certain situations.
As long as you conduct your transactions the right way, you’re wholesaling real estate ethically and shouldn’t have any problems. After all, when you can build trust and credibility as a wholesaler, you’ll get far more recommendations from other buyers and sellers as well.
And when it comes to real estate wholesaling—networking is more important in the long run than acting out of your own self-interest for short-term profits.
What else do you want to know about wholesaling? Drop us a comment below!
If you’re a real estate wholesaler, then you’re already aware that your success depends on the trust you build with potential sellers and buyers. Unfortunately, many scammers try to take advantage of people by misrepresenting their intentions or promising impossibly high profits.
As they’re on the way to the bank, the unfortunate wholesaler must deal with the fallout, which frequently involves unhappy clients and a ruined reputation. Nevertheless, there are things you can do to gain their trust, seal deals, and earn wholesale profits.
Here are 3 few things you can do to assure sellers and buyers that you’re a legitimate real estate wholesaler with their best interests at heart.
1. Know the common types of real estate scams.
Apart from posing as agents or homebuyers, some con artists go the extra mile by pretending to be home inspectors, lenders, or landlords. To protect your customers from fraud, familiarize yourself with common real estate wholesaling scams.
Besides protecting yourself and the people you’re working with, in-depth knowledge of common scams shows that you really know the ins-and-outs of the industry. Without a doubt, this will help build your reputation, where buyers and sellers will feel more confident partnering with an expert.
The Foreign Buyer Scam
In this real estate scam, the seller will usually receive an email from someone claiming to be a prospective buyer living abroad. Then they’ll say that they’re planning to move to the United States.
They’ll send a check for the down payment only to say that they accidentally paid too much and ask the seller to wire back the difference. Only later will the seller realize that the check is fake—they’ve received no money. By that time, the buyer will have vanished along with the cash that was “returned” to them.
The “Bait and Switch” Scam
This scam occurs when a prospective buyer makes an offer that’s above the property’s market value, its sale price, or both. The seller then excitedly accepts the deal, only to learn that the buyer isn’t signing the contract yet because of “delays”.
They eventually come back; although, this time with a much lower price and a list of demands. Unfortunately, the seller will have paid thousands in ongoing taxes, insurance, and utility bills by this time, and feel they have to honor the sale regardless.
The Duplicated Listing Scam
Scouring through websites like Craigslist may lead you to great properties with incredibly low prices—but be warned! Some scammers copy legitimate rental listings and re-publish them with altered contact details and price tags. Unfortunately, some innocent buyers are so excited to grab the deal that they immediately wire a down payment to secure the purchase.
Needless to say, the scammer disappears upon receiving the payment, leaving the poor buyer with thousands of dollars lost and no property to show for it. They can try approaching the authorities for help but sadly, they often never get their money back.
2. Cultivate a robust online presence.
On the flip side, you want to show buyers that you’re not like the scammers we listed already. So, as a seller, you should establish a strong online presence is to convince buyers that you’re legitimate. After all, real estate scammers use fake names and likely won’t be as active on social media platforms.
Here are two ways to have an online presence:
Social Media: Create social media profiles on popular platforms like Facebook, Instagram, Twitter, and more to help prove your credibility and trustworthiness.
Website: Go the extra mile and build a website. Other than giving you a platform to display the properties you’re currently holding, you’ll also have a place to show past client testimonials, success stories, and positive reviews.
The more you cultivate your online presence, the more you can establish a strong brand and reputation. You also look more professional and differentiate yourself from scam websites that are often unorganized and hard to understand.
3. Avoid dominating the conversation.
As a real estate wholesaler, you’re probably aiming to grab all the opportunities you come across. There’s nothing wrong with this goal, but being too fixated on it could lead to being pushy or too eager when talking with buyers and sellers.
Instead, when speaking with buyers and sellers, stick to the basic facts—who you are, the name of your business, and how exactly you can help them. It’s completely alright to dig deeper and discuss their current situation and the property in more detail, but the key is to let them lead the conversation.
Constantly interrupting or talking over them will make you appear unprofessional and untrustworthy.
Build Trust, Land Sales, Earn Fortunes
Given how valuable an asset property is, buyers and sellers alike will only work with someone they trust. Therefore, if you want to land wholesale deals, you must focus on strengthening your brand and credibility. Only then will you find success in the real estate industry—one that’s largely built on trust.
Struggling to build trust with sellers and buyers? Our team of experts at Logical Property Management is ready to help!
We’ve been serving the Metro Detroit real estate market for more than two decades now and have everything you need to succeed in the area. We can help you with anything, from building an online presence to keeping track of your buyers and sellers.
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.
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.
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.
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.
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.
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.
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.
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!
It’s no secret: wholesaling can be a lucrative real estate investment method to earn a profit with minimal capital. On average, you can make around 5-10% of a property’s market value if you wholesale an undervalued home—that means you’re looking at a profit of $10,000 to $20,000 with a $200,000 home if you can get it under market value!
However, getting a slice of this pie does not come easy. Contrary to popular belief, real estate wholesaling takes a whole lot of skill, patience, and elbow grease.
For example, you need to find a property with a motivated seller, then find a buyer for it, coordinate all the paperwork required, complete the deal as soon as possible, and repeat everything again. You also have to simultaneously grow and maintain your buyer’s list so your business doesn’t come to a halt.
In other words, there’s a lot to keep track of when dealing in wholesaling.
But there is a solution to it: Make a list! Just like most projects in life, it’s easier to streamline the wholesale process if you have a checklist to guide you. That’s why we’ve written this ultimate checklist for wholesaling real estate—perfectly designed to help wholesale investors like you.
The Wholesale Checklist
Having a guide to the step-by-step requirements of a wholesaler can make the entire procedure easy as pie. But we do understand that not all of the things we’ll mention below will apply to you, so we advise that you focus only on the things that are most relevant to you.
Let’s get to the checklist!
A. Select a Market
Have you selected a market? Have you checked the trends of the current market?
Selecting a prime market can land you a hot deal. You want to find a market where there isn’t too much competition but is still highly coveted. In other words, try to find a balance—buyer markets that are on an upward trend without much competition to deal with.
Take for example Burlington, N.C. There’s a total of around 57 thousand brokers in North Carolina—far smaller than states like Florida with 212 thousand. But, the real estate market in Burlington, N.C. is booming right now. In fact, it is the 2nd most lucrative market in the US with listings only lasting an average of 35 days on the market.
You can only identify potential markets like these if you’re familiar with real estate market trends, so here is a quick jump-off point to get started:
Reference the MLS listings to get an idea of current trends in real estate prices.
Look for how long listings stay on the market. The less time on the market, the faster the turnaround for properties, and the better the situation for you.
Additionally, it’s important to know the median price of properties sold, so you know what you’ll be working with. For instance, in Burlington, it’s $295,000.
Once you’ve chosen your ideal market, you can move on to the next step in the checklist.
B. Build a Buyers List
Have you built your buyer’s list? Have you found any willing buyers in the area?
You’ll need a robust buyers list for a steady stream of good deals. Your goal is to continuously generate and follow up with the leads in that list so your wholesale investment becomes a growing business.
Create an online marketing campaign. Use social media and other platforms to get the word out on your name to build a potential buyers list.
Use customer relationship management platforms (CRM). Creating accounts on CRM platforms like Hubspot or Zillow can increase your reach to interested buyers.
Take note of buyer contact information and criteria. Make a note of the budget of your potential buyers and their contact info. When you find an appealing property, you can reference your list to see if the property coincides with the budget of one of your contacts.
By having an established and growing buyers list, you can increase the reach of your wholesale business which can lead to more deals and profits.
C. Look for Motivated Sellers
Once you’ve accomplished the first 2 steps, you can now enter the meat of the wholesale process: Finding a motivated seller with a property that coincides with the criteria of your interested buyers.
Now, in the industry, you’ll notice that distressed properties are popular for real estate wholesaling. There are 2 reasons for this: It’s easier to convince sellers to let go of their unkempt homes, and it’s easier to secure a larger discrepancy versus market price.
Use social media to create a marketing campaign for yourself.
Create a dedicated email address and/or phone number to screen incoming leads.
Once you’ve found a motivated seller. You then must hash out your wholesale contract.
D. Create the Wholesale Contract
Having found a motivated seller, you now need to finalize the wholesale contract. When creating the contract, you need to make it clear to the seller that you’re not buying the property.
You need to establish that you’re only finding an interested buyer for the seller.
Given that, be sure to establish the terms of what will happen if you fail to find a buyer. For example, you can set up an earnest money clause that will act as a guarantee. This clause will protect you and the seller in the event of failing to find a buyer. You will hand over an earnest money deposit that will act as a contingency that will be returned to you once the wholesale is complete.
Then, you need to find a buyer for the property.
D. Look for an Interested Buyer
Once the details of the wholesale contract have been decided, you then need to find a willing buyer. Be sure to thoroughly scope out the property to make it easier to find buyers.
For example, take photos of the property that shows potential buyers exactly what it looks like without having them visit the home. Additionally, take note of important details such as the number of rooms, the size of the property, and the overall condition of the property.
Once you’ve gathered all the necessary information, you should then do the following:
Send the property report to targeted buyers on your buyers’ list. Ensure that you send the property only to the buyers with the perfect criteria—or you lose their trust in the long run.
Like insurance, you can get in touch with local wholesalers to market to their own buyers. This expands your coverage, helps you grow your network, and makes it easier for you to sell.
Once you find a willing buyer, you can then move on to the contract turn-over.
E. Assign the Contract
With a willing buyer, you can then move on to assigning the contract. Here are the basic steps to remember when assigning a contract to a buyer:
Receive the amount necessary to purchase the property from the buyer.
Collect your earnest money deposit from the seller.
Turnover the buy and sell contract of the property to the buyer.
Enter into a new assignment contract with the buyer and collect your wholesale fee.
Contact an escrow company to complete the deal after the arrangements have been made.
Once the buyer has the contract, you can move on to the final step of the wholesale process.
F. Close the Deal
The escrow company will now oversee the process of transferring the property to the end-buyer. During this phase, you should keep in touch with the escrow company to get updates on the progress of the sale.
Once the sale is completed, the escrow company will turn over your assignment fee, and your wholesale will be completed.
Follow this Checklist to Make Your Wholesale Easy
Getting into wholesaling unprepared can be a recipe for disaster, and we don’t want that—not when real estate wholesalers already tend to have a bad reputation because of newbies making rookie mistakes!
But with the use of a checklist, you can avoid many of the pitfalls of wholesaling, increase your odds of landing a wholesale deal, feel less stressed with conducting your business and reap continuous profits from the many deals you’re scoring.
Take our list and make it your own! Good luck in your venture and feel free to comment on any other concerns you have in the comments section below.
