What is a Real Estate Wholesaler?
Real estate wholesaling can be a financially and emotionally rewarding endeavor and so is teaching what is a real estate wholesaler. It is a way of setting up a business of your own without having to invest much money. You don’t need a formal higher education or an expensive degree, and you don’t really even need a real estate license. Wholesalers help people because it can be difficult to sell their homes as quickly as they’d like, and wholesalers expedite that process by contracting to buy a property at a good price and finding a buyer who understands that by adding value in rehab or repair that the after-repair value will yield a good profit. Most sellers will always consider quick cash in exchange for a quick sale.
What the Job Entails
Real estate wholesaling is not a get-rich-quick scheme, and you are not going to become wealthy overnight once you learn what is a real estate wholesaler. Instead, you will work hard, and you will learn from the process. Wholesaling involves locating properties, often distressed ones, that are for sale and then finding buyers for them. When you sign a contract to buy a house the clock begins to tick…and you must find a buyer during the inspection period. The inspection period is a finite amount of days that are negotiated with the seller in which to carry out an inspection of the property. During this time a wholesaler can withdrawer from a contract without penalty. The object is to find a buyer willing to pay you a price for the house that is higher than what the seller is selling to the wholesaler for. As a wholesaler you will spend time networking to find both sellers and potential buyers, and you’ll also deal with the other players in the game. These parties are people who get involved in the deal, like mortgage lenders, accountants, banks, contractors, and lawyers. You’ll learn how to talk to them all, to get a deal closed.
Components of Wholesaling
Although each wholesaling deal is unique, there are components of wholesaling that appear in nearly everyone. A wholesaler must find a seller of property and then a buyer, and to do this, they must market and network. Wholesalers must also make sure they’re working within the limits of the law. Here are some of the components in more detail:
- Marketing: At the beginning of many wholesale deals is marketing. Marketing is often how wholesalers introduce their services to potential sellers who own distressed property and to the investors who are interested in buying it. The ways to market these services are infinite. Nearly everyone’s on the Internet nowadays, so advertising online can be a great method. However, targeted marketing is also important. Wholesalers benefit by marketing themselves among those most likely to sell or buy properties. This includes people with “For Sale By Owner” ads in newspapers, on Craigslist or at real estate investment meetings. Going to neighborhood home association meetings in areas of interest can also get wholesalers in touch with those who are moving or looking to sell. If the neighborhood association has a newsletter, that publication is likely to have a list of houses for sale in it.
- Contracts: Wholesalers must understand the contracts that are involved in real estate wholesaling. Assignment contracts make it possible for the wholesaler to sell the purchase direct to a buyer. Contingency clauses such as 30 to 60 day inspection periods enable the wholesaler to back out of the deal without losing money if a buyer can’t be found or if some problem with the property is uncovered.
- Building a Network: Knowing divorce or probate attorneys, mortgage lenders, accountants and the like can help a wholesaler find people who need to sell a home quickly, maybe because of divorce, death or even retirement. Lawyers may be needed to look over various contracts. Contractors will also be needed for repairs as well as estimating the cost of repairs for a rehab.
- Locating Sellers and Buyers: To make a wholesale real estate deal, you need sellers of property and people who want to buy them. Checking the local newspaper to find out what companies are leaving the area can tell you who may soon be out of a job and ready to sell a home. Finding inherited property that someone is waiting to sell is another possible way, and using a company that can sell you some targeted lists like U.S. Lead List or Melissa Data can be well worth the money and can also help to save you hours of time. To find buyers, going to real estate investment meetings is another great idea, because there you will find people who have cash and are ready to buy.
- Negotiating: Wholesalers must know how to negotiate a deal with buyers and sellers. Negotiating is a skill that can make or break a deal. Good negotiators listen more than they talk, and are eager to learn the needs and desires of the parties they deal with and to present a transparent and honest proposal. That’s how a good business reputation is built.
Keys to Success
The keys to success in real estate wholesaling are dedication, persistence, knowledge, networks, and due diligence. Learning what is a real estate wholesaler isn’t enough. Nobody succeeds in wholesaling without hard work. Time and energy must be spent to find the properties, and experience makes this easier over time. Being familiar with the area that as a wholesaler you are going to work in is crucial. Going through the local public records to find properties that were sold for cash can help the wholesaler to find buyers. Attending real estate investment meetings can also create opportunities for wholesalers to meet potential sellers and buyers.
Creating mailing lists of potential sellers and buyers is another skill to develop, as well as using direct mail marketing pieces. Once the properties are found, it’s a wholesaler’s responsibility to know the property inside and out. Then, setting up a marketing campaign that is effective, although it may have some designated starting points, is something that is often learned by trial and error. Wholesalers must simply find out what works in their area, and what does not.
As long as you’ve got a realistic outlook on wholesaling and have some idea what to expect, you’re in for an exciting, rewarding, and a lucrative career. I believe once you learn what is a real estate wholesaler, you can parlay the info into instant income for years to come.