The legal and certification requirements to sell wholesale real estate vary from state to state. Indiana does not have specific laws regarding real estate wholesaling and does not require an individual to hold a real estate license to wholesale Indiana properties. However, wholesalers must comply with Indiana real estate laws, or they may face severe penalties.

How Does Real Estate Wholesaling Compare to Retail Sales?

Understanding how real estate wholesaling works compared to more common retail transactions is essential. In many cases, an individual who wants to sell a house or other property agrees to work with a licensed real estate agent, also known as the selling agent. The selling agent agrees to market the seller’s property in exchange for a commission or fee, typically a percentage of the selling price, which is unknown until a buyer agrees to a price.

The selling agent spends time and money marketing the property and often sells it by cooperating with another real estate agent representing the buyer. (The selling and buying agents split the commission based on the sale price.) The transaction involves the property owner selling the property directly to the buyer in a deal arranged by the agents.

A wholesale transaction has similarities and differences with a retail transaction. In a wholesale transaction, the property owner contractually agrees to sell the property for a fixed price, knowing the wholesaler will turn around and transfer the contract to a third party who becomes the property’s new owner. Like a real estate agent who earns a commission for matching a seller and buyer, the wholesaler earns an assignment fee for transferring the contract to the buyer. For the seller, the significant difference is that they know the price they will receive for the property upfront.

For many reasons, including pending foreclosure, the property’s condition, or due to acquiring property through inheritance, owners may prefer to quickly sell the property for a specific amount rather than wait an unknown amount of time to sell the property at an unknown price. Wholesaling offers sellers the speed and certainty that a retail sale does not.

The Real Estate Wholesaler’s Responsibility

As mentioned, a real estate wholesaler does not need a license in Indiana, though licensed agents can wholesale properties if they want to. Nevertheless, wholesalers must comply with all Indiana real estate laws.

Wholesalers can be successful based on their knowledge of the local market and understanding of property values. If they overestimate a property’s value when they agree to a contract, they will struggle to find a buyer and may lose money. Much of a wholesaler’s success comes from identifying people who want to sell properties quickly and finding a buyer willing to invest in the property, whether it needs repairs or not.

Wholesalers must comply with Indiana’s real estate legal requirements and follow the industry’s ethical guidelines. Thus, they function like real estate agents while providing a slightly different service. In both cases, the best transactions occur when the seller and buyer are pleased with the property price and the service they received during the transaction.