How Wholesale Real Estate Works
Wholesaling real estate is a lucrative way to make money in the real estate industry, but it takes some time, effort, and knowledge to get started.
When you wholesale a property, you’re essentially acting as a middleman between the seller and the buyer. You’ll not be taking possession of the property, but you’ll be responsible for finding a buyer and negotiating the sale.
You identify a property you think is a good deal, sign a contract with the seller, and then find a buyer. Sell to the buyer and pocket the difference.
How Wholesaling Real Estate Works
Real estate wholesalers must identify sellers motivated to sell their homes below the market value in exchange for a quick sale. Such homes usually need a lot of repairs, are neglected, or are facing foreclosure.
Once you identify such a home, you’ll need to make an offer to the seller below market value. If the seller agrees, you’ll sign a contract that includes an “assignment clause.” The clause allows you to transfer your interest as a wholesaler to the buyer.
You’ll then need to find a buyer for the property. You can market it to real estate investors or traditional home buyers. Once you find a buyer, you’ll need to sign a purchase agreement with them.
When the buyer closes on the property, you’ll receive your assignment fee. The buyer will take ownership of the property and will be responsible for paying closing costs and any necessary repairs or renovations.
You can wholesale properties without having to put any money down by using other people’s money (OPM). You can find private lenders through online platforms or by contacting local real estate investors. If all goes well, a real estate wholesaler can make a lot of money without ever owning the properties themselves.