Real estate is something that most people have an interest in – in one way or another. Whether it’s because they’re looking for a place to live and invest in a home to start a family, or they’re looking to develop a property as an investment opportunity.
Regardless of your real estate intentions, there’s always something to learn and use to your advantage regarding the purchasing and selling of property.
But, what is wholesale real estate? If you’ve heard the term, it may seem a little confusing and the concept can be tough to grasp. In this article, we are going to provide some information and insight into the wholesale real estate process.
What is Wholesale Real Estate and How Does it Work?
A wholesale real estate transaction consists of an individual called the “wholesaler” who finds a property and goes under contract with the seller. But, this wholesaler will present this contract to an “end buyer” who may keep the property for themselves or decide to develop the property for sale. The wholesaler collects a transaction fee once the deal has been brokered – this is usually a percentage of the overall sale.
What’s the motivation to become a wholesaler of real estate? Well, it’s a quick way for people to learn and participate in the real estate market without having any substantial startup capital to begin. Because the wholesaler is not actually putting up any money for the home, but rather acting as a liaison between the seller and buyer, there’s not a whole lot to lose, except sleep and some sweat equity.
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The Basics
Most typically, wholesaling of property is done with homes that are going to be sold under market value.
For example, a distressed property is not going to land market value on the open real estate market, and the seller for any number of reasons is going to be motivated to unload the property quickly. A real estate wholesaler will come to an agreement with the seller for a purchasing price, they will enter into a wholesale contract, and the wholesaler will secure a buyer to purchase the home slightly above what the wholesaler has the home under contract for so they can collect a fee for their services.
Why Sellers and End Buyers Work With Wholesalers
When someone asks “What is wholesale real estate?” a reasonable reply would be to say “it’s an opportunity to complete a real estate transaction as fast as possible.” Some may think “Well, why don’t the sellers go through a real estate agent to sell as quickly as possible?” The answer is that the traditional route of listing real estate with an agency takes time and expense.
Many real estate brokers are not motivated to list, market, and sell distressed properties. Homes that are not ready for the open market are harder to sell and take longer to find the right buyer. 
Wholesalers are motivated to get the property under the closing agreement as quickly as possible because they only collect their fee when it’s sold. This is good for the seller because the wholesaler is working hard to get the home sold as quickly as possible. This is also good for the buyer, who is usually an experienced renovation expert or property developer, and doesn’t have the time to go out and source these opportunistic distressed properties.
Who Should Get Into the Wholesaling Business?
Wholesaling real estate is not for the faint of heart. The process sounds straightforward enough, but there’s much more than shaking hands and closing deals when it comes to being successful in real estate wholesaling.
Networking is one of the most important skills and processes of real estate wholesaling. Someone looking to become a wholesaler needs to have great networking skills and the expertise to realize real estate opportunities when they present themselves.
Remember, the sellers are entrusting the wholesaler to sell the home as fast as possible. And, the end buyers are depending on the wholesaler to have sound knowledge of the property and all financial aspects of the transaction critically examined.
A wholesaler’s network is critical to them not only finding a property to represent but also having buyers lined up on the other end to close the transaction quickly.
Organization is critical to having all these processes move along efficiently. A good wholesaler should be well organized and available at all times to answer questions and help ensure all aspects of the sale go smoothly. It will be difficult to uphold a good reputation as a wholesaler if each real estate transaction is not handled skillfully and professionally.
Should I get into Wholesale Real Estate?
Wholesale real estate is a tremendous opportunity for sellers, buyers, and motivated individuals (wholesalers) to close real estate business transactions fast and make money. But, be sure to be well advised on any real estate wholesaling opportunities you may find yourself in before committing to it.
Please contact Growing Edge Properties with any questions regarding real estate or wholesale real estate opportunities.