Wholesaling real estate is an excellent method for getting into the real estate business if you don’t have the necessary funds for buying properties outright. You’d be taking the same steps as if you were flipping houses but with one major difference. Rather than looking for funding for your flips or making a cash offer, you’ll be looking for buyers to honor your contracts with the sellers. There are just a few areas that you need to be aware of and concentrate on, so we’re going to outline them for you.
Importance of Finding Buyers
Wholesaling involves signing a contract with a seller, then finding a buyer. Real estate wholesalers contract with buyers at higher prices than with the sellers and keep the difference as their profit. But, there are a few tricks to finding buyers, including:
- Marketing Online
- Networking both Online and Offline
- Checking available buyer lists
- Using Craigslist
- Researching and using the best Google Search Terms
- Seeking some Insight from local Real Estate Agents
Finding the Best Area to Look for Sellers
A real estate wholesaler generally finds and executes contracts on distressed properties. Searching online is a great way to locate distressed properties in any area. The best websites currently specializing in them include:
- HomePath by Fannie Mae
- HomeSteps by Freddie Mac Homes
One of the optimum methods for attracting sellers is putting out signs all around the area telling sellers “We Buy Houses”. You may have even asked yourself, like many people have, “are they legit or just a scam?”. They’re no scam and are usually quite legitimate. The people who put up those signs are cash buyers who are ready, willing, and able to make an on-the-spot cash offer. So, for anyone who wants to sell their home quickly, a cash buyer can be easy to work with. And, as a real estate wholesaler, you can attract more sellers by having some of these signs made and placing them all over town.
Real Estate Wholesaling Example
Wholesaling real estate may seem a bit complicated. However, the process is really quite simple, and here’s an example:
Let’s say there’s a homeowner who has a distressed property that he never thought he would be able to sell. It’s quite possible that the owner doesn’t have enough resources to fix it up himself, so he simply leaves it that way, assuming he’ll never be able to sell it for a fair price. This is where you come on the scene as a real estate wholesaler, approaching the homeowner with an offer. Together, you both agree to put the home under contract at $90,000. Using your network of investors and other buyers, you find a buyer who’s looking for a fixer-upper at $100,000. You assign the contract and have yourself a $10,000 profit without even having to own the home.