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Wholesaling is when an investor finds a property for sale for less-than market value, and then will contract with the seller, then finds a buyer for the property. This is a common tactic for off-market property’s unless you are in a buyers’ market. Wholesaling comes with a large amount of pressure and requires a lot of connections commonly. The benefit of wholesaling is that you don’t have to deal with rental management, nor you don’t have to handle the rehabs. You’re mostly just the middle man.
Wholesaling houses is an exit strategy where investors find a discounted property, get it under contract, and then sell it to an interested buyer for a profit. Wholesaling houses is a strategy that has become synonymous with today’s quickest method of turning a profit, with some investors wholesaling properties in as little as a few hours. Learning how to start wholesaling real estate involves taking a closer look at the process. Investors will find discounted properties, usually ones below market value, that they can then control through the use of a “purchase and sale agreement.” While under contract through said agreement, the wholesaler will then locate a subsequent buyer willing to purchase the contract.
When investors sell a contract, they aren’t selling the property itself; they are actually selling their right to buy it to someone else. Under what is known as the doctrine of equitable conversion, once a real estate agreement is signed by everyone involved in the wholesale deal, the final buyer becomes the equitable owner. The seller retains the bare legal title to the property under the terms of the agreement. On the other hand, a double closing will have you purchase the subject property and sell it immediately after the acquisition (without rehabbing it).
When you reverse the wholesaling process, you look for buyers first before finding deals. Reverse wholesaling differs from traditional wholesaling in that you already have a good indication of what your buyer pool wants. It is your job to then locate the property and match it with the buyer.
Flipping the contract in reverse wholesaling can be easier since you already know the buyer has an interest in the property.
Investors ready to learn how to start wholesaling houses will be happy to know the process is not complicated. Here are a few simple steps to get started wholesaling: