What is Wholesaling Real Estate?
Wholesaling real estate is the process of finding potential deals, analyzing them, negotiating them, controlling them, selling them and collecting a fee for doing this work.
Let’s break those steps down so that you can understand a big picture overview of what is happening at each step.
First, you got to find potential deals. Usually with wholesaling real estate you are not finding these deals in the MLS with a real estate agent. It is not that a real estate agent can’t help you find great deals or that there are not great deals in the MLS, the reason why we typically don’t find deals in the MLS to wholesale is because it is unconventional and hard to control a property that is listed in the MLS with the intention of assigning your contract to another buyer before closing. Can it be done? Yes. But you are fighting an uphill battle trying to do it that way.
You are much better off trying to find motivated sellers before they list their property for sale with a real estate agent or broker if you intend to wholesale it.
Step two is analyzing deals. You need to know what your end buyer will want as a deal and analyze your wholesale deals accordingly. If your buyers want to buy equity, analyze it based on equity. If your buyers want to buy based on cash flow, analyze it based on cash flow. Cater your criteria to what your buyer’s list wants.
Step three is negotiate deals. Once you find and analyze a property, now you need to negotiate with the seller to get the property at the price, terms and conditions you want and can wholesale it profitably.
Step four is controlling the deal. Once you have agreed on price, terms and conditions then you need to get your agreement in writing with a contract to purchase or an option. Most times it is not enough to have a verbal agreement; you will want to get your right to purchase in writing.
Step five is selling the deal. Hopefully, you’ve been building your buyers list in advance and can blast a message out to your list of investor buyers to sell your deal quickly for a wholesale fee. If not, you need to market like crazy to get your deal sold in the time you have.
And the final step is to collect your fees. Once you have sold the deal you will want to collect your fee for wholesaling the property and this is usually done, although not always, at closing.
Repeat as needed to generate cash from wholesaling property.
Until my next post,
James