Wholesale Real Estate: A Beginner’s Guide

How to sell real estate: step by step

The first part of getting started in real estate wholesale is starting your business. In the United States, this means you would likely first set up a Limited Liability Corporation (LLC) under which to run your real estate wholesale business.

Once you have done this, you are ready to hit the property market and start looking for investment properties. Follow these steps to get into the wholesale real estate game.

1. Find a distressed property or a motivated seller

For real estate wholesale to work, you need to find motivated sellers of distressed real estate. These sellers want to sell the property quickly and don’t want to use the usual channels of a real estate agent, mortgage lender, money making, and home inspection or appraisal.

Instead, they want to sell to a cash buyer who can quickly close the property before it goes into foreclosure. Motivated sellers usually sell the property below market value because they want to get out of the house quickly.

If you offer a price well enough below market value, you can sign the house with your team of investors for a higher price. This is important in order for you to earn a profit or a “finder’s fee” for brokering the business.

To find the distressed real estate owner, you need to market yourself as a distressed real estate cash buyer through direct mail, social media, and even word of mouth. The more people know about your services, the more apartments you have available to contract.

2. Negotiate with the seller

Once you’ve found the right property, it’s time to negotiate a deal with the seller. This is one of the most important steps in the process. If you bid too high, you are leaving no margin for profit in awarding the contract to the final investor. If you don’t bid enough, the seller may decline your offer.

When negotiating a property sales contract with the seller, be professional, courteous, and give the seller reasons to trust you. Tell the seller about your experience and how many other sellers you helped avoid foreclosure or default on their mortgage.

It’s also important to have a keen eye for detail. Just walking around the house should tell you what improvements the house needs so you can use it in your negotiations and let the seller know how much money it will cost to fix the house so you can negotiate a lower price .

The less money you pay the seller, the easier it can be to find investors who see an opportunity to profit.

3. Sign the contract

After you have agreed on a price with the seller, you create a wholesale agreement. You can hire a real estate attorney or broker to do this, or you can create one yourself. You will save more money doing it yourself, but you run the risk of something wrong. If you are unfamiliar with real estate contracts, consulting a lawyer can be a good idea.

4. Finding an end buyer

To find an end buyer, you need to rely on your network of real estate investors. Even though you may not directly know someone who is interested, someone you know may know someone. Build your network through social media and local real estate meetings.

As you build your real estate wholesale business, assemble a group of real estate investors who will buy the properties you have found. This is the final buyer or the person who takes possession of the property.

5. Negotiate with the buyer

Just as you negotiate the price with the seller, you then negotiate with the end buyer how much you can make from the sale of the contract. This is where you negotiate your transaction fee. This can be a standard fee that you charge, or it can be something specific that you agree with the buyer.

6. Assign the contract

In order to assign the contract that you have concluded with the seller to the buyer, you must complete an assignment agreement.

This agreement states that you assign the contract concluded with the seller to your end buyer for the agreed amount. The amount specified in the contract is the difference between the amount you are willing to pay the seller and the amount the buyer has to pay you for the house.

The buyer agrees to buy and own the house. You (the seller) agree to accept the fee as an assignment of contract, thereby giving you no rights to the home.

7. Close the deal

The final step is billing. At this point, all parties will sign the documents and transfer the deed to the final buyer. The wholesaler (you) does not have to pay any money out of pocket. The end buyer bears all closing costs and the cost of the home. You pass the money on to the seller and only keep your profit or the difference between your selling price and the price you agreed with the end buyer.