How to Wholesale Real Estate in 2024?

What Is Wholesale Real Estate?

Wholesale real estate is a short-term investment plan. Here, the wholesaler acquires a contract from a seller and sells it to an interested buyer.

Wholesalers look for home sellers with distressed or damaged properties who are interested in selling as is for cash. Such sellers are usually ready to settle below the property’s fair market value (FMV).

The wholesaler enters into a contract with the seller for a lower price and assigns the contract to a buyer for a higher price. The difference between the sums is the wholesaler’s assignment fee.

How Does Real Estate Wholesaling Work?

A wholesale real estate transaction works in the following way:

1. An RE wholesaler identifies a distressed property whose owner is desperate for a sale.
2. They negotiate the selling price with the owner. Once the price is fixed, the property is put under contract.
3. The wholesaler now looks for a buyer or investor interested in buying the property.
4. Once the buyer is ready to purchase the property at a higher price, the RE wholesaler assigns the contract to the buyer.
5. As the buyer closes on the property, the real estate wholesaler receives their profit.

4 Steps to Wholesale Real Estate

Anybody with knowledge of the real estate market can be a wholesaler. However, you must be systematic and prepare well for the deal to guarantee success.

Here’s how you can wholesale houses in 4 easy steps:

Is Wholesaling Real Estate Legal?

Yes, wholesaling real estate is legal as long as you follow the real estate laws of your state. As a wholesaler, you should be transparent about your role in the transaction. Remember, at no point should you act like a licensed real estate agent representing the seller or the buyer.

The contract should clearly state that you have an equitable interest in the property and don’t wish to buy the house itself. Apart from that, you must furnish proof of funds that demonstrate your interest in the property.

While wholesaling real estate is legal, here are a few things you should steer clear of:

• Wholesaling without a transparent contract
• Bringing the buyer to the deal first
• Failing to prove your intent as a wholesaler

Do You Need a License to Wholesale Real Estate?

No, you don’t need a license to wholesale real estate.

However, having a real estate agent’s license can have added benefits. You will have access to the MLS to search properties for wholesale. You can also use the MLS to find the buyer.

Is Wholesaling Real Estate Profitable?

Yes, wholesaling real estate is profitable.

The average salary of a real estate wholesaler is $53,805 per year. The number can go up to $80,000 for the top earners. However, if you are familiar with the wholesale real estate process, the sky is the limit.

An average wholesaler earns $3,000 to $7,000 in the assignment fee per deal. For experienced wholesalers, this figure is between $15,000 and $20,000. So, it shouldn’t take you a lot of transactions to make a good profit.

Wholesale Real Estate vs. Flipping Houses

Here’s how wholesale real estate is different from flipping houses:

Level of Risk	Wholesaling is easier and less risky as you buy a property below the market value and sell it at a higher price to the buyer.	Flipping houses is a slow and risky investment. The investor buys the house and renovates it to attract the buyers and motivate them to pay extra dollars for the property.
Investment Returns	Since a wholesaler’s job is to connect the seller and the buyer, they get a fixed return on their investment.	In house flipping, the investor spends a huge amount on renovation. The returns are determined based on repairs made on the property.

Pros and Cons of Wholesaling Real Estate

Wholesale real estate requires low capital investment and offers a simple learning curve. However, like all things, this investment strategy has its pros and cons.

👍 Pros of Wholesaling Houses

• No Barrier to Entry: You don’t need a license to start wholesaling real estate. Also, you don’t have to learn how to make repairs and upsell.
• High in Demand: Investors, Banks, buyers, and distressed property owners, all rely upon the wholesaler to close on the deal. Therefore, investing in an industry of hyper-demand is always a good idea.
• Few or No Repairs Required: In most cases, you will find a range of cash buyers or investors ready to buy the property as is.
• High Returns: There are no capped returns in RE wholesaling like a real estate agent. You can invest in multiple properties at once and keep your profit margin as high as 50%.

👎Cons of Wholesaling Houses

• Difficult to Finalize a Buyer: You may have to purchase the property yourself if you cannot find a buyer in the promised timeframe.
• Legal Complexities: Many people question the legality of this investment strategy. This is because wholesalers only sell the contract, not the house itself. Also, one doesn’t require a license to start wholesaling, which further adds to the distrust.
• Insecure Income: The number of properties you wholesale and your eventual earnings greatly depend on market conditions. So, you can’t expect a fixed regular income.

Is Wholesale Real Estate Worth It?

Yes, real estate wholesaling is worth all your efforts. Wholesaling helps you earn huge profits and build a strong network of real estate professionals.

Your success in wholesaling largely depends on searching for the right property and quickly closing the deal. Build a solid list of buyers to ensure faster closing.

To find properties to wholesale, view listings on real estate sites like Houzeo. We have advanced search filters to help you find foreclosures, as-is homes, etc.

Find Wholesale Properties For Sale With Houzeo

With thousands of property listings, Houzeo.com is one of the biggest property listing sites in the US. Find condos, townhouses, co-ops, and other types of homes for sale on Houzeo.