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What is wholesaling real estate?

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asked Aug 17, 2015 in Real Estate by luckybudda (1,240 points)
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Essentially speaking, you can look at wholesaling real estate the same way you do flipping houses, with a few minor differences. For example, people operating as wholesale real estate investors don't make repairs of any kind to a home; it's simply about the flip. The second difference is the wholesaler doesn't actually purchase the home, but instead he or she contracts the home out to the right field of buyers for the seller. This almost makes the wholesaler seem more like a real estate agent, until you understand the fact that the wholesaler doesn't get a commission; instead, the real estate wholesaler rakes in the profit, which would be the amount of the sale minus the price that was contracted at the very beginning with the actual seller of the home. [1]


Especially since the buyers are also normally investors, closings happen quite quickly. Often, these homes can be ones that wouldn't normally find a traditional buyer right away or close quickly due to being in need of multiple repairs. Have you ever seen the sign "We Buy Ugly Houses?" Just remember, real estate wholesalers don't buy homes, they put them under contract. Real estate wholesalers need to be highly networked with real estate investors, and they also need to be very familiar with properties and how to find the homes that fit the mold. [2]





Sources:


1. http://www.investopedia.com/ask/answers/100214/what-goal-real-estate-wholesaling.asp


2. http://www.biggerpockets.com/renewsblog/2006/11/25/wholesaling-real-estate-basics/
answered Aug 17, 2015 by JLettermanMB (43,320 points)
selected Aug 17, 2015 by luckybudda
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Wholesaling real estate involves finding a cheap property (typically a distressed one) and then having an investor buy it on your behalf so that you spend little to no money on it. You get a commission akin to a finder's fee, while the investor makes improvements to the property before flipping the house for profit that he keeps.

 

While this sounds like a relatively easy thing to do, it does require both time and knowledge. [2] You need to know the marketplace you're doing business in, understand retail values and be able to estimate improvement costs, among other things. To be successful, study up before making a huge comitment in this field.

 

1. http://www.wikihow.com/Wholesale-a-House

answered Aug 17, 2015 by Alexis Arden (43,230 points)

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