If you’ve just discovered this magic, you may be wondering to yourself “what is wholesale real estate”? It’s not a common phrase that you hear in the news or in general conversations. This article will explain how to wholesale houses, and offer you a FREE real estate wholesale contract PDF Version as a download.
Real Estate Wholesaling is a specialized method for buying real estate. It involves marketing to find those sellers that are typically in a distressed situation. These sellers need to sell the house fast, and without making any repairs. Some common scenarios are death [Probate], foreclosure, delinquent property taxes, and divorce.
The process of wholesaling real estate involves negotiating a price with the seller that leaves enough room to quickly flip the house for a cash profit. The real estate wholesaler doesn’t do any repairs to the property. Instead, they sell it to a landlord or a rehabber. These are the people that will do the repairs and then have an exit strategy for the house.
Step-by-Step Instructions
I don’t know why people are confused these days about the correct order of wholesaling real estate. Oh wait. Yes I do. People are lazy and want to do as little work as possible and still make big bank. I get it. I understand the theory. There’s a better way to do things. Instead of being lazy, be productive and start outsourcing some of the things that will convert more sellers into leads. Let’s talk about what that might be.
Before I get on my soap box, let me make you aware that I know that there’s more than one way to skin a cat. I hate that adage, but it’s true. I know that there are people out there closing deals and making money by just throwing noodles against the wall and hoping that some stick. Good for you. I hope you can sustain that method for many years to come.
This article is written specifically for real estate wholesalers. For the purpose of focusing on the SELLER side of things, we’ll stick to the wholesale real estate process that you should use to get deals under contract. And they ARE in a particular order. If you have ever wanted to learn how to start wholesaling real estate, this blog post is for you. This is the ultimate guide to wholesaling real estate:
How to Do A Wholesale Real Estate Deal
[In A Very Particular Order]
FIRST: Generate Leads. It all starts with a good marketing campaign. It’s the lifeblood of any successful real estate wholesaler. The ability to generate leads is where it all starts.
NEXT: Pre-Screen Sellers. Determine motivation. Ask questions. Listen for motivated seller trigger keywords. Qualify these sellers for your program. EVERY SELLER IS NOT A LEAD.
THEN: Property Inspection. Go see the house! Check the condition. Know what you’re dealing with. Do some due diligence. Check the comps.
FOLLOWED BY: Make the seller an offer/negotiate. They may negotiate things you don’t want. Read this article to find out what to do when sellers want an earnest deposit. Once you’ve collected the information that you need, and you’ve seen the house, you can make the seller an intelligent offer. Make the seller an offer that won’t make you look like an asshole later.
THEN (if necessary): Follow Up. If your seller doesn’t accept your offer(s) the first time, then don’t consider them dead. Follow up with every seller that you have made an offer to. Create a strong follow-up funnel that will convert sellers months down the road without any additional marketing dollars being spent.
FINALLY: Get the wholesale real estate contract Signed. When you get to this point, it’s all downhill from here.
Once Contract is Signed, It’s Time to Find a Buyer
The process of wholesaling real estate is basically getting a contract signed with a seller to buy their property for below market value. The wholesaler then assigns the contract to a wholesale buyer for a fee. The fee is paid in cash. This investing strategy is the easiest and quickest way to make money as a real estate investor.
Can we talk? Let’s go back to the opening statement of my article. I said we were going to discuss the correct ORDER in which to do a wholesale real estate deal. Then I went on to mention that people are lazy and don’t want to work. So take a guess as to which step in the above-mentioned process that people leave out?
If you guessed the Property Inspection, then DING DING DING! You’re correct! Make sure you take your home repair estimator on your inspections!
Now before you get your panties in a bunch (because I know you will), hear me out. I ran some numbers on my calculator this morning, and based on the number of closed transactions that I’ve done since 1998 (about 700) and the number of leads that I would’ve had to talk to in order to get to that number, I’ve talked to about 38,000 sellers. I’ve been through the real estate crash of 2008. I’ve watched it recover and change back to a seller’s market (like it is currently).
I LISTEN to what these sellers are saying to me. Listening is why we have 2 ears and 1 mouth. So we can do less talking and more listening. And there was a short period of time when the competition was light. It was easy to get a deal under contract by slinging a noodle on the wall.