What Is Real Estate Wholesaling?
Real estate wholesalers or investors are professionals who procure homes that are distressed or under the market value, assigning contracts to investors for higher prices to make a profit. One of the best ways to make money from real estate transactions without purchasing capital or a real estate in California with a license is through real estate wholesaling.
Of course, real estate wholesaling isn’t a walk in the park. To do it properly, you must research the local market and network with other investors and sellers.
However, breaking into the wholesaling world doesn’t require much of a time or money investment.
Real Estate Wholesaling – How Does It Work?
Real estate in Riverside, CA wholesaling typically plays out like so:
A real estate wholesaler will find a property that is in distress or under the market value, mostly because the seller wants to sell their home quickly. A real estate wholesaler will then give the seller an offer and negotiate with them. The home is then put under contract when the two parties agree on a price.
The real estate wholesaler will then find an investor or cash buyer who is interested in purchasing the home’s contract right so that they can make a profit when the house is flipped.
The investor will receive the contract at a higher price and the wholesaler will retain the difference, meaning the investor gets the contract rights while paying the wholesaler fee.
When the buyer closes on the home, the wholesaler will get their cut. This cut typically amounts to anywhere from $5,000 to $10,000.
Real Estate Wholesaler Vs. Real Estate Agent
Think of a real estate agent as someone who represents home buyers and sellers by coordinating real estate transactions. On the other hand, real estate wholesalers are middlemen between property investors and sellers. While real estate agents get a commission with every transaction, which typically amounts to anywhere from 5-6% of the final sale price, a wholesaler receives a flat fee.
You must get a license and pass state examinations to become a real estate agent. To become a wholesaler, however, you do not need a license unless you are transacting more than one home sale deal per year in Illinois.
Of course, wholesalers do not get access to platforms like MLS, which can be extremely beneficial.
Wholesalers Vs. Investors
A real estate investor is someone who purchases property under the market value before selling it at a higher price to profit. An investor might purchase a property with the intention of letting it appreciate before selling. They might also take a distressed property and fix it up to flip it, manage a company to take care of it, or rent the property out for continuous income.
Real estate investors must have the funds to purchase properties right off the bat, while real estate wholesalers do not need capital.
Getting Into Real Estate Wholesaling
Real estate wholesaling is a wonderful way to get into the world of real estate investing if you don’t have a lot of capital. Of course, you will need to do quite a bit of research, planning, and networking before going out and trying to secure a deal.