Wholesaling real estate is a popular strategy in today’s marketplace which deserves further explanation. In this episode Tyler interviews Jimmy Culler about what is involved with wholesaling.
Wholesaling or assigning are functions that involve negotiating the price of a home down and selling it at a higher price without doing any repairs or modifications. In many instances, these methods require little to no money in the deal from the wholesaler.
Wholesalers search for “problems” involving real estate or their owners and take the time to determine what the problem may be with the seller or the situation and then take steps to correct the problem. In many cases, a good wholesaler can sell a home within a matter of days, if not hours.
Being a wholesaler involves being a very good listener and an exceptional problem solver. In addition to solving problems and listening, negotiation skills are a critical component to the wholesaler’s tool bag.
This method of buying and selling real estate is often confused with the functions of real estate agent which is simply false. Wholesalers actually negotiate the purchase price of the home (as compared to the “asking price” when dealing with a Realtor) and then enter into a contract to purchase the home. The purchase contract usually contains a clause which allows the buyer to assign his or her rights to the contract to another person or entity.
When an assignment is done, the wholesaler will agree on a price of say…..$50,000 for a house that in repaired condition would sell for $100,000. The wholesaler and homeowner enter into written purchase agreement. The wholesaler will then find a buy to purchase that contract for an assignment fee of say….$10,000, which makes the sale price of the home for the end user $60,000. The end user would complete the repairs and then sell the home for $100,000 allowing everyone to make a profit.
The benefit of the above scenario is the end buyer obtains a significant discount on the purchase which allows them to complete the repairs and sell the home for a profit.
Many wholesalers begin as “bird dogs” who find opportunities for wholesalers in their local communities. Once they find a home in poor condition or a seller having financial difficulty or other problem that requires a quick sale of the home they relay that info to the wholesaler.
If the wholesaler is able to get the home under contract and assign that contract the birddog would earn a fee for the referral.
Wholesalers use many methods to find properties with problems. Some of these methods include sending letters to owners via direct mail or the use of “bandit” signs. Opinions vary from person to person on which method is more effective. Everyone agrees that “everything works, nothing doesn’t”
Jimmy Culler’s website is wholesaledealsinflorida.com and can also be reached at firstname.lastname@example.org