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What is wholesale real estate?

It's probably what you're thinking -- But Better!

The simplest way to explain what is wholesale real estate, is to just say it's when a property owner sells their property below current market value. Usually, way below.

What would motivate a seller to sell so low?

There are lots of reasons a homeowner might be willing to take less for his house. The most common reason is that the property is in disrepair and their finances are in the same sorry state. 

Not every homeowner has the luxury to put the money into their property in order to make it appealing to the mass market, and some of these sellers are willing to accept a lower offer, to avoid spending money on a property they are no longer interested in.

A few typical reasons to agree to sell low are:

  • The real estate taxes are overdue
  • They need to sell fast in order to relocate
  • A divorce on the horizon
  • A death of an owner and the heirs aren't interested in the property

So, what is wholesale real estate?

Thinking back to when I first heard the term wholesaling at a real estate investor's meeting, I felt a curiosity to know what is wholesaling real estate, and generally how the word 'wholesale' could be applied to property. I didn't think you could buy a house at Costco, could you?

This was taken at  the REIA meeting where I discovered what is wholesale real estate. These two guys are amazing real estate wholesalers!You can learn so much from networking with others

There were other wholesale real estate terms I just couldn't wrap my brain around either, such as:

  • Assigning a contract 
  • Bandit Signs (do they wear masks?)
  • Flipping the contract (maybe juggling?)
  • Buyers list
  • MAO 

So getting back to what is wholesale real estate. . .

Fast forward years to today, and over time I have learned what all the odd terminology means and I am excited to share that I have closed on some very lucrative wholesale real estate deals. 

From the time I learned what is wholesale real estate to today, I have 'wholesaled' all kinds of properties from vacant land to mobile homes. There have been some nice surprises as well as maddening deals. But it's all in the learning curve, and it's been a fun journey.

Is wholesaling real estate legitimate?

In most states, yes. Provided the seller wasn't coerced into selling, an property owner of any real estate can make informed decisions on the transfer of any property they legally own. That includes Executors of a probate, too.

I have pulled together a state-by-state list for you to check out your own area to determine the rules of wholesaling real estate. Before you get started on your own wholesaling career, best to check first -- easily check your state's outlook on wholesaling and other pertinent real estate rules of engagement.

What is wholesale real estate -- more details

Every state has lots of opportunities, both high end neighborhoods and working class. Because it's not always possible to know the lives or circumstances of the homeowners behind the doors, your offer to buy just may be a blessing in disguise. Often it's all about the timing.

If you are thinking about starting a wholesale real estate business, it's best to start close to home. The best reason is that you know your own area and surrounding areas, so there will be less of a learning curve to start. You'll feel more confident speaking with homeowners since you know the current market for the neighborhood.

And don't think wholesale real estate is only for ugly neighborhoods! There are wholesale deals in every area, personally, I prefer the upscale neighborhoods because if I can't put together a wholesale deal, I can lease option the property 99% of the time.

As my own wholesale real estate business grew, I grew smarter along with it, and this comes with experience -- you'll get there soon, if you decide to put the time into wholesaling. I went from a one-person do-everything business (and some days were way better than others), to a outsourcing many of the tasks to a hand-selected team, and the wholesale real estate business has run smoothly ever since.

As Ron LeGrand, one of my many mentors, likes to say, "The less I do, the more I make." Start with Ron's best seller (kindle or print) here.

When are the best wholesale real estate markets? Upmarket, downmarket?

Every market, every season in real estate,  when real estate is really hot (a seller's market) or when there seems to be a for sale sign on every street (a buyer's market) offers enormous opportunities. You can make money with real estate no matter what the economy is doing.

That's because there will always be homeowners who really need to sell, and investors who will buy nearly all real estate they can.

How to find those wholesale real estate deals

Some deals drop in your lap while others take time to cultivate. What works well for me, might not be your best plan of action. 

I like to "drive for dollars", as is a common term among wholesalers. It's fun, gets me out of the house, and I just love looking at real estate. As the term implies, I drive neighborhoods slowly, looking for visible signs that a property owner might be motivated to sell soon. So if I can offer a quick cash deal, it might just be exactly what they need at the moment.

Sometimes I'll ride with my friend Lila, and knock on the doors of properties we are interested in. If no one answers, we'll leave a sticky note with a simple request to call us.

Many real estate wholesalers have good luck finding motivated sellers when they mail out postcards, or letters stating their interest in a property. Read more about using wholesale real estate letters here.


Check out these real estate wholesaling articles of interest to you. . .

Examine what wholesaling real estate is, and see if it's your cup of tea here.

Glossary of wholesale terms you might come across

Starting a wholesale real estate business, essential first information.

The Disadvantages of wholesale real estate investing

What is micro flipping houses?

Important! Find out if wholesaling real estate is legal in your state here.

You'll want these wholesaling tips.

Wholesaling real estate without ANY money of your own - check this out for sure.

Ready for direct mail? Here's how to send wholesale real estate letters.


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