What really goes on in wholesales?

[Philip Breeden]

I've heard of people making money from buying bank-owned properties and selling them before they're required to make their first payment. They say its as easy as that, but I remain skeptical. For those of you have done wholesales... what really happens?

[David Dachtera]

Wholesaling is typically done one of two ways:

1. The wholesaler gets a property under contract then markets their position in that contract to an end buyer (contract assignment). A lotta folks muck that up and sell the property rather than their position in the contract, with the end result that some states are cracking down on it in a major way.

2. "Back-to-back" closings, often mistakenly referred to as a "double closing" which is illegal in most jurisdictions due to major abuse by short-sale flippers. The wholesaler buys the property outright, then flips it to end buyer within the terms of any title restrictions imposed by the seller, the lender, the state, etc.

Dunno if that helps ...