Ok I'm Kinda Lost,,,, Wholesaling?

Question

What is it? What service does a wholesaler provide? How do they take their profit? Is it just a legal loophole alowing the wholesaler to act something like a Realtor?

Account Closed · Answer

There is a difference between wholesalers and "wholesalers" A professional wholesaler actually has the property under contract, has their network of buyers ready to go and if something happens they will close on a property .This adds to the wholesalers strength.  They would be given preference on deals because people no there is no bullshit involved and they absolutely know their number so their clients will know what type of deal they are getting each and every time.

Brent Coombs · Answer

The 'Wholesaler' negotiates an agreed sale price with the Seller, IF they believe they can find an ACTUAL buyer that will pay more. Supposedly, the Seller doesn't care who ends up buying the property. Mostly, a Wholesaler doesn't have to declare his role of buying it for the purpose of immediately selling it on at a profit. But like Account Closed says, there are wholesalers and "wholesalers".

There are many threads on BP started by newbie-wannabe "wholesalers", who have suddenly become panicked by the thought of not being able to find a Buyer, or not being able to "get out" of the Contract they just signed. That is why they deserve to be classified in inverted commas, until they learn to: Find their Buyers, or Fund their Buys!

It is nice to know though that anyone of age CAN succeed as a wholesaler, IF they do it right. There's a couple of very big IF's in those comments! Cheers...

Bill Gulley · Answer

That's pretty much it in a nutshell Joe, the equitable interest ploy to act as an agent and the value they bring is no more than what an agent would charge if they don't fix a real problem, like a title matter. But, then again, an agent may fix minor issues as well.

Ask one of these operators to define "equitable interest" and what must be present to actually have such an interest. My bet is they can't answer that question. It's pretty much a false premise used to validate the strategy as a business for those with no money, no credit, no job, no business knowledge or experience and no common sense. There are thousands of these types hitting the streets.

Nothing wrong with wholesaling a property by assigning "A" contract, the issues arise when someone makes it a business model to do multiple assignments, such being all that they do, and that is when circumventing license laws comes into play.

Gurus, marketing types and advocates of this strategy have simply played on newbies overstating how easy it is, that it's perfectly legal, that you can simply follow steps of their system and succeed to big profits. Horsefeathers!

It's tough to do, loaded with potential liability with homeowners, the knowledge needed to be good at a deal is in depth as to knowing a market, property valuations, estimating repair costs, contracting without conniving or lying or misleading a seller or end buyer.

And, because they don't learn RE from the beginning, learning the basic principles of RE, they don't have a clue as to what must be done for an ethical, legal and valued transaction.

Remember, I said there is nothing wrong with assigning a contract and wholesaling a property, but otherwise, if that's your thing, just get a license. :)

Bill Gulley · Answer

Equitable interests can be established from either of those areas, legally, the interest must be measurable in dollars, ascertainable by evidence, you need to show a financial interest in or to title.

Money down establishes a financial interest, so will a tenant or someone paying for repairs or providing labor. An heir to an estate has an equitable interest.

Having an interest in a contract, without money in it or reasonable consideration can certainly limit the claim as to a legitimate interest, if you can only show the value of the next sale, that value is subject to the sale closing and that interest is only established after settlement.  It may not be easily ascertained by claiming you have a buyer, that buyer must be willing and able, proving that they can perform before you can count chickens before they hatch.

You'll find that by the time you can do all the things necessary to wholesale a deal properly, you'll have the skills and knowledge as well as the ability to conduct business that you don't need to wholesale it, in other words, you'll have other options available to you to take better advantage of that opportunity. There are many other opportunities that may be available to profit further than simply assigning a contract.

When I wholesale a deal, unless I provided other related services, I charge what would be in line with an RE commission, the service is the same and that value is established by practice, custom and is fair without sticking it to an owner or a buyer trying to justify adding imaginary value as if my experience in other areas makes me unique in that simple process. You don't pay the rate of a heart surgeon to have your blood pressure taken, even if that doc takes it, his surgery rates are different.

You most likely won't find a new attorney who just past the Bar, try to charge what a seasoned and experienced attorney might in the same case, but you'll also find that a high priced attorney may not take a divorce case where there are limited assets involved, they recognize that they can't really apply their advanced knowledge and expertise to justify a large legal bill.

Professional services are valued as to alternative and similar levels of services, not just an arbitrary charge based on the ability to convince someone to pay what ever you dream up. The scope of the transaction certainly plays on the knowledge, experience and ability to facilitate a transaction. :)

Joe Cummings · Answer

"Equitable Interest" in the form of money? Or maintenance and repairs to the property?

I don't understand the avoidance of getting a real estate license. I know a few people who went and got one. I don't remember them having that much of a hard time or spending a lot of money to get it. Seemed to me the hard part, and the real learning experience came after they got their license.

Ok I'm Kinda Lost,,,, Wholesaling?

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