I have a question about wholesaling property. I have been watching a lot of videos lately on it, but there is a missing part not explained in any vids I have seen and I'm not understanding something properly. When you find a good property by someone motivated to sell, and your'e trying to get the property for a discounted price, lets say 30k, who pays the 30k. Do you pay it ? so you can then put it under contract,or does a lender or third party pay for it so your'e not using your own money. How does that work?
Real Estate Broker · Portland, OR · Member since 2019 · 4k+ posts · 2k+ votes
6y
"When you find a good property by someone motivated to sell, and you're trying to get the property for a discounted price"
You're a wholesaler. Goal is to find an ignorant owner willing to sell his property for $30K+ below market price and ZERO cash from you in escrow.
You also have to convince him that you'll be buying it, meanwhile scrambling to find the true buyer. Then you pull the switcheroo at close and hope your sales agreement allows "blind" assignments like this.
Make sure you don't have a RE license though - Most states' REAs don't allow wholesaling.
Better yet, totally ignore the REA since you're trying to arrange the sale of RE for a fee without being licensed.
Real Estate Broker · Portland, OR · Member since 2019 · 4k+ posts · 2k+ votes
6y
"When you find a good property by someone motivated to sell, and you're trying to get the property for a discounted price"
You're a wholesaler. Goal is to find an ignorant owner willing to sell his property for $30K+ below market price and ZERO cash from you in escrow.
You also have to convince him that you'll be buying it, meanwhile scrambling to find the true buyer. Then you pull the switcheroo at close and hope your sales agreement allows "blind" assignments like this.
Make sure you don't have a RE license though - Most states' REAs don't allow wholesaling.
Better yet, totally ignore the REA since you're trying to arrange the sale of RE for a fee without being licensed.
Rental Property Investor · Des Moines, IA · Member since 2020 · 11 posts · 3 votes
6y
The "switcheroo" sounds shady IMO. I've not done this but I'd prefer being upfront with the seller so that you don't end up feeling bad about what you are doing. Sure it's business but there is difference between good business and bad business. Depends on what reputation you want to develop and whether you care about that when you go to sleep at night. If a seller is motivated and you have good connections with investors and/or flippers then what your value to them is in that. You can turn the sale of their house around quickly without them having to worry about repairs or messing with a realtor and agent commissions.
As for paying for the property, if you do it right you don't have to pay anything. You get them to sign a contract that states you have X amount of time to buy the property for X amount of dollars. During that time you are working to sell it to an investor for Y amount of dollars more than the X amount of dollars you agreed to buy it from the seller. All from a piece of paper that has the terms that you and the seller already agreed upon. This is wholesaling. Purchasing the property yourself turns you into a flipper whether you do anything with it or not and then sell it to an investor yourself. At that point you also have to worry about capital gains, perhaps a waiting period before you can resell it again due to your local laws.
Real Estate Broker · Portland, OR · Member since 2019 · 4k+ posts · 2k+ votes
6y
Really have no problem with wholesaling (barring legal things like OR doesn't allow it), my issue, as you noted it DISCLOSURE. Oh, and half-truths don't count as being honest.
If you have a willing AND knowledgeable seller that knows what's going on, god bless you. I just don't think 98% of these deals are run that way.
I mean RE agents here are NOT supposed to do this. When has a RE broker been able to take a moral high ground? :)