Why are sellers willing to sign options with wholesalers?

[Pamela Rickey]

I just finished reading Mark Evan's book on Virtual Real Estate Investing (i.e. wholesaling) and am am puzzled about one thing. Mr. Evan talks about having a homeowner sign an option agreement, preferably for three years. What would the motivation be for a homeowner to sign a three year option? What do they get out of it? Wouldn't they be better off just listing with a realtor?

Also, I am wondering if a real estate license is needed to wholesale. Or, does holding an option on the property negate the need for the license. Does it work differently in different states? I am in Indiana.

[Shvonne C.]

Was the book talking about lease-option wholesaling?  

Similar to straight wholesaling where you get a motivated seller under contract and find an end buyer, lease-option wholesaling works the same way but usually involves longer termed contracts because you are dealing with tenant-buyers that have large down payments but can't get financing right now.  For those types of deals, a seller will usually agree to that if they are having a hard time selling their property.  You can convince them of the benefit (usually financial) of getting someone into the property that will pay a nice rent for it, maintain it and then hopefully take the option to buy it at the end of the lease term (hopefully over the term of the lease the tenant-buyers credit improved enough to get financing). 

If the tenant-buyer chooses not to exercise their option to buy at least the seller had cash in their pocket for the lease term and ideally the house was taken care of.