This might seem like a ridiculous question but I’m trying to wrap my head around how wholesaling works.
I know you have to find a property and there are several ways of finding properties. I understand that.
Let’s say I find a property and want to wholesale it.
What prevents someone from just making the deal without you and not paying you your wholesale fee?
Can someone unpack the process of an example of a wholesale deal?
Wholesaling as it's taught is a myth. You need a license to Broker real estate. That's all wholesaling is as it's taught in these programs, it's brokering real estate except instead of being up front & telling the distressed seller that you'll sell their property for X amount & take X amount as your commission / fee you are taught to lie to the seller & pretend you are going to buy the property while you secretly attempt to "assign" your contract.
It doesn't work. Nobody has any respect for wholesalers. Whenever a wholesaler contacts me I simply get the information about the property & reach out to the owner myself cutting the wholesaler out of the deal entirely. If you do business above board as a licensed agent that won't happen to you. The only people making money wholesaling are the guys selling you all of that education.
To be successful connecting buyers and sellers you need to have
An in depth knowledge of the market.
Marketing skills.
Sales skills.
Negotiation skills.
Accurately estimate rehab costs.
Understand how to much time it would cost to run a renovation on the properties you are presenting.
My advice get a real estate license. Way cheaper, no legal issues, more respect and there is a decent chunk of cheap or free training out there from the mega brokerages. Soak it all in while you're trying to get off the ground. It's not an easy job, 90% fail rate but it's better than the 99.9% "wholesaler" fail rate.
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
6y
@Tim Woosley look around here there is a ton of information on Wholesaling. I believe there is a free wholesaling guide but I can't find it now.
Basically you get a property under contract to buy or under an option to buy. You can now sell that contract. The basics are that simple. The devil is in the details - and there are many. Those details include how to do it both legally and ethically.
Regarding your specific question. If you have a property under contract, you are protected from someone else "Interfering" with that contract. Also the owner is legally obligated to you and cannot sell to anyone else while your contract is valid.
You're going to get way better information about how to wholesale by seeking it out rather than asking for it. Wholesaling is a big topic. How it works... How to find sellers... How to find buyers... How the contracts work... What is legal, and what isn't... and on and on and on. No one is going to give it justice in a message board post.
Read books. I found "If you can't wholesale after this... I've got nothing for you," which I give a solid B+. There are other books, of course. Podcasts. YouTube videos (though I haven't watched many), and of course, you can pay for training.
Real Estate Broker · Watertown, NY · Member since 2016 · 1k+ posts · 1k+ votes
6y
You have to make sure your contract is assignable. If it is, then create a seperate addendum stating that your assigning your rights to XYZ contract to (Buyer) at the new price of $XX,XXX for an assignment fee of $XXX,XXX,XXX which is paid at the purchase of the house in said contract
Real Estate Broker · Watertown, NY · Member since 2016 · 1k+ posts · 1k+ votes
6y
@Tim Woosley and yes, the seller is legally bound to sell you the house unless you don't fulfill your end of the contract. But the contract must be assignable
This might seem like a ridiculous question but I’m trying to wrap my head around how wholesaling works.
I know you have to find a property and there are several ways of finding properties. I understand that.
Let’s say I find a property and want to wholesale it.
What prevents someone from just making the deal without you and not paying you your wholesale fee?
Can someone unpack the process of an example of a wholesale deal?
Wholesaling as it's taught is a myth. You need a license to Broker real estate. That's all wholesaling is as it's taught in these programs, it's brokering real estate except instead of being up front & telling the distressed seller that you'll sell their property for X amount & take X amount as your commission / fee you are taught to lie to the seller & pretend you are going to buy the property while you secretly attempt to "assign" your contract.
It doesn't work. Nobody has any respect for wholesalers. Whenever a wholesaler contacts me I simply get the information about the property & reach out to the owner myself cutting the wholesaler out of the deal entirely. If you do business above board as a licensed agent that won't happen to you. The only people making money wholesaling are the guys selling you all of that education.
To be successful connecting buyers and sellers you need to have
An in depth knowledge of the market.
Marketing skills.
Sales skills.
Negotiation skills.
Accurately estimate rehab costs.
Understand how to much time it would cost to run a renovation on the properties you are presenting.
My advice get a real estate license. Way cheaper, no legal issues, more respect and there is a decent chunk of cheap or free training out there from the mega brokerages. Soak it all in while you're trying to get off the ground. It's not an easy job, 90% fail rate but it's better than the 99.9% "wholesaler" fail rate.