What is a Wholesale Deal?

I was at a Real Estate Investors Annual Members Pool Party and had an interesting conversation with another guest about Wholesale Deals. This guy was a stockbroker who had done one or two deals. He had made about 50k off a deal and had been living off of this money and was ready to do another deal. He was also living in an investment property he was ready to liquidate. He started explaining to me about how great a Wholesale Deal this was and how perfect it was for wholesaling investors.

Now me being a Commercial Investor, knew one thing was for sure… language between investors can be confusing. Land contracts, subject to, lease options, wholesale, birddog.. ect. the list goes on and on with Real Estate Investors confusing language.

So when he started telling me about how great a wholesale deal he had and how there was money to be made on this property, I of course listened to him.

However, halfway through his information about this property, I realized we where definitely discussing two different ideas of what a Wholesale deal really means to investors.

This Investor's definition of a wholesale deal was to tell me that the home was valued at around $225k and he wanted the note paid of $157 and 20k in his pocket. He continued to tell me that a cash buyer was what he wanted out of this wholesale deal and he did not want a conventional sale where he had to deal with inspections and attorneys.

Now I have a different idea of what a wholesale deal is in my head and proceeded to explain to him about the difference in what he was saying and what I believed. To me a Wholesale Deal is when someone creates a buyers list and a sellers list and tries to pair these people together. A wholesaler creates a relationship with a motivated seller and also has a buyer to either assume the loan with a down payment or has a buyer to cash the seller out completely. The Wholesaler then makes a fee off of the down payment or the sell of the property to his/ her buyer. Usually in my opinion if a wholesale deal is done correctly then all the Wholesaler needs to do is connect everyone together ( whether with realtors or with just investors) and with some due diligence meet at an attorneys office for closing.

Now back to the property above this investors believed this was a wholesale deal because he was selling it about 50k under value, plus he wanted a cash buyer not retail. (if you notice the property is not even at 65% loan to value). The “wholesale” deal was perfect for cash buying investors as it was priced under retail value.

I proceeded to ask a realtor/investor at the event who was correct on this deal.

Before letting everyone know what her professional advice was… I would love for you to tell me.. Is this a “Wholesale” deal perfect for cash investors and wholesalers?What is your opinion or definition of a Wholesaling a deal?