What Does It Mean To Wholesale Real Estate? Memphis Investor Explains

By
Real Estate Broker/Owner with Ivy Vine Investments

What Does It Mean To Wholesale Real Estate?  Memphis Investor Explains

 

I'm sure you've heard the term fix & flippers and buy & holders but what about wholesalers?  What does wholesaling real estate mean?  Does it mean buying homes in bulk like we buy toilet paper at our local Sam's or Costco stores?  What role does a wholesaler play in the real estate world?  Can you make a living wholesaling real estate?  All of these are questions you may have asked yourself before or may have been curious about.  When I first got an interest in real estate I was introduced to the term wholesaling real estate and I was asking those same questions.  Now two years later I have a clear understanding of the terms and wanted to take a moment to share with other's who may be interested as well.

 

Wholesaling real estate is the act of finding and buying homes at a discount rate and then selling the rights to the contract over to an all cash buyer or investor for a fee.  As an investor, every home that I'm presented with may not be something that I would like to add to my portfolio.  In that case, if the home is in a desireable location, the numbers make sense as far as debt to equity ratio, I'm able to buy at a discounted price and I know I have other investors who would like to buy the home I will get the home under contract with the homeowner.  Once you have a signed purchase agreement between yourself and the homeowner it's now time to assign that  contract over to a cash buyer who will submit to the title company for closing.  Once the title has been ran and it comes back clean a date is set for closing for both seller and buyer.  The homeowner then has an all cash payment in their hand within 5 to 7 days from start to finish and we as investors now have a new home to add to our portfolio.  

 

Motivated sellers who may need to sell their home fast for cash and may not want to sell the traditional way are potential clients who will reach out to a wholesaler or investor.  These houses usually are  distressed properties, homes that are nearing foreclosure, inherited homes, property's of tired landlords or homes that need to be sold due to an unfortunate divorce.  There are a multitude of reasons why a homeowner may need to sell their home fast. The goal of a wholesaler should be to position yourself and your company in your city as a realiable and honest source for people who may being going through a tough spell in their life and need your help.  There are some people who may enter our industry for the wrong reasons and don't give a damn about people and the situations they are going through.  I have no patience for those with that mindset and they usually weed themselves out anyway's.  People who reach out needing to sell their home fast aren't doing so because everything is peaches and cream at the moment.  It might be pork n beans and crackers time so make sure to have empathy for people.

 

There is so much I could write about concerning wholesaling real estate but I just wanted to provide the cliff note version so you wouldn't get bored.  Just like selling and buying real estate the traditional way it's very important that you build lasting relationships with other investors, community members, real estate agent or whoever.  You also want to make sure you do a great job being a solution for your clients because that will lead to referrals.  

 

It's not easy wholesaling real estate.  You have to work just as hard as any other sector in real estate field. You also have to make sure you educate yourself on what wholesaling is.  There are numerous books and videos out there that you can purchase or are free that will help you understand wholesaling better.  Someone recommended a book for me to check out and it changed my life forever!  I'm glad I took the time to follow up and if you have an interest I hope you take the same time also.  

Until next time.............I'm out

 

 

 

 

Comments (28)

Michael J. Perry
KW Elite - Lancaster, PA
Lancaster, PA Relo Specialist

Interesting concept for assigning the Agreement of Sale. I’ve seen this in Paper Buying also 

Jul 14, 2020 04:12 AM
Chris Ivy

Hi Michael,


How does the concept work in paper buying?  I'd be interested in learning.


 

Jul 14, 2020 06:56 AM
Brenda Mayette
Miranda Real Estate Group, Inc. - Glenville, NY
Getting results w/ knowledge & know-how!

Great & timely information for my world.  Thank you for sharing! 

Jul 14, 2020 04:41 AM
Chris Ivy

No problem at all Brenda!


Thank you for taking a few minutes to check out my post.

Jul 14, 2020 06:55 AM
Sham Reddy CRS
H E R Realty, Dayton, OH - Dayton, OH
CRS

Wholesaling a new trend in real estate investment industry.  It had picked a lot of speed due to improvements in technology.

Jul 14, 2020 06:12 AM
Chris Ivy

Hi Sham,


Thanks for taking a minute to check out my post.

Jul 14, 2020 06:53 AM
Jeffrey Richman
Immediate Home Solutions - Waxhaw, NC
Creative Real Estate Specialist

Hi Chris Ivy,

My favorite way to buy is "Subject To", but I just signed a wholesale deal yesterday in MS and have been doing this for about 25 years.  Thank you for your insight to the others.

Jul 14, 2020 06:38 AM
Chris Ivy

Morning Jeffrey...


Congrats on getting that wholesale deal locked down yesterday!

Jul 14, 2020 06:51 AM
Sam Shueh
(408) 425-1601 - San Jose, CA
mba, cdpe, reopro, pe

A lot of wholesalers are not licensed professionals. They act as the middle man. Put bandit signs I will buy you for cash. Sign this and that I will get the investor to show you he has the means. Try to go through a licensed real estate broker and a lawyer before you sign anything.

Jul 14, 2020 07:47 AM
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Very good tips on wholesaling. It's not for everyone and you're right, those without empathy can't process the family oriented need for wholesaling.  Good for you!

Jul 14, 2020 08:20 AM
Caroline Gerardo
Sun West Mortgage Corporation - Newport Beach, CA
C. G. Barbeau the Loan Lady nmls 324982

Sam Shueh  lots of people call themselves wholesalers when they are as you say. There is no unlicensed guy who buys foreclosures in bulk from a bank, only Hedge Funds do this. Buying an assigned contract from unlicensed person is a can of worms 

Jul 14, 2020 09:03 AM
Kathy Streib
Room Service Home Staging - Delray Beach, FL
Home Stager - Palm Beach County,FL -561-914-6224

Hi Chris - and welcome to ActiveRain. I had no idea what wholesale real estate was all about but your explanation helped. Hope to read more posts from you. 

Jul 14, 2020 10:11 AM
Chris Ivy

Thanks Kathy for taking a moment to check out my post.

Jul 14, 2020 12:08 PM
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Hi Chris Ivy - very good information if people don't understand.  There are reason why people choose this route.

Jul 14, 2020 11:25 AM
Chris Ivy

Thanks Grant!

Jul 14, 2020 12:07 PM
Margaret Goss
Baird & Warner Real Estate - Winnetka, IL
Chicago's North Shore & Winnetka Real Estate

Makes sense to me - but what happens if your chosen investor decides not to take it over? Do you have a way out?

Jul 14, 2020 12:46 PM
Chris Ivy

Hi Margaret thanks for taking the time to view my post.  In order to be successful you should have a wide network of buyers that you network with on deals.  If the deal is right and the numbers make sense if one investor decides that he is no longer interested there should be another investor that you can reach out that will purchase.  You have to do your research and due deligence and know what investors are looking for.

Jul 14, 2020 02:11 PM
Kat Palmiotti
406-270-3667, kat@thehousekat.com, Broker, eXp Realty - Kalispell, MT
Helping your Montana dreams take root

First of all, welcome to ActiveRain! And secondly, the two main things that jumped out at me from reading this - empathy and relationships. If you can do that well, the rest will follow!

Jul 15, 2020 05:19 AM
Chris Ivy

Good morning Kat!


Thank you for the welcome and also taking the time to check out my post.

Jul 15, 2020 06:33 AM
Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of the Manchester NH's area Leading Agents

Here in NH licensed people can not assign contracts. We do have a number of investors who do this though. In this market it hurts sellers who can be selling too cheap with more buyers than sellers. But in a declining market, is a great tool for sellers as values decline and buyers are few.

Jul 15, 2020 05:45 AM
Erik Hiss
Keller Williams Capital Partners Realty - Worthington, OH
You can trust me for all your real estate needs!

Wholesaling can be a good business if you know what you're doing...just like any other business. It takes work and knowing the ins and outs, but certainly not easy as some believe.

Jul 15, 2020 07:18 AM
Chris Ivy

Hi Erik........ I agree!  Thanks for checking out my post.

Jul 15, 2020 12:45 PM
John Marshall - FORE!
LoKation Real Estate - Cherry Hills Village, CO
Specializing in Golf Course Properties

Chris Ivy thank you for educating me on Wholesaling, I had some idea, but was not quite sure. It seems a lot of newly licensed agents must have bought that book you refer too, as many of them I meet with want to get into wholesaling! BTW, what is the name of the book?

Jul 15, 2020 03:44 PM
Chris Ivy

Hi John thank you for taking a moment to check out my post.  The name of the books are "If You Cn't Wholesale After This I've Got Nothing  For You & Wholesale Real Estate Instead Of Sitting In That Cubicle

Jul 15, 2020 05:02 PM
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

Congratulations on your feature recognition.

Have an outstanding summer.

Jul 16, 2020 06:46 AM
Chris Ivy

Good morning Roy how are you doing young fella?  Thank you for  taking a few minutes to check out my post.

Jul 16, 2020 08:24 AM
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

Thank you very much for following my blog. Your comments are always welcome.

Jul 16, 2020 09:43 AM
Sam Shueh
(408) 425-1601 - San Jose, CA
mba, cdpe, reopro, pe

Great posts. Only comment is the size of fonts can be larger. That is especially true read from phone screen.

Sam

Jul 18, 2020 06:11 AM
Chris Ivy

Good heads up Sam!  I'll use a larger font on upcoming posts.

Jul 18, 2020 06:50 AM
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg Real Estate

Great post with a clear thought out explanation. 

Jul 20, 2020 01:05 PM
Chris Ivy

Hi Lyn,


Thanks for taking the time to check out my post!

Jul 20, 2020 09:36 PM
Kimo Jarrett
WikiWiki Realty - Huntington Beach, CA
Pro Lifestyle Solutions

Interesting perception regarding some wholesalers lack of empathy about people and the situations they are going through, so, do you always buy distressed properties at higher prices than other wholesalers in your market? If so, do you use a pricing formula or certain percentage of FMV to always determine your wholesale offer price to the seller? 

Jul 20, 2020 10:37 PM
Chris Ivy

Hi Kimo nice to meet you man.  Honestly I never know or worry about what the competition is offering.  We do our research and know what price we need to come in as far as offer price in order to make a profit.  There are times when our offer gets beat but that is part of the game.  There has also been times where our offer may have been lower than some of the offers the homeowners received and they still sold to us because of our service and upfront approach.  I like to buy at 22- 30% discount of the ARV minus repair costs.

Jul 20, 2020 11:09 PM
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

Wholesale is a really unique way to put it for real estate in 2020. Might be worth it during the pandemic

Jul 21, 2020 10:57 PM