A wholesaler is basically someone who purchases or “locks” up a piece of real estate at a certain price and then sells it for a higher price.

There are many different ways you can go about wholesaling, but it is essentially quite simple. You use one of the many available acquisition strategies to “tie up” a property by putting it under contract. Then, you “sell the rights” to that contract through an “assignment.” That’s it!

You’re not even really selling the house, but the right to take over the terms of your purchase contract. Unless a contract specifically says it is “not assignable” you can assign it – and you can put that option right into the purchase contract.

Be aware that usually properties that are either bank owned or short sales will say in the contract that they are “non-assignable.”

Who is wholesaling for?

Wholesaling can be a terrific opportunity for someone who doesn’t have a lot of capital, doesn’t know much about rehabbing, or doesn’t want to take the risk of purchasing and rehabbing a house.

So if you are hesitant to get involved in real estate because you feel like you need to either be an expert, or raise all the capital first – just start wholesaling! Then the only thing you have to worry about is getting a house under contract. You don’t need capital and you don’t carry the risk.

Wholesalers typically receive their fee when escrow closes on the purchase of the property.

Wholesaling is a great way to get into this business when first starting out, and it can even be a great business model in its own right. Many investors just focus on wholesaling.

There’s no need to worry about financing, rehabbing, cost over-runs, selling, or any of the other parts of “house flipping.”

What Skills do you Need to be a Wholesaler?

1. You need to develop your ability to analyze property value and run the numbers the same way a rehabber would. You need to be able to at least estimate repairs, understand the costs for purchasing, financing, and selling, and know what the approximate after repair value (ARV) is. This will allow you to know what to offer so that the rehabber can make a profit as well, after paying your assignment fee.

2. Other skills you need are marketing and deal prospecting - finding deals. You should have systems to follow up with potential sellers and be sure to brush up your negotiation skills so you can get a price that everyone will agree on.

In sum, wholesaling is a great strategy to learn – especially if you are just starting out. It’s one of the best ways to get your feet wet with buying and selling properties. The key to being a wholesaler is effectively marketing to sellers so that you can find the properties, and then be able to evaluate the properties and make the right offer so it’s a win-win deal.

Learn these skills and you may find yourself running an amazing business with great potential!