Several of our projects came from wholesalers, and we almost picked up another one this week. This wholesaler has proven to be reliable and, perhaps more importantly, believable. Wholesaling is a way many investors get into the business. In theory, if you can find a good deal (and, in our philosophy, can help out a distressed owner), you can wholesale to other investors and make a quick turn-around. That’s the theory, anyway. In practice, it’s not as clean and dry as that.
What Is Wholesaling?
Wholesaling real estate is getting a property under contract and then assigning, or selling, the contract as quickly as possible. Basically, a wholesaler gets a property (normally a distressed property) under contract and then either assigns the contract or resells the property to another investor. These other investors either use cash, lines of credit, or hard money loans. This process provides quick closings on properties that sometimes need extensive repairs.
Buying a house from a wholesaler it is much different from buying a house off the MLS. Investors do not have much flexibility on terms, such as how long they have to close. We often has to put a non-refundable deposit down, and they get no inspection. Houses are sold AS-IS and no repairs will be made.