What a wholesaler does
Looking for an attractive real estate technique? When it comes to real estate wholesaling you may be thrilled… Whether your niche is residential or commercial the wholesale sector has proven lucrative for generations.
So what’s involved in a wholesale transaction? What does a real estate wholesaler actually do? A wholesale transaction consists of hunting down a “gem” so to speak. Here’s what I mean, a gem in a buyer’s eyes may be a dog of a house, but the potential should equal big pay outs. In other words, their quest starts with the goal to discover discounted properties that may be sold to the next buyer that intends to salvage their new investment themselves for the purpose of holding the property as a rental or they may sell for profit. Finding a seller who is highly motivated or willing to negotiate a substantial discount is the goal. A wholesaler knows it’s a numbers game. They may find the right investment on the first property or it may take 10 attempts before they get a hit. It’s all a numbers game and emotions is a foreign word to them.
Think about it this way… this may be an extremely polished way for a newbie investor to dip their feet in this wonderful business we call real estate. It can be somewhat simple(with patience) in process and may be a more predictably successful venture with limited out of pocket expenses considering the possible attractive feature of no repair commotions.
So what’s the catch? Let me fill you in on what else a wholesaler does to get what they want in the time they want. In the beginning they may subscribe to a bundle of wholesaler lists. Now if you speak to a wholesaler more than likely they will tell you that finding a great deal is scarce. Sometimes the leads may be picked over leaving only the scraps. Here’s another scenario… they happen to find a lucrative prospect only to find that the property has multiple offers cutting their chances over and over again. Now what happens if they get a property under contract? Often these listings could have title issues(common with foreclosures), environmental hazards, unpassed inspections, delays in closings, etc. The gauntlet from pending to closing can also leave the property unsaleable.
An experienced wholesaler know that all this is just part of game. “Next” is the motto to live by. Soon they will find the right property that everyone else has overlooked. They may even fall into a negotiating process that yields victory over all other “lowball” bidders. They keep swinging and they get a hit.
So there it is. The secret sauce for a quality wholesaler involves a proven system, tenacity, and strategic experience – either personal or partnered. They work the system, play the numbers and keep it simple so that they can duplicate it for the next deal.