One can invest in real estate in many ways. Among other options, one way to get into the business is with wholesale real estate. Real estate wholesaling is a business plan in which a wholesaler acquires a contract on a home, which is eventually sold to a new buyer. The wholesaler doesn’t purchase the property. Instead, the wholesaler is just like a middleman. This short-term contract with the owner places the wholesaler in the position to sell it on their behalf while keeping the profit themselves. Real estate wholesalers find properties by checking the MLS (multiple listing sites) or real estates online platforms such as Zillow, Craiglist, and Houzeo.
What Is Wholesale Real Estate?
Homeowners can get into a contract with a wholesaler to sell their homes. In wholesale real estate, profit can be gained without even needing to make an offer to purchase or make a down payment. The wholesaler and seller enter into a temporary contract for a property, which the wholesaler later goes on to sell to another customer. Real estate wholesalers usually locate customers owning distressed properties and make a contract with them. Real estate wholesalers are experts at finding owners who are motivated to sell, usually homeowners facing foreclosure or having properties that require a lot of repairs. The properties that are located in the right area and are priced right attract a lot of investors.
In contrast to the fixing-and-flipping property plan of action, a real estate wholesaler does not take possession of the property nor do they spend money for carrying out repair work. In the flipping strategy, an investor buys a home to sell it for a profit.
Benefits/Disadvantages of Wholesale Real Estate
The motive of real estate wholesaling is to sell the property to a buyer before the contract with the original property owner ends. No money is exchanged between the wholesaler and the seller, except in the scenario that the wholesaler finds a buyer. Sellers with distressed properties usually make wholesale property deals, mostly as they cannot or are uninterested in fixing them up or selling them on their own. Instead, they prefer to get into a contract with a wholesaler, who takes care of the selling process. Let’s look at the pros and cons of wholesale real estate.
Pros:
- You don’t need to purchase the property. Not much money is required in the wholesale estate. Time and effort are all that is required.
- In a relatively short period, a wholesale real estate deal might make a substantial profit. When the buyer agrees to pay more than what is asked by the seller, the wholesaler makes a profit.
Cons:
- Real estate wholesaling can be beneficial because of the profits, but often the profit margin is usually less than when investing in real estate in other different ways, such as flipping.
- To be successful in wholesaling, you need both property owners willing to sell through a wholesale real estate deal and investors willing to buy.
For Sale by Owner Websites
Wholesale real estate not only benefits wholesalers but also homeowners selling properties for sale by the owner. In many real estate markets today, there are more buyers looking for properties than there are homes available for sale. Real estate wholesalers fill this gap by locating motivated sellers with distressed property and putting a deal together. They assign the purchase to buy-and-hold investors. For sale by owner (FSBO) is nothing but the owner of a property deciding to sell on his own, and not using the services of a listing agent or broker. The main advantage of selling this way is to avoid paying any commission to a real estate agent, which is a possible savings of thousands of dollars. On the other hand, the disadvantage of FSBO includes the seller taking ownership of all the responsibilities and doing all the work of completing the sale. Most FSBOs list their properties on FSBO websites, such as Houzeo, Craigslist, and Zillow. These are the real estate online platforms that can help get the best deals for wholesalers.
How to Choose the Best For Sale by Owner Website
For sale by owner websites are surfacing daily and claiming to be the best for sale by owner solution. While deciding on the best for sale by owner services, you need to consider their overall performance and any additional services they offer like pricing assistance, negotiation support, open houses, etc. You should also read up on the reviews left behind by earlier customers on their websites. Good reviews reflect on customer satisfaction.
Although the brand name alone makes Zillow’s for sale by owner website an attractive option for many buyers and sellers, Zillow’s for sale by owner capabilities only offer the basics in online listing services. Houzeo is also a good option because of its easy-to-use technology and online integration, which makes it very simple for customers to get their homes listed and complete the key steps of the sale online. Another great benefit of Houzeo is that your listing doesn’t just appear on their site; it appears on the MLS and other major listing websites. This is important as it means that your property is not just visible to buyers and sellers who are only browsing Houzeo. This enhances the exposure of your property. In conclusion, real estate wholesaling is advantageous not just for investors but also for FSBOs.
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