Any property seller that seeks to sell a house “as-is” for cash will almost certainly encounter a wholesaler along the way. So, what is “Wholesaling”, and why should you care?
The reason you should care is that selling to a wholesaler could very well (a) not close on time, (b) be a lot of hassle, and (c) sell for a lot less than you originally agreed. Before I explain how to avoid these pitfalls, let’s take a look at what and who wholesalers are.
To better understand wholesaling, check out this post on a popular real estate investing website called “Bigger Pockets” which is designed to recruit “investor-wanna-be’s” into becoming a wholesaler:
1. Get started with very little (or no) money
2. You don’t actually buy the house
3. Make a lot of money FAST
4. Learn how to recognize a good deal
5. Build a network of actual investors
6. Become good at finding good deals
7. You can wholesale part-time
There is nothing wrong with wholesaling when done correctly, and in full disclosure, The Trusted Home Buyer has also assigned contracts in the past when the situation warranted it.
What is wholesaling? In a nutshell, a wholesaler generally does not have any money to buy your property. They negotiate the best price they can with you, and then they hope by networking with actual investors that they can get a real investor to pay more for the property then they agreed to pay. And then they “assign” their purchase contract to the real buyer for a fee.
You may ask, “why should I care, as long as it sells?”
(1) The wholesaler promises that the sale will be fast and easy. But because they have to go find a buyer – it often means that they don’t close on time.
(2) The process to find a buyer requires the wholesaler to run “open houses” at your property to show it to the other investors in the hope that they will buy.
(3) If no buyer is willing to pay more for the property, then the wholesaler will go back to you and try to “beat you up on price”. The problem is that often at this point the seller has often already made financial decisions assuming that the property is sold and so feels forced to accept a lower price, or deal with the consequences of a cancelled contract and starting all over.
No wholesaler will agree to those 3 items. Why? Because wholesalers are taught to get the contract, at the lowest price they can, but even if they have to pay too much, to get the contract anyway. From their perspective, maybe they’ll get lucky and find someone who can pay more, and if they can’t they now have leverage to re-negotiate the price with you.
Very simply, The Trusted Home Buyer Guarantee: “The Trusted Home Buyer will close on the date of your choice or we pay you an additional $150/day”. Of course that only applies if the delay is caused by The Trusted Home Buyer, as the seller you can choose to extend the closing as needed.
Arizona is a hot spot for people looking to buy a house. The state has the second-highest rate of homeownership in the country, with two-thirds of homes being owner-occupied. It also ranks near the top when it comes to home price growth, so if you're considering selling your house, now may be a perfect time! […]
A Guest Post From OasisAdvisor When it comes to such an important aspect in your life or the life of a senior you know and love, you want a trusted advisor to guide you every step of the way. Being proactive and planning is the best approach. We want you to know that we understand […]
Things You Can and Cannot Do: When You Have an Exclusive Contract with a Real Estate Agent? Having an exclusive contract with a real estate agent leads to numerous benefits, some expected and perhaps even unexpected. However, when a real estate agent asks you to sign an exclusive contract with him or her, he or […]