How To Wholesale Real Estate: Step By Step
The first part of getting into wholesaling real estate is setting up your business. In the United States, this means you would likely start by creating a limited liability corporation (LLC) to run your wholesale real estate business under.
Once you’ve done this, you’re ready to hit the real estate market and look for investment properties. Follow these steps to get in the wholesale real estate game.
1. Find A Distressed Property Or Motivated Seller
To make real estate wholesaling work, you must find motivated sellers of distressed properties. These sellers want to sell the property fast and don’t want to use the normal channels of a real estate agent, mortgage lender, earnest money, and home inspections or appraisals.
Instead, they want to sell to a cash buyer who can close on the property quickly before going into foreclosure. Motivated sellers will usually sell the property for less than the market value because they want to get out of the home quickly.
If you bid a price well enough below the market value, there’s enough room for you to put the home under contract at a higher price with your team of investors. This is important, so you make a profit or “finder’s fee” for facilitating the deal.
To find the owner of distressed properties, you must market yourself via direct mail, social media, and even word-of-mouth as a cash buyer of distressed properties. The more people that know of your services, the more homes you’ll have at your disposal to put under contract.
2. Negotiate With The Seller
When you find the right property, it’s time to negotiate a deal with the seller. This is one of the most important steps in the process. If you bid too high, you won’t leave room for a profit when you assign the contract to the final investor. If you don’t bid enough, the seller may reject your offer.
When negotiating a real estate purchase agreement with the seller, be professional, courteous and give the seller reasons to trust you. Tell the seller about your experience and how many other sellers you’ve helped avoid foreclosure or defaulting on their mortgage any longer.
It’s important to have a keen eye for detail too. Just walking around the house, you should tell what improvements the home needs so you can use it in your negotiation, telling the seller how much money it will cost to fix up the …….