Real Estate Regal

A real estate wholesaler is someone that purchases or takes control of properties that have a lot of equity in them and sells the properties to investors for a profit.  Just like a wholesaler of washing machines the wholesaler is trying to sell his products to retailers, rehabbers, investors and in some cases to the end consumer.  The real estate wholesaler will always have some financial obligation in the properties.  The wholesaler may have purchased the property outright or will have purchased an option on the property to purchase the property at a specified price by a specific date.  If no money has changed hands then you are not a wholesaler, you are considered to be a bird dog or a jobber.

Where do wholesalers find properties?

Fundamentally a wholesaler is looking for properties that have a lot of equity, and for some reason the seller are selling the property below market value.  These could be homes that are in foreclosures, tax sales, bank sales, builders, tired landlords, estate sales and inherited properties with out of area owners and so on.

Foreclosures:

Foreclosures are properties that banks and mortgage companies have made loan on for but the owner of the property is unable or unwilling to continue to making payments.  The lending companies usually have worked with the home owner for a number of years trying to resolve the financial problem.  The mortgage will be several thousands of dollars in the arrears and the home owner is about to have his credit severely impacted.  If the property has gone into the foreclosure process the time available for the wholesaler to close the deal is only from a few days to a few weeks.

Your job Mr. Wholesaler, should you decide to accept it, is to get the outstanding loan paid for or at least out of arrears and to keep the home owners credit from becoming impacted.  This deal will self destruct is a few days.

The real estate wholesaler may purchase the property from the lending institution for the outstanding loan price or even lower.  If the wholesaler is able to purchase the property below the outstanding loan price it the esthetical responsibility of the wholesaler to negotiate with the lending institution to not try and collect the remaining amount from the owner of the home.

Tax sales:

Tax sales are usually on unimproved land with no outstanding mortgages.  Land may have been purchased for speculation or someone may have inherited the land from someone but they are no longer willing or able to make the tax payments.  There are exceptions of course, but finding a tax sale on a home that is unencumbered with leans or loans is very rare.

Bank sales and auctions:

Auctions and bank sales are properties that have already gone through the foreclosure process and are offered to the general public.  Normally a 5 to 10 percent down payment is required after a successful bid.  The auctions are for cash only and are not contingent on the buyer’s ability to obtain financing.  Auctions obligate the buyer to purchase the property but it does not obligate the seller to accept the bid.  It may take several weeks for the seller to decide to accept the bid or not to accept the bid.

Builders:

Sometimes a builder will not be able to sell all of the properties built by that company.  Some below market value new homes are available when a builder has overextended themselves and need the cash to continue to build new homes or to satisfy lending requirements.