Exactly what is a wholesaler?

[David D Painter]

I have had RE investments for longer than I care to admit but don't really understand what a "wholesaler" is or does.  Could someone please explain this to me? I understand the term wholesaler but not how it can apply to RE. No one I have asked seems to be able to answer. Thanks! 

[Mike Cumbie]

This is a general description:

A Wholesaler is a person who finds a motivated seller, then discusses a price and terms. Once they agree the wholesaler gets a contract to purchase the property. Since they have an "equitable interest" in the property they are allowed to sell the property. The next step is finding someone who will pay more for the property than they are contracted for so that they can make a profit. They are trying to sell a "contract" not a house. 

Since they are not allowed to be on the HUD-1 form, they can't work for a commission which also means they can't really deal with anyone who is going to be financed, so they are limited to cash buyers. Also since the industry is regulated they can't place signs on the property, ads in the paper etc.

Hope it helps some.