Are there any hidden risks to wholesaling?

3 Replies

I am new to real estate and, like many other newbies, have decided to start off with wholesaling. The reason I've decided to take this route (and I'd assume many others have similar reasoning) is because wholesaling seems to present very little risk.  I understand that there are marketing costs, but those are set costs and you decide how much or how little you are going to put in to it. You're not guaranteed to get a return on your marketing costs, but from what I understand there is no risk to losing any money in addition to your marketing costs.  Am I completely wrong about this? Is there something I'm missing? Or is wholesaling real estate really as risk free as it seems?

If you go under contract and cannot close you will look like an ***. I may be wrong but this is what keeps me from putting deals under contract in my name. I currently don't have the cash to purchase these deals in the event I could not find a buyer in time.

in CA hot market you will need significant EM and short due diligence times so you will risk deposit money or your simply wasting your time altogether at least as it relates to the high priced markets.

Here's a risk: you make an offer on a property and assign your rights to a buyer who never closes. Get who has to buy it?

You may say, but my contract allows me to withdraw in such a situation... but I would answer that no intelligent seller would agree to such an arrangement.

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