Wholesaling in Pennsylvania

10 Replies

What are some things I need to know about wholesaling in PA as a beginner? I’m trying to get started but I have no clue where to even start. I have a bunch of information and no clue how to use it. What should I know about the laws, the markets, etc. What are some strategies you use to get started? Thanks in advance!

There are several 'gurus' that teach strategies for wholesaling.  While I'm not endorsing any of them, I found Ron Legrand's program to be informative, and novice friendly.

PA Department of Revenue has a view on real estate transfer taxes that most of those out of state guru trainers have no clue about; even some in state are likewise ignorant of the PA Department of Revenue looking to collect real estate transfer taxes on a contract assignment.

Wholesaling has nothing to do with real estate and everything to do with sales and marketing. And of course, you need to know and understand the markets, comps, ARV values, construction costs, hard money the list goes on and on. Start with taking the time to properly educate yourself and THEN take ACTIONABLE steps towards those goals. That's how you start.

@Sharnee Davis

Aside from what @Steve Babiak wrote about realty transfer taxes, wholesalers need to understand some basic laws. For example, I lost count on how many wholesalers told me they/seller don't need to comply with RESDL. 99% of the time, they are just wrong. That kind of behavior can get all the involved parties in unnecessary trouble.  

Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.

@David Bokman Great information, David! Your feed back is greatly appreciated. As I’m learning and putting it all together, what you mentioned seems to be the heart of Wholesaling. Glad to know I’m on the right track. Also, how do I get the ARV? I understand that I have to compare the house to other similar homes in the area within a mile or so but is there more to it than that? That seems too easy. Do I need a contractor for the actual numbers?

@Sharnee Davis Watch out for comparing homes within 1 mile but because that is NOT how it always works and is area dependent. For example, Philly is block by block and comps are NO further than .025 away. If you did 1 mile your comps would be completely of. So you have to know your market. You get the ARV from looking at comps, I ONLY use and TRUST the MLS and nothing else but you can get a sense from some of the online sites.

@Sharnee Davis Similar to what @David Bokman wrote, a house is not a house is not a house.  Even within a mile, you need to consider the house configuration, age, condition, etc.  A house built in 2000 will almost always be valued higher than an identically configured house built in 1950.  Consider location: a property on a busy street is usually valued lower than a house on a quiet residential street.  Consider lot size and features.  Is there a wet basement?  Age/condition of systems?

There is a lot to be aware of when valuing a property.  Someone trying to wholesale needs this knowledge and experience to be helpful to an investor.  I recommend first building this knowledge by working in the industry.  A real estate agent is your competitor and usually available free to buyers.  They will often blow away an unskilled wholesaler.

@David Bokman is correct - a mile radius would be extremely incorrect. A mile in Philadelphia can span 7 neighborhoods and can be the difference of a million dollars. Philadelphia is the difference by the block. Your comp doesn't need to be on the exact same block; but it does need to extremely similar. Or valued as a better or worse block.