I am learning about wholesaling and I have a couple of questions.
So it seems as though some of the controversy with wholesaling is in the contracts and assigning the contract. I am really new at this and learning the ropes. What if you had excellent relationships with buyers and instead of doing the assigning contract thing, you just had a verbal agreement with the buyer that you get a certain percentage of the property price? Seems like 10% or so of what I have read so far. So I would find a deal. Negotiate the price with seller. Tell the seller that I have a buyer that is interested in your house. Buyer buys house for negotiated price. And I get a check from buyer for 10% of price.
Hello Shaun! most teachers say that you need a signed purchase agreement that covers all of your worries. Most that teach that sat to tell you to budget two closings and decide whether that owner is OK with your profit and one that does not like it and eliminates your contract. There are many people that say wholesaling is a good place to start because of your fund availability. There is a few out there who are backstabbers and thieves so watch out and be careful.
One variation of that is called "reverse wholesaling" where you talk to buyers first and find out what they are looking for then go look. That way you can make prompt sales calls instead of talking around for buyers you can trust. Just keep educating yourself and do not try to do everything yourself no matter which way you go, that is mainly up to you and how you were grown up, your goals, and plan plus your ability to withhold some of what you're up to.
Good luck to you!
Thanks Michael, it just seems to be so much controversy surrounding wholesaling, but seems an excellent way to break into real estate.
@Shaun Reed Hey I noticed you're listed as a "contractor"...If you have your GC license, is there some way you can wrap your profit into the rehab budget? Tell they buyer they're getting the house "at cost" but you'll charge an extra fee on the rehab budget..paid "upfront" before any work gets done..
Hmmm, to be honest that seems a little misleading to me, in my personal convictions, I think I would try to be as upfront and transparent as possible with all parties.
And Contractor was the closest thing to describe me. I have worked in Construction for 20 years but do not have a GC license. I do have building inspection license however in the state of Michigan. Thank you for your time
@Shaun Reed
Are you planning to do wholesale
In Houston??
No, too far away for me, I’m in Michigan
Don't worry about the controversy.
First, learn all you can. There are lots of resources out there. Some states might have laws that are stricter and some that are not. Get active in your local REIA and get to know other wholesalers - not to mention building a buyers list.
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@Shaun Reed Simply collecting a fee for bringing a buyer into a deal is an Absolute violation of the licensing laws in any state....a much more clear violation than wholesaling. It’s not the actual assignment of a contract that is a violation of licensing laws, but the marketing of a Property (once you starting posting pictures, details, specs, etc) in a wholesale situation that runs you afoul of the law in some states.
Originally posted by @Shaun Reed:So it seems as though some of the controversy with wholesaling is in the contracts and assigning the contract. I am really new at this and learning the ropes. What if you had excellent relationships with buyers and instead of doing the assigning contract thing, you just had a verbal agreement with the buyer that you get a certain percentage of the property price? Seems like 10% or so of what I have read so far. So I would find a deal. Negotiate the price with seller. Tell the seller that I have a buyer that is interested in your house. Buyer buys house for negotiated price. And I get a check from buyer for 10% of price.
If you can get 10% that's pretty amazing since real estate agents only get 6% and they have all of the licenses, paperwork, contacts and legal behind them.
Why not get a real estate license and take the worry out it?