#AskBP 094: What is Reverse Wholesaling?

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On this episode of the #AskBP Podcast, Mindy Jensen talks about what reverse wholesaling is, and how to do it.

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About Author

Brandon Turner

Brandon Turner (G+ | Twitter) spends a lot of time on BiggerPockets.com. Like... seriously... a lot. Oh, and he is also an active real estate investor, entrepreneur, traveler, third-person speaker, husband, and author of "The Book on Investing in Real Estate with No (and Low) Money Down", and "The Book on Rental Property Investing" which you should probably read if you want to do more deals.

9 Comments

  1. Vincent Polisi

    This isn’t “reverse wholesaling” or wholesaling at all. It’s contract assignments, a completely different animal that has nothing to do with wholesaling.

    The contracts aren’t the same. The process isn’t the same. The income isn’t booked or taxed the same. The only similarities between wholesaling and contract assignments are the lead generation methods, but that’s where it ends.

    To wholesale a property requires the purchase and closing of the property and resale to another investor.

    Wholesale deals are B2B, not B2C and wholesaling has nothing to do with discounted pricing as many people mistakenly believe. It has to do with the purchase and sale of a property from one investor to another, not the end user.

    What’s being referred to here is contract assignments.

    To refer to a list of “cash buyers” is inaccurate because contract assignments don’t involve buyers. They involve assignors and assignees. The assignee is under no obligation to purchase the property and can just as easily assign it to another assignee.

    Contract assignments don’t require clearing title or a closing to get paid and the assignment fee is paid at the time of the assignment, not at a closing, because once the assignment is executed, the assignor has assigned all right, title, and interest in the contract and there’s no further obligations from the assignee or payment.

    The industry as a whole would be infinitely better if the educational material was actually factual and accurate using correct terminology and legal methodologies which most “wholesaling (contract assignments)” courses don’t include.

  2. Jerry Kisasonak

    I agree with you Vincent. But this is not easy to fix being that it takes someone who wants to be a student to actually learn all the nuances in the business.

    I get annoyed by the apparent lack of correct terminology. Even from the “pros” they often put stuff out that is rather ambiguous because they use wording interchangeably that isn’t even at all related.

    I still hear ALL THE TIME realtor pronounced – Real-a-tour. If I had to guess, I’d say 80% of the people I know pronounce it wrong – even realtors! But what can we do. That’s our society and what we have to work with. Most are not committed to learning and just go with what everyone else says – and socially speaking that works. To those who know the difference, it looks unpolished.

    And don’t get me started on lease options, lease purchases, land contracts, seller carry-backs, etc. To many people these are all the same thing. They have no idea.

  3. Vincent Polisi

    Jerry:

    I wish there was a like or thumbs up button I could click on your reply. It’s painful to watch new people and the masses follow along like bobbleheads because someone they perceive to be knowledgeable said something and they’re too lazy to do their own due diligence to see if what he/she said is correct.

    And the Real-a-tour thing is a huge pet peeve of mine as well. Drives me nuts when I hear it.

    You couldn’t be more right when you say that all the variants of leases, options, and owner financing get lumped together with virtually no understanding of the individual laws that govern them by a myriad of people.

    The sad part is, any attempt at educating people to reality online or in social media quickly becomes a flaming session by the flash mob and so the entire industry as a whole remains a quagmire leading to a bad reputation and stereotype.

    Mediums like Bigger Pockets should hold themselves to a higher standard to educate and elevate the industry as a whole instead of promulgating misinformation and outright untruths like in this video.

  4. Jerry Kisasonak

    Thanks Vincent. We have the same pet peeve!

    Yes, if you try to correct someone on this stuff be prepared for the eye roll and “Oh you know what I meant.” Ugg…

    I also see lots of wholesalers (even big hitters on BP) say, “Just tell the seller… (Fill in the blank).” They never follow this advice up with a comment like, “It’s likely that 80% of the lawsuits in real estate dealings is due to deception or non-disclosure of facts.” It is unsettling to me to see people giving advice on how to be sneaky or plain outright deceptive.

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