If you want to quickly start making money through real estate, you need to start wholesaling real estate. However, closing the first deal might feel a bit tricky to any investor since the entire wholesaling process is different from other traditional transactions in real estate.
Now if you want to plunge into wholesaling real estate, this guide will ease up things for you. In this guide, we’re going to talk about how to close your first deal as a real estate investor.
Step-by-Step Guide to Wholesaling Real Estate
Step #1- Find Distressed Property Owners (Motivated Sellers)
As a wholesaler, the first thing that you need to do is finding motivated sellers who have distressed properties that they wish to sell. Distressed properties are the best ones to start with as these are easier to buy under market value and then sell for more than you put it under contract for.
To find such properties, you can start driving for dollars, or marketing yourself as a wholesaler through various marketing channels. Try to find as many distressed properties as possible and once you create a list, cold call all the owners and make sure that you’re not making any unnecessary cold calling mistakes.
Step #2- Negotiate a Deal With The Seller
Now that you’re done with finding motivated sellers, it’s time for you to start talking to them and negotiate. Here are the specific steps that you need to take to close a deal with a seller:
- Approach The Seller: Call or meet the owner as a professional wholesaler. Try to gain their trust by talking to them about them and not yourself. Once they trust you, they will start to open with you.
- Propose an Enticing Offer: Tell them about the benefits of selling their property to you. Focus on the pain points of the seller that you are going to eradicate. For instance, you can save the homeowner from defaulting on their mortgage that they are not able to pay.
- Sign: You might get the help of an attorney or real estate agent for drafting the contract. However, most of the wholesalers create their won contracts by either editing a generic real estate contract or by using a whole agreement template. In this way, you get to add your own clauses.
Step #3- Find a Buyer for the Property
You have a seller, a contract to sell a property, and now you need a buyer to buy the property. The end buyer is most likely to not be a first-time buyer. In fact, the buyer might be an investor or a contractor who will buy the property and repair it. Here are a few ways to find a buyer for your property-
- Call or email all the investors or agents in your network and let them know that you’ve got a property to sell.
- Advertise your property on multiple online classified websites like craigslist.
- Distribute real estate flyers around the neighborhood.
So to put it simply, you need to market your property to your target audience as much as possible. Also, keep a track of all the prospective buyers and add them to a list for future possibilities.
Step #4- Negotiate a Deal with the Buyer
Negotiating with the end buyer is a crucial step while wholesaling real estate as it determines the profit that you’ll be making through the deal. Here the profit is derived from the difference between the amount you bought the property at and the amount you’re wholesaling the property at.
Also, during the negotiation, make sure that all the extra costs are covered such as:
- Appraiser fee
- Contractor walk through fee
- Title fees
- Marketing fees
Step #5- Assign the Wholesale Contract to the End Buyer
Now that it’s all set, it’s time for you to assign the wholesale contract to the end buyer. The simplest way to do this is by executing an assignment of a contract agreement. An assignment agreement is usually a one-page contract that states that you, the wholesaler, are assigning interest in the original purchase contract over to your end buyer for a specified amount.
Step #6- Close it!
Closing the deal is also known as the settlement. This is the time when all the parties involved meet each other, including you. During this event, all the documents are signed and the property gets transferred to the name of the new owner. So in a nutshell, settlement concludes the wholesale deal.
So, keeping in mind the above steps would definitely help you shine your way through wholesaling in real estate.
Charu Mitra Dubey is a Content Writer at Batch Services. She has been writing for more than three years and has been published on multiple websites like Entrepreneur and Hackernoon. She specializes in writing content for SaaS and B2B companies. You can connect with her on LinkedIn.